Academic staff within the tertiary sector recently went on strike to protest low wage offers.  They want pay increases that reflect the rising cost of living and also soaring profits within some education institutions.

Strike action is becoming an increasingly common occurrence as a result of two significant factors - wage increases have been held back over the past two years as a result of fears of a covid induced recession, whilst inflation has taken off.  The expectation of many unions now appears to be that an increase matching current and projected inflation levels is the minimum workers should accept.  Whilst some employers have agreed to these levels of pay increases, many have not and have therefore become embroiled in protracted and acrimonious bargaining.

Jenny Nicholls, a columnist for Dom Post, recently wrote about the strike action occurring within the tertiary education sector, and the University of Auckland in particular.  She was critical of the University’s actions in not paying employees who walked off the job for 4 hours, saying “threatening workers’ ability to strike by docking their pay gives the TEU an even firmer grip on the moral high ground”.  She also refers to the University reducing the pay of striking workers “in retaliation” for the strike action.

The suggestion that the University was somehow acting immorally or improperly in this instance, is unwarranted.  Employees are entitled to strike in support of their collective bargaining claims, but the quid pro quo is that they are not entitled to be paid for the time that they are on strike.  This is the law and it makes perfect sense.  The work-wage bargain is reciprocal - employees work and employers pay them for their work.  If employees are on strike, and therefore not at work and delivering value to their employer, why would they expect to be paid?

There is an important natural balance in this situation.  If there were no adverse consequences for striking employees, and they did not lose any pay, they could strike for weeks and months until they drove their employer to its knees and into succumbing to their demands.  The fact that employees lose pay when they strike requires unions and employees to take a more moderate view as to what level of strike action can reasonably be taken and sustained.

It also encourages more “strategic” forms of strike action where employees do not walk off the job, but instead attend work and refuse to do certain parts of their jobs.  This may include working to rule, refusing to attend meetings or answer phones, refusing to complete paperwork or virtually any activity which amounts to reducing the normal performance of their work.  The critical difference between this and a full strike, is that if employees are at work, they are entitled to be paid their full wages regardless of their reduced output.

This is known as a “partial strike” and has become a favoured form of industrial action by unions and their members since 2018 when the Employment Relations Act was amended to remove the ability of employers to reduce the pay of employees by an amount proportionate to their reduction in activity, or 10%.  Now employees can engage in this type of industrial action without any adverse financial impact.

Employers in this situation are faced with a difficult decision – either they put up with the reduced performance, which could go on for weeks and months.  Alternatively, they may suspend striking employees without pay, but this results in no productivity at all and is often viewed as inflammatory and leads to escalation.

The purpose of this column is to point out that there is a complex dynamic in any industrial conflict.  It is unrealistic to think that an employer would continue to pay striking workers when there is no legal obligation to do so, and where this is likely to lead to further strike action.  Put another way, where is the disincentive for employees to cease their strike and get back around the bargaining table when they are still being paid 100% of their wages.

Given the current misalignment between employee expectations and the ability of employers to pay in many workplaces, we will continue to see more strike action over the next year.  Employers will likely have to offer bigger pay increases than we have seen over the past decade, but not necessarily at the level of inflation as traditionally there is not a direct correlation between wage growth and cost of living increases. 

In this environment employees can and will exercise industrial muscle by going on strike.  Equally, employers can exert pressure by docking the pay of striking workers.  Neither is wrong or inappropriate – it is the natural order of the labour market and ultimately results in balanced and sustainable outcomes in most cases.