The New Zealand and United Kingdom Governments are currently taking vastly different approaches to addressing pay disputes in the public sector.

In the UK up to half a million teachers, civil servants, train and bus drivers, healthcare workers and border officials walked off the job on 1 February to demand better pay.  The mass strike was dubbed “Walkout Wednesday” and was the largest and most significant protest of its kind in years.  An ongoing campaign of further industrial action is planned for the forthcoming weeks.

The result of this action was chaos and widespread international attention.  But that does not appear to have swayed the new UK Prime Minister Rishi Sunak’s Government, which, at this stage is holding firm.  Whilst unions in some sectors have been offered increases of up to 5%, union officials say that this is not enough to combat soaring inflation levels of around 10.5% and would see employee pay effectively going backwards.  The Government’s response is that an “inflation busting pay rise is not on the table”.

It is unlikely to be a coincidence that this is occurring in the context of the intended introduction of new strike breaker laws which would remove the ability of employees to take strike action in certain services where this would impact on minimum public service levels.

Not surprisingly, the groups of employees who walked off the job last week include many of the same workers who would be affected by the strike breaker law, which covers health, fire, rescue, education and transport services, border security and nuclear plant employees.

In these sectors striking workers can be issued with “work notices” if their employer determines that minimum service levels can not be met, in which case they are prohibited from participating in the strike action.  If they ignore this and strike, they would have none of the ordinary protections that striking employees generally have and could be sacked.  Likewise, unions will not be protected from any strike action that is deemed “unlawful” and could be liable for significant financial penalties and any losses which flow from it.

The legislation is being seen as highly inflammatory and the biggest attack on employee rights and freedoms in decades.  The irony is that it is likely to create so much dissent amongst employees and unions that it will actually lead to more strikes than ever before.  It would be fair to say that the situation in the UK is now very volatile, and without concessions by both sides, will likely escalate further until something snaps.

In contrast, in New Zealand the Government has taken a proactive and constructive approach to working with unions to settle collective agreements and pay disputes.  The Public Service Commission – Te Kawa Mataaho recently released Public Sector Pay Adjustment Guidance which is the outcome of a number of months of consultation with public sector unions. 

The framework, which has been agreed in principle with most, but not all, public sector unions, provides for a $4000 lump sum pay increase for employees with effect from 1 December 2022 and a further payment of the greater of $2000 or 3% of base salary from 1 December 2023, together with a lump sum payment of $500 (these payments are prorated for part time employees and do not apply to collective agreements which expire after 1 January 2024).

Reflecting the cooperative approach taken to developing these terms, union member employees who are covered by a collective agreement are also entitled to a “union only payment” of $750.

Whilst unions are entitled to “opt out” of these arrangements, most have not, recognising that this is likely to be a better deal than they can negotiate directly with their employer.  By way of example, the effect for an employee who is paid $50 000 is a total pay increase of 12% over two years, whilst for an employee on $100 000 the total increase over this period is 7.12%.  This may not entirely meet employee and union expectations but is certainly an improvement on the relatively frugal levels of pay increases over the past 3 years and reflects certain financial realities.

This is a novel initiative and is designed to achieve the quick and efficient resolution of collective bargaining in the public sector over the next two years such that the focus can be on rebuilding rather than fighting fires.  As always there will be some issues created by this approach, including creating expectations and setting a precedent for future bargaining rounds, and well as the risk of further fuelling inflation.  But if we look again to the UK, the alternative at this point seems unpalatable.