Christopher Luxon says former National leader Jim Bolger's claims Fair Pay Agreements will lift wages and productivity are completely wrong

Christopher Luxon has hit out at former Prime Minister and National Party leader Jim Bolger over his comments about Labour's Fair Pay Agreements (FPAs). 

FPAs are a set of terms and conditions - including wages and working hours - that employers in a particular sector must abide by, with the overall aim of raising standards.

Labour's FPA plans were foiled by its former Government coalition partner New Zealand First. But with a huge majority in Parliament, Labour is now pushing ahead to improve pay and conditions for essential workers. On Tuesday the party introduced its Fair Pay Agreements Bill to Parliament. 

The FPA framework is the same system proposed by Bolger who led the FPA working group in 2019. 

But current National leader Luxon isn't a fan, telling AM on Wednesday it will hurt businesses and the economy. 

"What those agreements are about is essentially a jump back to the 1970s where you have compulsory unionism. 

"If you look at Business New Zealand, if you look at Retail New Zealand what they're telling you is in a time when businesses have been hit with heaps of cost, that's not the way in which you drive to higher wages and salaries. 

"The way you drive to higher wages and salaries is you improve the productivity of businesses and what we mean by that is not people working harder, New Zealanders are already some of the hardest working people on planet earth. We have to actually work much smarter and so things like for example, a tradie being able to do four or five jobs a day instead of three because they can get through Auckland traffic and congestion much better is the way in which you drive more productivity into an economy," Luxon said. 

When asked by AM co-host Melissa Chan Green whether he agreed with comments made by Bolger when Fair Pay Agreements were first floated that they will lift wages and productivity and help middle New Zealanders, Luxon said no. 

"I disagree completely. There is no way by implementing awards you're going to drive the economy to more productivity. 

"You're going to have less flexibility in a labour market, more rigidity and actually people today want more flexibility in their working arrangements and more importantly what you want is a flexible labour market where people move in and out of jobs really easily, businesses, employers and employees can come to their own agreements in order to create jobs and opportunity and I can tell you this is not the way to move forward."

Luxon said FPAs would be a headache for businesses and wouldn't lead to higher salaries or better productivity. 

When announcing the introduction of the bill on Tuesday, Workplace Relations and Safety Minister Michael Wood said FPAs will lift wages for low and middle-income earners. 

"For too long, New Zealanders working in critical roles like cleaners and bus drivers, whose work is keeping our country going during the pandemic, have lacked bargaining power to seek better wages and conditions. We want to turn that around and ensure workers get a fair go again. We're proud to be a Government that backs everyday Kiwis," Wood said. 

"These agreements will improve wages and conditions for employees, encourage businesses to invest in training, and level the playing field so that employers who are trying hard to offer fair terms don't get undercut and disadvantaged.

"We acknowledge that a balanced approach is needed and have designed FPAs to enable unions and employer associations to bargain together to set minimum standards for all employees and employers in an industry or occupation. 

"These negotiated, sector-specific minimum standards can take into account the costs and opportunities businesses have while ensuring more workers receive higher wages and better employment terms and conditions."

The FPAs have been controversial with employer advocacy group Business NZ refusing to partner with the Government to implement them.

Business NZ and the Council of Trade Unions were initially announced as coordinators to bring bargaining parties to the table and help raise awareness. Over three years, $250,000 would go towards the organisations for their support. 

But in 2021 Business NZ CEO Kirk Hope said his organisation was "not prepared to be part of a compulsory scheme that is unfair and out of touch with modern ways of working" and had "formally rejected" the Government's offer to be the default bargaining party for employers. 

Bolger, who was Prime Minister from 1990 to 1997, was best known for his controversial 'Mother of All Budgets' which saw drastic cuts in public spending, particularly in health and welfare.

He also introduced a controversial piece of legislation in 1991 called the  Employment Contracts Act which saw union membership fall dramatically in the decade following its passing.