Are Fair Pay Agreements dead yet?

This post has been sitting in drafts for a while. Time to brain dump everything 2021 so that I can comfortably let my brain turn to mush over Christmas. But remember this post next year when this issue becomes big again.

A couple of weeks ago (or a lifetime ago in politics, depending on what speed your news clock runs at) BusinessNZ made the announcement that it will be pulling out of its role in the Fair Pay Agreements (FPA) system.

To refresh your memories, FPAs are the government's next step in its plan to bring about full communism by next election. 

Just kidding.

Essentially, FPAs are supposed to enable employer representatives and unions within a sector to bargain for minimum terms and conditions that will apply to all employees in that industry or occupation. In the Cabinet paper to establish approval to draft the legislation, BusinessNZ were identified as the 'default' employer representative: the representative that would come to the bargaining table if no other industry representative were willing to.

Back in July I wrote about how BusinessNZ's role in the process was a bit of an eyebrow raiser. Considering it had already publicly denounced the FPA system, it seemed deeply weird that it would take a pivotal role in enabling the system. As several commentators have pointed out, including this excellent Herald editorial, the only real surprise about Business NZ's withdrawal is that it took so long.

So what does all this mean for FPAs?

Welp, here's the Minister in charge replying to a press gallery journalist regarding BusinessNZ's move:

So... no need to worry. This almost sounds like a good thing for FPAs! First Union certainly seem super casual about BusinessNZ's announcement.

Here's the thing though: for collective bargaining to work, industry representatives do need to come to the table. Is that a realistic expectation? Federated Farmers were one of the first cabs off the rank to announce that they support BusinessNZ and will also refuse to be a negotiating partner.

It's easy to imagine a world where other industry reps follow that lead. Bargaining for something so fundamental puts a heck of a lot of pressure and reputational risk on the industry representative. Many industry reps have not traditionally played a collective bargaining role. And of those who do, it still requires institutional knowledge and experience to be able to bargain at scale, carrying responsibility for negotiating wages for an entire sector or industry. 

Are there any industry/employer representatives who are ready and willing to step up? Are there any other industry representatives who have strictly ruled the role out? That'd be useful public knowledge before an FPA bill is released for public submissions.

And then there's the option of going to determination: basically, if there's no industry representative to come to the table, the wages and conditions for an entire occupation and sector will be determined by a panel of Employment Relations Authority members.

Now, I don't want to get into semantics and the meaning of words (I'm still not over private taxi companies being counted as public transport by the way), but having the Employment Relations Authority set wages and conditions is not collective bargaining. There is no bargaining! Does this matter for FPAs? Well, you'd think so. Here's the objective of the system, as set out in the Cabinet paper:

Let's assume for a moment --and it's not a crazy assumption-- that a lot of FPAs end up being sent to determination because no industry representative was willing or able to come to the table. How would the Employment Relations Authority go about setting wages and conditions?

It's actually not straightforward at all figuring out what the objective of a sector/occupation-wide minimum wage should be, let alone how that translates into something binding for all employers. In fact, it's hard enough figuring out what the objective of the standard minimum wage is. In David Maré and Dean Hyslop's Minimum Wages in New Zealand: Policy and practice in the 21st century, the authors argue

A key challenge for evaluating the effectiveness of minimum wage policies is the lack of a clear statement of what minimum wages aim to achieve. Minimum wage policies can potentially contribute to several key policy objectives. They do not, however, operate in isolation, and their impacts depend on their interactions with other policy settings in areas such as industrial relations, tax and benefit policies, employment and training policies, and business support, making evaluation even more challenging.

The living wage has its problems too, in that it is a clunky calculation based on assumptions about household size, the status of other household workers, hours worked, consumption bundles (what people spend their money on), and national average rents. 

Coming up with a sector or occupation-wide minimum wage that is at all meaningful requires being really clear about what problem needs to be fixed, and having the economic tools available to assess whether that problem explains relatively low wages in that industry/occupation. That's no small task for the best economists in the country, let alone a panel of Employment Relations Authority members.

FPAs aren't dead yet.

But it's looking increasingly possible that the system will look nothing like the system that was originally envisaged: a collective bargaining system.

Hold that thought for next year, and pray we won't all be too distracted with Covid to notice the legislation coming through.

Vaccine certificate rules chuck taxi drivers under the bus

I really feel for taxi drivers right now.

While many businesses are having to shut up shop because they do not want to turn away unvaccinated* customers, taxis have the opposite problem: they're not allowed to turn away the unvaccinated. 

This week the Taxi Federation called on the government to remove the prohibition on taxi drivers (which includes rideshare drivers) being able to require vaccine passes and turn away unvaccinated passengers. RNZ reports:

Covid-19 Response Minister Chris Hipkins said taxis were considered public transport and therefore did not require My Vaccine Pass.

"The government has been careful to balance the need to keep people safe from Covid-19 while ensuring everyone can access food, medicine and transport."

My initial reaction? This seems nuts. 

After a bit of thinking, I still think this is nuts. But it also gets to some gritty issues around what constitutes a life preserving service, the regulation of private businesses, and trading off different people's rights against each other. 

What constitutes a life preserving service?

Oh no. I fear debating this is about as straightforward as MBIE trying to define what counts as an essential service. Here's how taxis seem to fall into the criteria:

The linked briefing is the most fitting official document I've managed to find on the topic (if I got this wrong, I'm only willing to take half the blame: finding any kind of information on the traffic light system seems to lead to endless clickholes).

Now, I don't think anyone except the meanest anti-anti-vaxxers would argue with the intention of the policy. But the way the policy is applied is going to capture a lot of non life-preserving travel. Taxi drivers aren't just prohibited from turning down an unvaccinated passenger who needs to get to the supermarket or doctor. They're prohibited from turning them down fullstop.

And I'm not a transport expert, but it hurts my brain trying to think of how private businesses can be counted as public transport. I thought I knew what public transport meant: services provided by or contracted by central or local government. When I think public transport, I think buses, ferries and trains. Is Uber now public transport? When did this happen? My entire understanding of private enterprise is ruined.

Definitions aside, I'm also not psyched about just having a blanket prohibition on rejecting unvaccinated passengers. I get why policy wonks like it: it's administratively simple and easy to communicate (because the traffic light system is so easy to follow so far), and easy to enforce. But tidy policy isn't necessarily good for taxi drivers when it exposes them to more risky events than necessary.

Taking away choice about risk tolerances

There might very well be taxi drivers who are willing to take on the risk of unvaccinated passengers. But there are clearly also drivers who are worried, and who are uncomfortable taking on that risk. Not to mention drivers who are old thus vulnerable, or who live with people who can't get vaccinated themselves.

And for the sake of argument, I see the situation of taxi drivers as fundamentally different to the risks taken on by doctors, nurses, or police: they never signed up to protect and save lives. Nor are they comparable to supermarkets where physical distancing is a lot easier to enforce. They're not even comparable to bus drivers who are contracted to perform a public service.

In normal times, there are only limited circumstances under which taxi drivers can turn down a passenger (and now that I think about it, I'm not sure I'm 100% cool with that regulation either, but one battle at a time). But importantly, one of those reasons is if they believe their personal safety is compromised.

Surely the risk of catching Covid is an example of personal safety being compromised? And if not, remind me again why the unvaccinated have fewer rights occupying other businesses under the traffic light system?

Vaccine mandates are a mucky business, but equally mucky is banning the right of private businesses and individuals to take on extra precautions in order to feel safe. 

I think the word "feel" here is significant: perceptions of safety have an element of subjectivity. Even if a new study comes out tomorrow saying vaccinated people are just as risky unvaccinated people (vaccine sceptics, don't come at me with said study. I'm aware of the claims, and I'm aware of the critique of the claims), I'd still back the right of individuals to take their own precautions in an extremely uncertain environment.

On the one hand, the government is stopping people from taking on risks that they might be willing to take on. But on the other hand, it is also forcing people to take on risks that they are unwilling to. I mean, force is a strong word. I take that back. Taxi drivers can always just go out of business and become unemployed.

Trading off different people's rights

At the heart of most important Covid responses is the trading off of human rights. I for one am willing to give up a little bit of freedom in the short run if it means a safer, more freedom-filled life in the long run.

Minister Hipkins said that "the government has been careful to balance the need to keep people safe from Covid-19 while ensuring everyone can access food, medicine and transport."

In the case of taxi drivers, the decision seems pretty stark: a taxi driver's right to health is less important than the unvaccinated's right to life preserving services.

As the Taxi Federation puts it:

"We are being forced to provide a service to those that consciously refuse to protect themselves and others, willingly threatening the safety and wellbeing of our communities."

In an ideal world, you wouldn't need to make a trade-off: both sets of rights are important and both sets of rights ought to be advanced. It's stating the obvious to point out that this isn't an ideal world.

Is there a better way?

Full disclosure: I do not work in Covid policy, do not want to work in Covid policy and I don't envy those who have to work on these types of problems every single day. This stuff is hard. But there seem to be at least a few options on the table:

• Narrow the scope. Don't force taxi drivers to drive the unvaccinated to their mates' houses (I was about to say the pub, but they can't go there anyway) or wherever they go for fun these days (the park?). But do ensure they accept trips to actual life preserving services like the doctor or supermarket. 
• Don't count private businesses as public transport. That's an option. And if there are areas that aren't well serviced by public transport, I don't see why private businesses should bear the cost (if they choose not to). My first best option is to allow private businesses to choose whether to require a certificate. Call me a free market radical, but I'd be surprised if taxi drivers who are keen to just make a living wouldn't service those areas once the gap in the market has been identified.
• KiwiRide. I didn't say this was a good option. But rather than sticking an arbitrary public transport label on private businesses, why not at least start formally contracting them to provide what is apparently an important public service.

Maybe my options suck. But at the very least, I think this issue highlights the flipside of vaccine mandates. The government is exercising enormous powers to minimise Covid risks. But those powers can also prohibit individuals from exercising their own ability to take precautions to minimise risks in the same way.

*A note on wording: I'm using the term unvaccinated to refer to those who choose to be unvaccinated. In my mental model, people with vaccine exemptions should be treated equally to the vaccinated.