The Growing Up Of the Unions

Appendix to Chapter 7 of The Commercialisation of New Zealand

Keywords: Labour Studies;

The union movement will think of itself as largely marginalized by and marginally involved in the commercialization shift. This appendix explores another story: one which advocates of the reforms should be keen to point out. All institutions find it very difficult to reform themselves. Genuine institutional reform involves some external pressure. This is the case study of the union experience, but there are numerous others including the corporatization of state owned enterprises (Chapter 1).

The Origins of New Zealand’s Union Structure

The earliest New Zealand unions came from Britain and were organized on a craft (or occupational) basis. Later the Australian union experience was influential, especially from some industry based unions. This overlapping of occupational (horizontal) and industrial (vertical) union structures has been a persistent feature of New Zealand unionism.

The typical union was very small. As late as 1983 there were 248 unions with 527,545 members, an average of 2127 members per union. However almost four fifths of these unions had fewer than 2000 members, covering 16 percent of the unionized workforce. On the other hand there were 15 unions, each with over 10,000 members covering over half of the unionized workforce. [1] Small unions faced considerable difficulties servicing their members.

Yet many small unions persisted. They did so because they were a creation of legislation. Under the law it was feasible for a union to never to meet most of its members. All its officers had to do was negotiate the award annually with employers and collect the subscription via an employer levy. Compulsory unionism meant that the worker had no opportunity to opt out, even where he or she was getting no direct services from the union and was being paid above the award rate (which only set minima). Thus it was possible for a single union to organize a handful of members at each of numerous work-sites.

So, together with an historical inertia, unions existed in both horizontal and vertical forms. Often there was more than one union per work-site – the most notorious being at the Tasman Mill in Kawerau, where there were 12 unions and frequent and bitter inter-union disputes.

The New Economy and the Need for Union Reform

One of the major consequences of the external diversification described in the prologue was that increasingly sectors which had been in the protected domestic market found themselves in the exposed external sector. Now the whole of the primary sector was involved in exporting, and not just pastoral farming. Manufacturing increasingly switched from almost solely domestic supply to export supply, either directly or indirectly supplying other exporters. This indirect supply meant that many service activities were also involved in the export effort. (Today the tourism sector is the single biggest foreign exchange earner.)

These changes made much of the traditional union structure increasingly inappropriate. The design of a union structure from scratch in the new economy would be likely to favour work-site or enterprise arrangements. Consider three factories in the same town, one producing timber, one packaged dairy food, and the third produced a household durable. Suppose they are all supplying a local market, protected from overseas competition. The industrial relations and pay rates for the three firms could be much the same and, indeed, much the same as for similar factories in another part of the country. Now suppose, following the diversification, the timber is going to Japan, the dairy food to Thailand, and the durables to Australia. Each firm will have a whole range of problems specific to it, arising out of its different markets and marketing conditions. Inevitably this will affect industrial relations within the firm. There will remain commonalities, but faced by the diverse requirements of exporting each firm will want to adapt its working conditions for its specific markets.

This pressure for work-site specific flexibility was reinforced by two other major changes: increasing technological complexity and changing social demands by workers. The union movement was not insensitive to such pressures. For instance in 1987 the Federation of Labour was replaced by the New Zealand Council of Trade Unions (CTU) which incorporated public sector unions into the peak organization for the first time. There were constant – not always successful – attempts to give women’s concerns a more prominent role in union activities.

Undoubtedly the most important direct source of change in the 1980s was the 1987 Labour Relations Act (LRA), and the provisions in the 1988 State Sector Act which required public sector industrial relations to follow private sector arrangements more closely. The original provisions in the Labour Relations Bill were markedly changed following consultation (or pressure) from the unions, although the public sector unions were much less successful in changing their legislation. (Chapter 8)

That the size of the unions registered under the new act was to be at least 1000 workers, led to some rather odd amalgamations of small unions collecting under the same umbrella organization in artificial amalgamations. Nevertheless by 15 May 1991, when the LRA was repealed, there were 80 unions, of which only 4 had fewer than 1000 members. However the growth had been in the medium size unions, with still only a score of unions with 10,000 members or more, covering 72 percent of workers (compared to 53 percent in 1983). And if there were fewer, larger, and even potentially stronger unions, the structure was still not aligned with the new economy, as the artificial amalgamations illustrated.

In May 1989, the CTU responded to the changing economic circumstances (and the LRA) with Strategies for Change [2] which aimed to encourage voluntary amalgamation and exchange of union members to align the unions more closely to an industrial and sectoral structure. Identifying 14 sectors (containing over 100 industries between them), the strategy was that within five years any union would have a presence in only those over which it had total coverage, and in not more than two others. It was hoped that in a particular industry (but not sector) there would be only one or two unions because `three unions is becoming impracticable; four or more unions is unmanageable’. There is a tone of urgency in the report arguing `change is overdue’, but there was little progress before the 1991 Employment Contracts Act (ECA) overwhelmed the assumptions upon which it was based.

Another evolving change was the beginning of a move to single enterprise awards for large firms, breaking them out of the national award, and composite industry awards in which a number of unions combined their awards to a single one, as in the case of the plastics and packaging industry composite award.

One can see these changes as a response to the new economic environment and a movement towards realigning the union structure to one based on industries. However the changes were ponderously slow. As they were voluntary, an individual union could veto a change. In particular changes were inimical to the occupational-based unions, organized across a number of industries and sectors. This is well-illustrated by the experience of the clerical workers’ unions.

The Clerical Workers’ Unions [3]

The clerical workers’ unions were a classic example of horizontally based unions, which organized a few workers on each of numerous work-sites. In 1983 the New Zealand Clerical Workers’ Association (NZCWA) had 50,000 members on 20,000 work-sites, or 2½ workers a work-site. Over half the New Zealand Clerical Workers’ Union’s (NZCWU’s) work-sites in 1990 had just one member, and only 3 percent employed more than 20 workers. They were quintessentially a creation of statute. Unionized clerical workers were marginal until the 1936 amendment to the IC&A Act. When the statute dramatically changed in 1991 to the ECA, the union as dramatically collapsed.

There had not been a lot of membership involvement in the unions’ activities. Between 1981 and 1990 voter turnout at annual general meetings of the Northern Clerical Union (NCU) fluctuated between 2½ and 5 percent, while only 20 percent took part in the 1989 postal ballot to elect the executive. A similar proportion voted in the 1991 postal ballot to wind up the NZCWU. A 1976 survey of members of the NZCWA found that 68 percent would vote for a voluntary union, and 41 percent would not join it.

It is easy to explain this by their members being predominantly isolated workers on most work-sites, mainly woman, often working part-time, and experiencing a high turnover. But there were other factors. The Chief Judge of the Labour Court found in 1990 the NCU’s `rules do not foster democratic principles or nourish the exercise of democratic rights.’ Indeed on occasions the management of some of the unions was thoroughly undemocratic. When the clerical unions were a part of Fintan Patrick Walsh’s base in the trade union movement, giving him significant voting power in the Federation of Labour over which he presided, members of the unions were rarely, if ever, consulted on how that power should be exercised. Throughout the academic reports on the union in the 1980s are accounts of power struggles.

The situation was possible because, once an unqualified preference clause was included in the award – a situation which pertained for almost all of the unions’ post-1936 history – clerical workers had to belong to the relevant union, irrespective of the quality of service they were receiving from it. As the unions themselves on occasions acknowledged, it was virtually impossible to provide any quality of service to members dispersed across so many work-sites. For many members, the dues were just another impost, a tax on their income, for which they received only the vaguest return – if any.

On the other hand, there were dedicated officials of the clerical unions who were conscientious and active about their responsibilities to members, and who were labouring under great difficulties of dispersed membership. Moreover the unions could make some proud claims for gains for its members, including an active campaign against sexual harassment in the 1980s, and their representing women’s point of view in the peak councils.

But when the ECA was introduced in 1991, the clerical workers’ unions had little future. By the end of the year the NZCWU had transferred its remaining members to other unions who were better organized on the work-sites, while the two remaining regional unions amalgamated with other unions. Today a clerical worker in the private sector, if unionized, is likely to belong to a multi-occupational union on the work-site and she may see her organizer more frequently than in the past. (But she is less likely to be unionized.)

Peter Franks concludes that `the union’s demise was the result of its dependence on protective legislation, its structural problems, and the failure of its attempts to solve these problems.'[4] The situation was even more complex. An occupational union, organized across a multitude of work-sites with few workers in most sites is inherently vulnerable. Only the most supportive legislation enables it to exist. Any significant reduction of that support results in a collapse of the union.

Ironically, one feature of the CTU’s Strategies for Change had thus been implemented, albeit by the ECA which was otherwise an anathema to the union movement. Implicit in the proposal was that many clerical workers would be organized by an industry rather than occupational union, as has occurred under the ECA.

There is a nostalgia about the clerical workers’ unions, especially because in later years they were strongly feminist and addressed some crucial labour market issues which affected women. Nevertheless, we might ask whether, in an environment in which clerical workers are organized under enterprise and industry based unions, the workers are getting a better deal, and whether in the long run the union movement, and workers, will benefit from less gender segregation. Even if the answers to those questions are yes, today many clerical workers get no union support and may well be worse off.

Responses to the Employment Contracts Bill (ECB)

We can partly trace union responses to the Employments Contract Bill on the spectrum from independency to dependency on statute. There is some dispute as to what happened. What is not in dispute is that in April 1991, the CTU had a proposal for a 24 hour general stoppage on April 30. This was defeated on a card vote of 250,122 against and 190,910 in favour. The exact voting lines are not published, but Sarah Heal suggests that the opposition to the national strike included the Educational Institute, Engineering Union, Financial Sector Union, Nurses Union, Post Office Union, Post-Primary Teachers Association, Public Service Association, and in fact `most of the major unions’. [5] Supporters for the action included the Service Workers’ Federation and clerical workers’ unions.

Heal attributes the failure to call the national strike to the conservatism of the CTU leadership. Ellen Dannin, in a more reflective study which is nevertheless sympathetic to the notion of national actions, describes the CTU engaging in a complex response which included going around the bill, and talking directly to employers. Many unions despaired of the prospects of significantly modifying, let alone defeating, the bill. She reports how the Engineering Union was giving priority to the transition to the post LRA environment.[6]

It would seem that those unions opposing the one day stoppage were more successful in that transition, generally having suffered smaller proportional losses than those who supported the strategy. Those that thought they could survive under the ECA, albeit at a reduced scale, opposed the national stoppage, while those who thought they could not, or that they would suffer most greatly, supported it. Given the greater membership losses of the advocates, if the CTU were to re-consider the motion in 1991, the outcome would be a greater proportion opposed to the national stoppage.

What responses had a clerical workers’ union to the Employment Contracts Bill when, as subsequent events proved, it was faced with certain demise if it were passed? There were not many, other than to use every means possible to prevent the bill’s passage, no matter how low the probability of success. A national strike was a viable strategy for those faced with obliteration under the ECA, even if the proponents knew a relatively low proportion of their own members would participate. Even a very small probability of success made it worthwhile for the clerical workers’ unions, because they had hardly any other strategy.

However, there were more options for those who might survive under the new regime, albeit at a more limited scale. The public sector unions, with a long history of voluntary unionism, knew they had a core of workers they could rely on, although there would be attempts to split off workers into house unions and to non-membership through individual contracts. Private sector unions who had a core of readily unionizable workers knew they would lose some from the abandonment of compulsory unionism, so they needed to maintain as much wavering support as possible around their core. A national strike was only one option, and not a particularly attractive one in comparison to preparing for the new industrial relations environment. Indeed the strike could have reduced that preparation if it diverted energy, while antagonizing workers which the unions hoped to retain in the new environment, and also the more sympathetic employers with whom they hope to work in the future.

Behind the advocacy of the national strike appears to be the belief that it would have been effective. Brian Roper writes about the failure of the CTU `to organize and lead the kind of generalised strike action that would, at the very least, have forced the National Government to substantially amend (if not withdraw) the legislation.'[7] Was that possible? Would not such an action have strengthened the resolve of the government to proceed with the legislation and to break the union movement, while alienating goodwill among the sympathetic population which was not unionized? In any case would there have been sufficient worker commitment to such a course? What if the CTU had thrown a party and hardly anyone came? Heal’s assessment of the size and effectiveness of the various sporadic actions that happened in lieu of the national strike seems optimistic. She reports a number of such activities, but one gets little sense of their overall size; the extent they involved a few zealots, or they were mass actions. The claim that 60,000 people marched against the ECB (including those who did so in their lunch time) is either not sourced or attributed to The People’s Voice. Perhaps as good a test of the counterfactual of what would have happened if there had been a national strike is the experience in the Australian state of Victoria. When the Kennet government introduced a bill based on the New Zealand ECA, mass workers’ actions occurred, but they had no effect on the legislation.

The Aftermath of the ECA [8]

If there were 80 unions with 603,118 members when the ECA was implemented in May 1991, there were 82 unions with only 375,906 members three and a half years later in December 1994. The increase in unions reflected the collapse of the umbrella unions created by the LRA back to their old constituents, and house-unions formed in the public sector and some enterprises which split off from their traditional unions.

These additional unions disguised the demise of a number of traditional unions which either had collapsed or been absorbed into other unions. The reduction in union coverage was 27 percent. However industrial coverage patterns differed. One group (agriculture, fishing & hunting; mining & related services; construction & building services; and retail, wholesale, cafes, & accommodation) experienced reductions in excess of 60 percent over three years; a second (manufacturing, transport & communication, and finance and business services) lost between 22 and 24 percent; public and community service lost 13 percent; and energy and utility services reported a gain of 15 percent. Excepting the miners, the greatest losses occurred in industries whose organizing situation resembled clerical workers – numerous work-sites, few workers per site, woman or detached workers, who were often low skilled. (In 1995, the Engineering Union began a successful recruiting drive in the mining industry.)

There are appear to be some stabilities. The CTU covered 86.5 percent of total union membership in 1991 and 79.0 percent in 1994, with TUF covering another 6.2 percent, so that the total of the two peak organizations was 85.2 percent, or almost the same as three years earlier. While there were 20 unions with over 10,000 members in May 1991, covering 72 percent of all unionists, there were only 10 such unions in December 1994 but they now covered 69 percent of unionists. Thus the union movement was becoming more concentrated into relatively fewer unions, but covering a smaller proportion of the workforce.


The industrial relations legislation from 1894 to 1991 created unions which were essentially wards of the state, unable to function outside the umbrella of the statute. Unfortunately the resulting union structure reflected an economy which began disappearing in the late 1960s. The union movement was not able to change sufficiently, especially because of the existence of occupational unions organizing a few of workers in each of numerous work-sites.

Ironically the Employments Contracts Act, whatever its other defects – and the union movement would say there are many – created a union structure much closer to that which the CTU argued for in the late 1980s, although with many fewer members and lower coverage. It was also a structure closer to what might be prescribed for an economy whose external sector is much more diversified and whose domestic economy is much more open to the world. Increasingly there is one, or a co-operating handful, of unions in each industry and more often there is one union per enterprise. Horizontal unions organizing a particular occupation in many industries have all but disappeared. The outcome is not perfect, for there are inherent tensions in a union which covers skilled and unskilled workers, while not all unions have faced up to the challenge implied by increasing numbers of women workers.

The economic diversification which began in the 1960s, exposed more sectors to international competition, thereby posing a challenge to the union movement with which it had great difficulty grappling. The difficulty is well illustrated by that few accounts of the events described here include any economic dimension.

The converse does not mean that industrial relations are totally determined by economic circumstances. But because now each industry (and enterprise) is increasingly exposed to international competition specific to its circumstances, its industrial relations has to be designed to be a part of the response. This suggests a far greater flexibility in the IR structure than occurred a couple of decades ago. In particular the horizontal linkages between firms have to be less rigid. Each enterprise now needs a greater degree of autonomy in setting its pay and conditions.

By shaking off unions over-dependent on state legislation the union movement has freed itself to a greater extent from state control. One suspects that, given the experiences of the decade after 1984, the labour movement will not be keen to return to state dependence again. It might even argue that part of the ineffectiveness of unions – and other agencies of a leftish bent in the 1980s – was they were too dependent on the state, so that when the state turned on them, their ability to resist was extremely limited. A union movement more outside the apparatus of the state, and less tied to statute, may be able to play a more independent and constructive role in the development of the nation.

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[1] The data on union size comes from the New Zealand Official Yearbook (various years), and Harbridge et al 1995.
[2] CTU (1989).
[3] Interpretations in this section are my own, and are not necessarily that of Dannin (1995), Franks (1991, 1994) Hill (1994), or Hill & Du Plessis (1993) on which much of the account is based.
[4] Franks (1994:209).
[5] Heal (1995:277).
[6] Dannin (1995:85).
[7] Roper (1995:269).
[8] This section uses Harbridge et al (1995) and Harbridge & Hince (1993).

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