Holidays - some thoughts

Readers will not have missed what seems to be a co-ordinated attack on the holiday entitlements of New Zealand workers imbued with the underlying theme that we are all lazy work dodgers. That New Zealanders work some of the longest hours in the OECD was not a dominating feature of the attack

This debate was kicked off by an opinion piece in The Post by one Tom Grumley (a business advisor and investor) who argued that “New Zealand’s Christmas break has started to become way too extreme. And it is impacting our productivity on an individual business level, and at the level of the economy.”

The head of the Auckland Business Chamber, Simon Bridges, jumped into the debate claiming there are “solid reasons for a shorter summer holiday period”. An article in The Spinoff notes that the usual right-wing talkback hosts have jumped in behind the idea.

Another article, in The Press, “Are we lifestylers or just last lazy?” Martin van Beynen expands on the same theme claiming New Zealanders don’t work hard enough and welcomed the end of the era in which New Zealand was a “heavily unionised, weekend break-observant country where work was seen as a major imposition and inconvenience.” He speaks enthusiastically of contractors on the new Christchurch stadium finding “themselves working weekends, statutory holidays, after hours and very early mornings to keep up with Jinggong’s punishing schedule.” Issues such as worker fatigue and increased workplace health and safety risk do not seem to have come to Martin’s mind.

The PM jumped into the conversation by comparing New Zealand to the United States, a country notorious for its short holiday entitlements and where there are no federal or state minimums. In fact New Zealand entitlements seem more or less comparable with other developed countries including Australia.

One could make several comments about this right-wing attack.

Working harder is different from more productive work

[Finland, author’s photo]

First, the phobia with hard work equating to productivity – mainly that it’s rubbish. To quote the Reserve Bank of Australia “Labour productivity is defined as output per worker or per hour worked. Factors that can affect labour productivity include workers' skills, technological change, management practices and changes in other inputs (such as capital).” Working harder or longer doesn’t seem to be mentioned!

If one wanted to look at the real causes of low levels of productivity a better place to start may be levels of investment in New Zealand – and massive investment in housing is unlikely to help matters.

A comment by the national secretary of the Australian Manufacturing Workers Union  (well worth a read) could equally be applied to New Zealand: “For more than 20 years we have delivered productivity growth that has gone straight into profits, not our pockets. Productivity is delivered through investment decisions by management – better machines, technology, tools and training. Yet, too many companies are on a “capital strike”, hoarding billions instead of reinvesting.”

If New Zealand wants to increase productivity working harder as a remedy falls well behind reducing poverty (the Productivity Commission estimated that only one-third of the benefit of ending child poverty would accrue to those suffering from it, the rest would fall to others as the result of lower social and welfare expenditure); upskilling the workforce through the education and training system as a whole (working smarter is more likely to improve poverty than working harder); and encouraging capital investment in research and new industries.

 And in any case, as Bill Rosenberg has pointed out, real wages have not kept up with productivity gains- whoever is benefiting from what gains there have been are not workers: “The hourly wage would be 14% higher, or $9,500 per year in March 2023 for the average wage and salary worker if wages had risen as fast as labour productivity since the early 1990s – a considerable sum.”

Holidays – I wonder what’s coming soon*

Readers with a conspiratorial mindset, or even just a well-justified suspicion of the employment relations objectives of the present government and minister, might have noted that we are yet to see a draft bill of the promised replacement to the Holidays Act 2003. Given the Minister of Workplace Relations has previously been critical of the number of holidays New Zealand workers are able to take one wonders if the current “debate” may be a precursor to negative changes in the proposed reforms. While the broad scheme of the proposed Act has been announced the devil as always is in the detail.

For example annual leave calculations will now work on a “contracted hours”’ basis. Hours worked above contracted hours will not accrue annual leave although will be paid at an additional 12.5% of the ordinary hourly rate.  This change will have little effect for full-time salaried employees but will impact those waged workers who have low contracted hours but work significant additional hours on an on-call or similar basis.

Given the proportion of New Zealand workers on or close to the minimum wage this additional amount would no doubt be welcome given cost of living increases but it may mean that a week’s holiday becomes a distant dream if, for example, contracted hours were 20% of hours actually worked. The 12.5% would of course have been spent on living costs and in most cases disguised in an “all inclusive” wage rate. Unlike the current “gross-rate” calculation such workers would see a significant cut in their pay when on holiday. Any argument about holiday being paid as you go is disingenuous in real life – many workers may be unable to afford decent length holidays.

*A declaration of interest - I was Chair of the Holidays Act Taskforce.