Registered Settlements and Wage Flexibility in the New Zealand Private Sector

Abstract

New Zealand's system of private sector wage fixing has, since the election of the Labour Party to government in 1984, undergone several major reforms. These reforms (in 1984 and 1987) were designed to force union and employer parties to negotiate settlements without recourse to state intervention, and to increase the flexibility of bargaining outcomes. As part of this process the main actors have been encouraged to negotiate industry and enterprise-sensitive documents, rather than national, occupationally based awards. This paper examines wage movements in all settlements registered with the Arbitration Commission in the three wage rounds that have taken place since the end of the wage freeze in December 1984. Flexibility in wage movements is examined in the framework of oECD-related studies, and wage increments are measured across occupations, industries and regions. The results of this analysis show statistically significant wage differentials and suggest a higher level of wage flexibility than commentators have cared to acknowledge.