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References: references should be listed in full, alphabetically, at the end of the paper in the following
style:
Anderson, G. (1991), The Employment Contracts Act 1991: An Employers’ Charter? New Zealand
Journal of Industrial Relations, 16(2): 127-142.
Fox, A. (1974), Beyond Contract: Work, Power and Trust Relations, London, Faber.
Kumar, P., Coates, M.L., and Arrowsmith, D. (1987), The Current Industrial Relations Scene in Canada,Kingston, Queens University.
Sulong, S. (1965), Aspects of Trade Union Government in New Zealand, MA thesis, Victoria Universityof Wellington.
Walsh, P., and Ryan, R. (1993), The Making of the Employment Contracts Act. In Harbridge, R. (ed),Employment Contracts: New Zealand Experience, Wellington, Victoria University Press.

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New Zealand Journal of Employment Relations (2004), 29(1): 3-20

The Human Capability Framework- An Important and Useful
Framework for Understanding theLabour Market?
RUPERT TIPPLES*

Abstract
The Human Capability Framework (HCF) was launched by the Department of Labourin November, 1999. Since then it has become a key guide for the organisation andadministration of the Government’s employment, labour market and welfare policies.
It has also become important for public policy and academic research, although its
importance is probably only apparent to “insiders” and specialists. It is argued, however,that the Framework has wider research applications.
This article, therefore, explores perceptions of the original model and its origins andconsiders the outcomes that have ﬂowed from the use of the model in the succeeding four
years. After an initial explanation of the HCF, there is an analysis of its use as a policy toolat national and regional levels. Its use in various research projects is described in orderto underline its importance as a research tool. The article concludes with a considerationof some limitations of the concept and some questions for further research.

Introduction
At the ninth Labour, Employment and Work Conference in 2000, Bartley, Dupuis, and deBruin described the Department of Labour’s Human Capability Framework as a usefulconcept that covered not just economic issues in the labour market but also social factors.
They said it was “…on the one hand both complex and sophisticated and on the otherdisarmingly simple” (Bartley, et al., 2001: 149). That was a revelation as this was theﬁrst indication that many had of the Human Capability Framework (HCF). Not only wasit put forward as an important research model, but it was also picked up by a number of
Ministers in the newly elected 1999 Labour-Alliance Government, as a valuable guide to
developing employment and social policy.

*Rupert Tipples is Senior Lecturer at the Farm and Horticultural Management Groups, Applied Management andComputing Division, Lincoln University.

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4 Rupert Tipples

It is clear that the Human Capability Framework has quickly become an importantphenomenon and therefore warrants attention. This article is essentially descriptive,
tracing the developments of the framework and discussing some of its key components.
In particular, it will illustrate how the Framework provides a more ﬂexible and complex
understanding of the New Zealand labour market, which integrates labour market policies,
social policies and education and vocational training. It is also aligned with recent
ideas promoted by international organisations (for example, the OECD), such as social
integration, the knowledge society and how to further integrate disadvantaged groups inmainstream employment. The article highlights the inﬂuences of the Framework and its
application by drawing on a number of studies, particularly those on the primary sector
undertaken by the author as well as other researchers. Finally, the article raises some of
the research issues that require further attention.

What is human capability and how does it go beyond the humancapital notion?
The notion of “human capability” is well-established in the human capital literature andhas common currency amongst policy makers. For example, Department of Labour notesthat “human capability” is “… the ability of people to do things – both the capacity and theopportunities to do things” (Dol, 1999c, 4). However, the Human Capability Framework
is a much more active and encompassing concept than ‘human capital’. Amartya Sen,the development economist, has also reﬂected on this distinction:“In looking for a fuller understanding of the role of human capabilities, we have totake note of:1) their direct relevance to the well-being and freedom of people;
2) their indirect role through inﬂuencing social change; and3) their indirect role through inﬂuencing economic production.
The relevance of the capability perspective incorporates each of these contributions.
In contrast, in the standard literature human capital is seen primarily in terms ofthe third of the three roles. There is a clear overlap…there is a strong needto go well beyond that rather limited and circumscribed role of human capital inunderstanding development as freedom.” (Sen, 1999: 296-7)
Bartley, et al. (2001) have suggested that one of the factors involved in the developmentof the HCF was a reaction against the inﬂuence of the OECD on policy development.
The HCF provided an “…integrated view of key economic and social objectives, and anunderstanding of the role of the labour market in achieving them” (p. 149). It was an
improved alternative to the dominant human capital paradigm advanced by the OECD for
considering issues of employment and employability. Bartley, et al. (2001:150) express
it thus:

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Human Capability Framework 5“One concern about the human capital approach is its assumptions of individuals
as rational maximisers of individual utility: that is, that people make decisions aboutmaximising their own opportunities and develop their potential to maximise future
opportunities based upon rational considerations of self-interest and unlimited
choice. The HCF allows for a more holistic – and realistic – view of individuals
as being embedded in a variety of social relations that affect their choices andaspirations in a way that human capital simply does not”.
In essence, the HCF has been presented as an holistic way to approach labour markets.
It has three main components, capacity, opportunities, and matching, which provide abasis from which individuals may be seen as participating in a variety of social relations
that affect their choices and aspirations. “Capacity” refers to the skills, knowledge andattitudes people possess and how in using these skills, they can take advantage of thelabour market and other opportunities available to them. The HCF also illustrates theimportance of the networks that people are involved in as an inﬂuence on their capacity
in the labour market. “Opportunities” are the alternatives available to people to use
their capacity (i.e., skills, knowledge and attitudes) as a way in which they gain ﬁnancial
or personal reward. “Matching” links people’s capacity and labour market opportunity
and is a distinct set of processes that considers the inﬂuences on both these elements.
Acknowledging each element as a process in its own right enables us to discover thebreadth of each concept before analysing the impact each has on the other. As matchingis the link between capacity and opportunity, it is affected by the quality of informationthat ﬂows between the two. Matching allows us to explore what it is that increases
capacity for the particular job skill required and the conditions under which this capacity
meaningfully increases.
The HCF is based on the premise that a wide variety of inﬂuences affect human capability,
both socially and economically. The matching process allows us to see each ‘cloud’ inthe diagram as a contributing factor, with relatively ﬂexible boundaries. The adoptionof the framework ensures that subtle factors, which might inﬂuence the effectiveness of“capacity formation, opportunity creation…and the matching process” are recognised(DoL. 1999c: 20-24). However, the contributing factors will vary from situation tosituation.

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6 Rupert Tipples

Figure 1: The Human Capability Framework

Source: Department of Labour, (1999: 19).

The ‘capacity’ side of the framework can also be described in more economic terms
as the supply-side, in which, for example, inﬂexibilities in curricula, delivery systems
and regulatory complexity reduce employer and employee investment in training.
Correspondingly ‘opportunity’ may be described as the demand-side, which is strongly
inﬂuenced by structural and institutional factors. For example, industry and ﬁrm economic
pressures may adversely affect opportunities made available by employers. Where
the supply/demand-side analysis falls down is that in economic theory the ‘matching’mechanism is purely determined by the price of wages. That is clearly a simplistic view ofthe matching processes. The more nuanced approach of the HCF reveals the complex
factors involved in bringing supply and demand together to increase the overall level ofwell-being of society (see Toner, 2003, for an application of supply/demand-side analysis
in relation to declining apprenticeship training rates).
During 2000/01 a new mission statement for the Department of Labour was developed:“wired for work and wellbeing”. “Wired” reﬂected the connectedness of developing policy
between services providers, communities, businesses, government and internationally,
and incorporating social and economic issues. “Work” reﬂects the primary role of labour
and the responsibilities for “…building capacity, opportunities and matching in the labour
market that promote fair, safe, satisfying work and balanced immigration”. “Wellbeing”
features in OECD documentation (e.g., OECD, 2001) and is also included the mission
statement as it covers the outcomes of Government policy resulting from its promotion ofopportunities for social and economic development, and “…thriving, well-settled, inclusive
communities”, (DoL, 2001b: 7).

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Human Capability Framework 7

Policy use
In New Zealand, the genesis of Human Capability Framework as a policy tool began when
the Department of Labour underwent major changes during 1998 and 1999. The New
Zealand Employment Service and the Local Employment Co-ordination function weretransferred to Work and Income New Zealand. These changes resulted in rethinking the
Department’s purpose, which became:“We link social and economic issues to enable people to develop and utilise theirpotential for the advantage of themselves and New Zealand.” (DoL, 1998: 3)
This social aspect came to the fore during the period of the National Government after
the ascendancy of the ‘new public management’ and the ‘economic rationalism’ of the
1980s and early 1990s.
The Chief Executive of the Department of Labour, John Chetwin requested his staff “tobegin a project to establish a framework for developing policies relating to the developmentof New Zealand’s human capability” (DoL, 1999b: 3). This began in late 1998 and resulted
in a full paper published just before the 1999 General Election (DoL, 1999c). Writing
subsequently, Chetwin describes it as a key dimension of the Department’s strategic
thinking:“It is a framework that provides a way of thinking about the linkages between socialand economic issues and is directly connected with the Department’s purpose…
The Department is now using the HCF as a context for all its policy advice and to
facilitate connections between each of its Services at an operational level…The
overall objective – the effective development of New Zealand’s human capability.”(DoL, 2000b: 3)
However, the ﬁrst signiﬁcant appearance of the Human Capability Framework was in the
Ministerial brieﬁng papers after the 1999 General Election prepared by the Departmentof Labour for the incoming Labour-Alliance Government (DoL, 1999d). It again featured
signiﬁcantly in the Department of Labour’s Corporate Plan 1999-2000, in the succeeding
Strategic Directions documents (2000-2001, 2001-2002 and 2002-2003) and its
Statements of Intent. HCF is also mentioned in the Department of Labour’s Annual
Reports to the House of Representatives from 1999 onwards. Furthermore, it was acentral feature of Department of Labour’s key policy document: Workforce 2010 – adocument to inform public debate on the future of the labour market in New Zealand(DoL, 2001a), in which the HCF had obviously gained Ministerial support in the newLabour Government. The document appeared under the signatures of Steve Maharey,
Minister of Social Services and Employment, Margaret Wilson, Minister of Labour andLianne Dalziel, Minister of Immigration. It provided a critical framework for a range of

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8 Rupert Tipples

social and economic initiatives which were advanced. While both Wilson and Dalziel
were lawyers, Maharey had been a Sociology Lecturer, a factor which probably madehim sympathetic to such a framework (see Maharey, 2003).
As a senior Minister, Steve Maharey held several responsibilities, including Social
Services, Employment, Tertiary Education, and for the Community and Voluntary sectors.
This was deliberate as he revealed in a speech to economists in August 2000:“It is not by accident that I have these portfolios – they all cohere around one
principal objective, and that is the objective of building our human capability. Across
my portfolios we use a very simple formula to capture that objective and challenge.
In essence that formula is: Capacity + Opportunity = Human Capability … New
Zealand’s prosperity relies on the capability of its people, and the successful use of
their skills and abilities to generate income and promote a thriving economy. The
Human Capability Framework provides a way of looking at the various elements inthis process, and how they work together. It emphasises the need to consider thefactors that inﬂuence labour market outcomes in an integrated way, not just taking
one issue and trying to ﬁnd a solution to it.” (Maharey, 2000)
One of the more useful ways the Government has applied the HCF is as a key organisingand analytical framework for the Government’s Employment Strategy. The strategy isdesigned “…to ensure effective government co-ordination of, and accountability for, aspeciﬁc set of employment goals, activities and results” (Bascand, 2003). Recently,
the Employment Strategy has been reﬁned to place more emphasis on sustainable
employment and productivity. This reﬁnement was based around the factors suggestedby the HCF. For example, Goal 4 of the Employment Strategy is “Developing community
capability as a source of employment opportunities.” The challenges and opportunities
this provides, as presented in the strategy, include the statement:“Increasingly the government’s role in the labour market will concentrate onaligning its interventions, and fostering good connections and networks. These
connections are not just the ’matching’ between employers and employees, butalso between government and training providers, regions, community organisations
and employers.” (DoL, 2003c, (http://dol.govt.nz/employment-strategy.asp)
The Human Capability Framework has been applied to all aspects of the Departmentof Labour’s work and was recently re-afﬁrmed by the Department’s Management Board
as a central guiding concept (ibid.). In Strategic Directions 2000-2001, one form of theregular use of the framework was exhibited for each service area of the Department. To
illustrate this use, Figure 2 applies the matching model to the Employment Relations
ﬁeld.

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Human Capability Framework 9

Figure 2: Applying the HCF to Employment Relations

Recent examples of the use of the HCF in matching the capacity of the individual to the job
or other opportunities in New Zealand range from the Government’s policy advice on new
skilled immigration to the Department of Labour’s attempt to match disadvantaged groups,
such as Maori and Paciﬁc peoples, youth, and people with disabilities, with employment.
According to Bascand (2003), the Framework helps to explicate the situations of thesedisadvantaged groups. For example, although Paciﬁc people are less likely to haveformal education and training, the Department of Labour has used the Human Capability
Framework to seek a balance between formal and informal education (Chetwin, 2001).
Furthermore, the Department of Labour had a role in ensuring that the linkages between
capacity and opportunities were accessible and suited the needs of Paciﬁc people. If they
were user friendly then they could make a contribution to the prosperity of Paciﬁc people
in New Zealand (Chetwin, 2001). To achieve the maximisation of human capability for
New Zealand such inter-departmental collaborations are essential and key areas of workfor 2003/04 (Department of Labour, 2003b: 10 and 24).
The Ministry of Women’s Affairs has also used the framework in discussing the pay
equity issue and women’s employment, which adds another variant on the basic diagram(Figure 3).

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10 Rupert Tipples

Figure 3: Pay equity within a Human Capability Framework

Source: Ministry of Women’s Affairs, 2002

The Framework is not only being applied at the level of central government but it has
also been utilized by regional governments. For example, the Canterbury Development
Corporation has applied the framework and the other features of the Workplace 2010
document to the Canterbury Region. The outcome of this application can be seen in
Figure 4. Figure 4 looks at Capacity and Opportunities as the Supply and Demand sidesof the labour market and maps out the key issues facing the Canterbury Development
Corporation as a key service and delivery body involved in the matching processes in
Canterbury. It provides another view of the framework with different headings under
the Capacity and Opportunity captions, resulting from an analysis of the risks andopportunities likely to appear in the Canterbury labour market by 2010. Each of these isthen considered as it affects each of the age subset of the supply side of the framework:
Under 15, Youth 15-24, Mainstream 25-49, Third Age 50-64, and those aged 65 or more
(Canterbury Development Corporation, 2002).

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Human Capability Framework 11

Figure 4: Key labour issues facing the Canterbury Developement Corporatation
to 2010Source: Canterbury Development Corporation, 2002

Another local use of the HCF in formal policy development can be found in the Mayors
Taskforce for Jobs. Vivian Hutchinson, Community Adviser to the New Zealand Mayors
Taskforce for Jobs, has lamented the failure of the Department of Labour to stimulate aserious debate about future employment and the ’waste of young people’ with its rather
bland Workforce 2010 report. However, he praises the Department for the introductionof its institutional philosophy based on building capability. He describes the HCF asa “…framework for thinking about labour market interventions…” and as “organised

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12 Rupert Tipples

common sense” (Hutchinson, 2002, Part 4, 1-2). But, as he adds, “…there is no use
having this common sense unless we get on with the job” (ibid.). He has identiﬁed oneof the beneﬁts of the HCF – the relative ease with which it can be used by key authorities
and stakeholders to convert ideas and concepts about employment into real actions
fostering jobs. This process of translating ideas into action by using the HCF in the areaof local youth unemployment is currently being discussed by the Waitakere City Council
and other stakeholders, including the Massey University Labour Market Dynamics team,
based at the Albany Campus, (Spoonley, 2003, see below).
As the Department states in its Annual Report 2002/03 (p.18), the HCF has provided abasis on which:“...to formulate and understand policy to do with the labour market (and othersituations involving people applying their skills for a purpose).”Further,“Part of the power of the Human Capability Framework is that it can be applied
at every scale – from global to New Zealand to regional to enterprise level to
one’s own career. It can also be used to think about speciﬁc types of industry ormarket…” (Ibid.)Thus, we have a pictorial framework capable of expressing key linkages in employment
from the individual employment relationship to the global economy. The structure of theindividual employment relationship closely parallels that of the HCF. It has a supply side,
the individual seeking work; a demand side, the employer offering a job; and a matchingprocess, in which the two come together to form the relationship. It is a relationshipthat not only has a legal structure, the contract of employment (of which the speciﬁc
employment agreement is only a part), but also a psychological dimension with one
or more psychological contracts. A good relationship is only formed when there is ahigh level of agreement between the wants, needs and expectations of the parties,
both at legal and psychological level (Tipples, 1996). Only when there is a high level ofmatching in the relationship do the real beneﬁts ﬂow in terms of labour productivity, job
satisfaction, commitment, and longevity in the job (for example, see: Kotter, 1973; Herriot
and Pemberton, 1997; Guest, 1998, 1999; 2002; Guest and Conway, 2002).

Research use
The HCF has not only been utilised in policy matters but it has also been used as ananalytical research tool and a platform for action in employment situations. In particular,
the concept has been used to provide a research framework for looking at employment
participation and labour supply problems in a number of industries and regions. For

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Human Capability Framework 13

example, researchers at Victoria University’s Industrial Relations Department and Massey
University’s Department of Human Resource Management have been working on the“Developing Human Capability” project. Its three main objectives of the research were:(1) “…the structure and operation of labour market institutions have a signiﬁcant impact
on capability development”; (2) “…forms of managing human capability development
will inﬂuence organisational performance and quality of working life”; and (3) “…howindividuals engage with paid work, and their experiences of both institutional structuresand organisational policies, shape the development of their capability” (The Employment
Agreement, 13, December 2003: 4). Initially, the aim of the research is to ﬁnd out more
about the three elements in the HCF (capacity, opportunity and matching). Initially thiswill take place through two pilot case studies in two organisations. Both organisational
and individual employee perspectives on capability development will be investigated(May, 2004. Further details are provided on the websites of Victoria University, Massey
University and FORST).
Another illustration of the research application of the HCF is the work by Massey
University’s Labour Market Dynamics Research. In recent studies, they have applied it to
the dynamics of economic participation by “exploring the interface between households
and the labour market” (Bartley, et al., 2001: 1; also refer to Bartley, et al., 2002). North
Auckland WINZ also initiated funded research for several agencies, including the LabourMarket Dynamics Research Group, to look at the existing and future skills needs ofindustries in Waitakere. It was decided to shift the focus from labour supply to labourdemand because of labour and skill shortages constraining economic and enterprisegrowth, dissatisfaction with labour’s generic skills, a lack of ﬁt between demand andeducation and training providers’ activities, and the need for innovative policies with Maori
and Paciﬁc peoples, immigrants, school leavers and sole parents (Spoonley, 2003). The
results bear an uncanny similarity to those reported by Morris et al. (2001): skill shortages– particularly manual labour – constraining growth; lack of ﬁt between educational andtraining provision and employers needs; and poor generic life skills, (see below).
Furthermore, the Labour Market Dynamics Research Group used the concept to provide
a research framework to investigate employment and labour supply problems in primary
production and how to treat them. The speciﬁc research outputs described below also
illustrate its wide application. The research was largely carried out at Lincoln University
and inspired a Massey and Lincoln University team to use the framework as a key design
feature of a research project being tendered at the time for the Ministry of Agriculture andForestry’s Sustainable Farming Fund. In June 2000, a sample of farmers had identiﬁed
the shortage of skilled labour as one of their major concerns (Wharton, 2001). Perceived
labour shortages have been used by producers in the agriculture worldwide to urge
governments to provide more cheap, compliant labour to ease their labour problems andcosts. This has been achieved by the following strategies: by encouraging immigrationfrom areas of labour oversupply; by subsidised development of mechanisation of labour
intensive processes; and by encouraging improving employment conditions and retaining

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14 Rupert Tipples

existing staff. In New Zealand, such shortages had been the subject of substantial debate
at the time of the Agricultural Development Conference 1963-64; during the late 1970s
and early 1980s with the initial kiwifruit boom’s harvesting crisis; and most recently since
the end of the twentieth century, a problem highlighted by the difﬁculties of ﬁnding andkeeping staff in dairy farming enterprises (Morriss, et al., 2001).
The Ministry of Agriculture and Forestry invited tenders to investigate this problem at theend of 2000. Subsequent research resulted in a report Skill and Labour Requirementin the Primary Sector – People make the Difference (Morriss, et al., 2001). The project
speciﬁcation allowed the researchers considerable scope in how they developed theresearch. Work was divided along the lines suggested by the Human Capability Framework.
The Massey team undertook the study of all those factors helping to develop humancapacity in the industry. The Lincoln team was to explore the opportunities available
in the Primary Sector, which was deﬁned as covering all of agriculture, horticulture andforestry. Matching was to be considered jointly at a later date.
The Massey team set up a live internet website of all industry education and training
courses, and their providers, to establish whether or not industry’s needs were being
met. The Lincoln team worked along more traditional research lines with statistical andliterature reviews, leading to a survey of primary producers, to determine whether they
perceived there was a labour or skill shortage, and what they perceived their educational
and training needs were.
Information gathered from the Massey internet site showed there were 101 educationand training providers, providing some 433 primary industry education and training
programmes from doctorate degrees to basic skill enhancement. There did not appear tobe any shortage of available education or training programmes, although some speciﬁc
subject areas may not have been covered. However, the numbers of Effective Full-timeStudents in all programmes (Degree, Sub-degree and Extramural) had all declined. The
free market in education services had delivered more courses to smaller numbers ofstudents, throwing into question the viability of many providers, including those with longestablished reputations.
The random postal survey conducted from Lincoln generated 762 useable questionnaires
out of 1773 possible, or a 43 per cent response rate, which was considered to be verysatisfactory. The resulting data showed:
1. Farmers had avoided the need to employ more staff by using contractor labour
for a much larger amount of farm work than was the case previously. This trend
appeared to have increased following the Employment Contracts Act 1991 andthe debate about achieving greater ﬂexibility in employment.
2. More than half of farmers surveyed (58%) considered that there was a shortage

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Human Capability Framework 15

of candidates for jobs advertised with the skills they considered important.
However, when asked about their actual experiences of recruiting between 1
April 2000 and 31 March 2001, only 196 or 28 per cent had done so, but someseveral times. In 124 cases they thought that the response was adequate (53%),
while in 109 cases they believed it was inadequate (47%). Most often this was
because there was a lack of adequately skilled, knowledgeable, experienced
staff (30% of reasons cited for inadequate response). So it appears that slightly
more primary sector employers believed there was a labour shortage than wereactually experiencing it.
3. Nine reasons for a possible labour shortage were generated from employers.
Respondents were asked to rate the importance of each on a 4-point scale from
‘Unimportant’ (1) to ‘Very important’ (4). Most important causes of the labour
shortage were ‘Poor treatment of staff by employers’ (mean=2.24), ‘Manual
skills not being valued in the education system’ (mean=2.24), and ‘Overall
image of the agricultural industry is not attractive to job seekers’ (mean=2.23).
4. When farmers and others surveyed (n=515) were recruiting they soughtlargely generic skills rather than speciﬁc industry related skills. The attributes
most sought were ‘Good work ethics and attitudes’ (30%), ‘Honesty’ (18%),‘Willingness to learn and follow instructions’ (10%), ‘Good communications,listening skills and compatible personality’ (7%) and ‘Common sense andintelligence (5%). ‘Good skills and practical experience’ were only sought in 14
per cent of cases. Many producers believed they could instruct and train for thebasic skills needed by their enterprises.
When the data from the two parts of the research were compared, marked discrepancies
between what industry appears to want and what providers appear to provide became
apparent. Within the Human Capability Framework, one of the roles of education andtraining is to facilitate the matching of capability with opportunity, which can be obtainedby providers aligning the learning outcomes and aims of their programmes with the needsof employers. Using a rather crude word search of aims and learning outcomes given
by most providers, a comparison was made with the skills and attributes most often citedby employers as what they were seeking in new recruits. The results are compared inTable 1.
Education and training programmes focused mainly on meeting the skill and practicalexperience needs of employers (66% of programmes). Only 9 per cent aimed to improve
communication, listening skills and compatibility. Even less important was ‘Good work
ethics and attitudes’ at 3 per cent of citations. ‘Honesty’, ‘Willingness to learn and follow
instructions’ and ‘Common sense and intelligence’ received no education or training
programme citations.

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16 Rupert Tipples

Table 1: Matching Qualiﬁcation Aims and Learning Outcomes with Needs ofFarmer/Employers

Source: Morris et al. (2001, p. 51)

One might conclude by suggesting that the match between those presenting for work andthe recruiters was not satisﬁed. The data collected suggest almost half of primary sector
employers surveyed experienced difﬁculty in ﬁnding suitable recruits in the year 20002001. However, a considerably higher proportion believed that there was a shortage ofpotential recruits. This shortage of labour, particularly in certain areas, resulted in a debate
over strategies to reverse the situation. The lack of suitable employees in a number ofareas was “solved” initially by dairy workers from the North Island moving to the South
Island. However, many in the dairy industry recognised that poor employment relationsin the primary sector have been a major barrier to recruitment. Public perceptions of theindustry have been of not only long hours, but also poor rates of pay, and poor employment
conditions. Debate on the ‘shortage’ has highlighted how enlightened employers were
paying good wages for dairy staff, providing rostered time-off, and with early possibilities
of management responsibilities. The study also highlighted concerns regarding theimpact of the Employment Relations Act, 2000, on the employment practices in the dairy
industry as well as the need to continually create new farming systems and equipment tomaintain gains in labour productivity.
There have also been a number of subsequent studies on the primary sector since theresearch undertaken by Morriss, et al., (2001). For example, Edkins has successfully
used the HCF to set the context for his primary sector study of the Amuri Dairy Employers
Group (see Edkins and Tipples, 2002). The ﬁndings show that the Amuri Dairy Employers

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Human Capability Framework 17

Group was one of the ﬁrst to develop a Code of Practice for a class of small employers(i.e. dairy farmers in the Amuri district); and was the ﬁrst to use an independent auditing
system of employment practices in the primary sector. Both initiatives were established
to help improve the employment difﬁculties experienced by dairy farmers in the Amuri,
an isolated rural basin some 90 kilometres north of Christchurch. Another example is
Lucock’s (2003) study of dairy farmers’ use of migrant labour from within New Zealandand outside, and how better matches between employer and prospective employees canbe obtained (Lucock, 2003). His work has highlighted the close connections between
ideas of achieving good ‘psychological contracts’ (Tipples, Hoogeveen and Gould, 2000)
and the matching processes highlighted in the HCF. The whole HCF model has also
been applied to the dairy industry and its likely future employment problems. A successful
application was made to Dairy InSight, the public good funding body for the dairy industry
and the research is currently in progress (Tipples, Wilson, and Edkins, 2004).
However, the application of the HCF is in its infancy and although the HCF has provided
a useful framework in the studies outlined above, it is not without its critics. In particular,
it is seen by some as too simplistic a model. Therefore, an evaluation of its application ina range of settings is required, which perhaps the “Developing Human Capability” projectwill do. In addition, the inﬂucent of the OECD on New Zealand’s employment polices andthe interactions between the Department of Labour and the OECD merit further study.
Another strand, which should be considered further, is how the extensive literature on
Sen’s human capabilities, particularly the literature that deals with the feminist economics,
aligns with the HCF model.

Conclusion
Since its appearance in the late 1990s, the Human Capability Framework has beenfrequently used to integrate Government employment, labour market and welfare policies
and to investigate and explain the complexities of labour market phenomena. Although
the intellectual strands from which it has evolved are still somewhat murky, developing
the Framework and applying the HCF to empirical research is also advancing. As seenby the number of different types of studies outlined in the article, the advantage of the
HCF is that it can be varied according to the type of problem to which it is being applied.
The relevance of related factors will clearly vary according to the context, but that is oneof its strengths for both policy issues and practical problems of ‘real world’ research.
However, in spite of its usefulness and its wide application, the HCF is not without its
limitations, some of which are apparent and others that have yet to been exposed.
Therefore, it is desirable that the extant scholarly research into the use of the concept
be continued.

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18 Rupert Tipples

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New Zealand Journal of Employment Relations (2004), 29(1): 21-37

Work-Life Balance?: Insights from
Non-Standard WorkANNE DE BRUIN* & ANN DUPUIS*

Abstract
The signiﬁcance and growth of non-standard working arrangements is a phenomenon
characterising the changing structure of labour markets in most advanced westerncountries in the last two decades. More recently, the so called ‘work-life balance’ (WLB)
discourse has become prominent in some circles and is currently receiving heightened
attention in New Zealand. This paper draws heavily on material from the second phaseof the Labour Market Dynamics Research Programme which investigated aspects of
non-standard work (NSW) for two groups of non-standard workers in New Zealand(the relatively privileged, skilled and qualiﬁed workers whose work has a knowledge
or technology focus and those workers in jobs in the lowest tiers of the occupational
hierarchy), to discuss how meaningful WLB considerations are for non standard workers.
We examine the relevance of the notion of WLB to these two quite distinct groups ofworkers. We also use this paper as a springboard to draw attention to the unsatisfactory
nature of the ‘balance’ metaphor in what has now become the buzz phrase – ‘work-lifebalance’. The need for a more appropriate conceptualisation of the work-personal life
interface is highlighted.

Introduction
Not so long ago the organisation and regulation of paid employment in most advanced
western countries seemed a relatively simple matter. Generally, paid employment was
performed at the employer’s workplace. A direct relationship existed between employer
and employee. The proportion of male to female workers was relatively high and thewages and salaries of male workers (the ‘family wage’) were generally sufﬁcient to support
a wife and family. Employees usually worked set hours (the forty hour week). Moreover,the expectation for most (male) workers was a job for life. Such employment, premisedon the public/private split, strongly gendered roles and the traditional nuclear family, wasthe basis for determining the rules and legislation regulating terms of employment and* Anne de Bruin is Professor of Economics, College of Business, Massey University, Auckland.
** Ann Dupuis is Senior Lecturer in Sociology, College of Humanities and Social Sciences, Massey University,
Auckland.
This research draws on the Labour Market Dynamics Research Programme, funded by the Foundation for Research,
Science and Technology via the Public Good Science Fund. The authors would like to acknowledge this support over anumber of years. Other members of the Labour Market Dynamics Research Team include: Paul Spoonley, Kerr Inkson,
Eljon Fitzgerald, Eva McLaren and Patrick Firkin.

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22 Anne de Bruin & Ann Dupuis

industrial relations. Working arrangements like these are often described as ‘standard
work’ (Felstead and Jewson, 1999).
The extent to which standard work is the norm in contemporary western labour markets
has changed considerably over the last two decades and continues to do so, with
employees increasingly engaged in alternative forms of work, as standard jobs are being
eroded and ‘non-standard’ arrangements become more common. A variety of concepts
and models have been developed to explain the changing face of work in today’s world,
especially the increasing signiﬁcance and extent of non-standard work (NSW) (Burgess
and Watts, 1999; McCartin and Schellenberg, 1999; Mangan, 2000; VandenHeuvel andWooden, 2000).
With major changes in the nature of work and work arrangements, including increased
female labour force participation, changes in women’s career expectations, the decline of
the family wage, the disappearance of the job for life and changes in family formation, therelationship between individuals, families and paid work has come under considerable
scrutiny. In particular, the notion of the ‘work-life balance’ (WLB) has developed both as
an ideal that people should strive to attain and a critique of the model of standard work
as an inhibiting factor in attaining this balance. Thus, increasingly, with a push for family
friendly workplace policies and ﬂexible workplace practices, WLB has been promoted asa means through which the model of standard work can, and should, be modiﬁed.
Currently in New Zealand, issues of WLB are in the limelight, especially with agovernment led consultation process in progress. A Work Life Balance Project led by
the Department of Labour (DOL) set up in the latter half of 2003, runs until mid 2004, sothat the Government can consider ‘…what more can be done to support good practices
leading to work life balance’ (DOL, 2003). There is also a new WLB website (www.
worklife.govt.nz).
This article draws on the second phase of the Labour Market Dynamics Research
Programme (LMDRP), an interdisciplinary, multi-year Massey University research project(see http://lmd.massey.ac.nz). This second phase investigated aspects of NSW for twogroups of non-standard workers in New Zealand - those whose work had a knowledge ortechnology focus and were relatively privileged, skilled and qualiﬁed and those workers
in jobs in the lowest tiers of the occupational hierarchy. We use this empirical data to
support our discussion on WLB considerations in relation to NSW. We state at the outsetthat the notion of the WLB is not without merit, especially for some standard workers.
However, in light of the rising incidence of NSW, we demonstrate its limited applicability
and discuss the conceptual and deﬁnitional inadequacies of the notion of the WLB.
Finally, this article highlights the challenge of developing relevant conceptualisations toﬁt the complexity and diversity of the work-life nexus of the spectrum of workers in thetwenty-ﬁrst century.

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Non-Standard Work 23

The Landscape of Non-Standard Work
Problems in deﬁning NSW have been well rehearsed (see for example, Mangan, 2000;
Zeytinoglu and Muteshi, 2000). Similarly, categorising non-standard workers is difﬁcult,given their diverse characteristics and the possibility of working simultaneously in bothstandard and non-standard arrangements (Carroll, 1999). Confusion also plagues
efforts to enumerate non-standard workers (Barker and Christensen, 1998:11). By
some estimates, about 25 percent of jobs are in non-traditional employment areas(Management, June 2000) and in a range of possible employment forms that defy
traditional career assumptions (Arthur and Rousseau, 1996). Notwithstanding deﬁnitional
difﬁculties a range of descriptors have been applied to NSW including ‘non-traditional’,‘atypical’, ‘ﬂexible’, ‘alternative’, ‘market-mediated’, ‘vagrant’, ‘vulnerable’, ‘precarious’,‘disposable’, and ‘contingent’ (Kalleberg, 2000:2). Arthur and Rousseau (1996:373) go
so far as to introduce the idea of a ‘boundaryless career’ which is one where there isindependence from, rather than dependence on traditional working arrangements (Arthur
and Rousseau, 1996:6).
Non-standard forms of work entail variations from standard employment in one or moreof the following: hours of work; location of work; tenure of employment; and employee/
employer relationships. While variations on hours of work could include shift or roster
workers, the greatest change in the last few decades in this regard has been the growthin the number and proportion of part-time workers in the paid work force. Part-time work
can be permanent or temporary. What is classiﬁed as part-time work can vary fromcountry to country. For example, in Australia the maximum hours a part-time worker canwork per week is 34 (Mangan, 2000), while in New Zealand it is 30 hours (Carroll, 1999).
Temporary part-time arrangements include casual, ﬁxed-term and on-call workers, whose
work is irregular and generally paid by the hour.
A number of variations from standard work relationships have also arisen. Contracting
has emerged as a rapidly growing area of non-standard employment, as has the use ofintermediaries, such as temporary work agencies (Burgess et al., 2004) and contract
companies. Increasingly common too is the phenomenon of portfolio working, or multiple
job holdings. Faced with increasing part-time work, a growing number of people increase
their working hours by patching together various part-time jobs (Felstead et al., 1999).
Individuals can also be described as non-standard workers because of the location of
their work. Increasingly teleworking is associated with NSW. It is increasingly common
too, for people to be engaged in forms of NSW that would ﬁt multiple criteria.

The Work-Life Balance
Growth in the various forms of NSW has increasingly resulted in changes in the way
paid work is perceived and organised. However, both non-standard and standard work,

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24 Anne de Bruin & Ann Dupuis

appear to share pressures brought about through a general movement towards work
intensiﬁcation, deﬁned as ‘the effort that employees put into their jobs during the time thatthey are working’ Burchell (2002:72). Downsizing, restructuring and moves to achieve amore ﬂexible labour market have resulted in what Lapido and Wilkinson (2002:36) call ‘acompulsion to work’. This compulsion can have considerable personal consequences,
not only in terms of time and stress, but also, as pointed out so effectively by Sennett(1998), although expressed differently, with regard to identity and subjectivity.
A major response to the issues and problems associated with work intensiﬁcation has
been the introduction of the notion of a WLB. Deﬁned by the British Department ofTrade and Industry (DTI, 2003) as about adjusting working patterns so people can ﬁnd arhythm to help them combine work with their other responsibilities or aspirations and by
Greenblatt (2002:179) as ‘the absence of unacceptable levels of conﬂict between workand non-work demands’, the WLB is frequently proposed as a means through whichstress and/or burnout can be addressed. It implies organisational change in employer/
employee relationships, through encouraging employers to introduce a range of options
to create greater ﬂexibility of working arrangements. Fundamental here, are notions
about the development of a responsive workplace through the implementation of family
friendly policies. The literature on WLB is overwhelmingly positive, seeing strategies
which promote WLB as ‘having the potential to be a win-win for both individuals andorganizations’ (Barnett and Hall, 2001:192). It is claimed that for businesses andorganisations WLB policies can ensure that the best available talent is attracted andretained, while employees also beneﬁt in that they can meet family, work and community
responsibilities.
Referred to by Greenblatt (2002:177) as a ‘powerful, new national sentiment’, the extent
to which the idea of the WLB has been adopted can be seen in a number of ways. WLB
campaigns are common, like those emanating from Britain’s Department of Trade andIndustry (DTI, 2003) and Northern Ireland’s Department for Employment and Learning(http://www2.bitc.org.uk). Such campaigns aim to offer ﬂexibility in the number of hours
worked, the arrangement of hours and the place of work. Moreover, countless web
sites offer advice and resources on WLB. For example, the web site http://editorial.
careers.msn.com/worklife/work_life_balance, provides downloads under such headings
as ‘stress’, ‘working from home’, ‘working mothers’ and ‘taking a vacation’. Workplace
training programmes on WLB proliferate. There are specialist consultants and coaches
in WLB and software packages are available on how a WLB can be achieved (see forexample, http://www.llamagraphics.com).
What is incontestable is that the WLB topic is multi-faceted and by no means simple one.
Guest (2002:265) provides a good summary of the multiple factors which relate to WLB.
These include: determinants grouped under organisational factors of work and home andindividual factors; the nature of the balance; and the consequences and impact of WLB.
Importantly, he emphasises the need to consider ‘the appropriate locus of intervention

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Non-Standard Work 25

to improve work-life balance. Is this the responsibility of the individual, the family, theemployer, the community or the state?’ (Guest, 2002:267). As epitomised by a recent
editorial in Unlimited entitled ‘Wilson , butt out’ (Macﬁe, 2004), it is by no means clear-cut
as to whether it is the role of central government to intervene in what might be consideredby some groups as an issue that belongs in the private domain.
The irony does not escape us that WLB policies could result in ensuing practices that, insome instances, strongly resemble some of the less desirable elements of NSW, suchas a reduction in work hours, or work outside the standard work day hours. Moreover, it
seems to us that sound arguments could be made that the WLB is another normalising
discourse in the Foucauldian sense, given credibility because of its institutional basis in
health and management. But the point of this article is not to rehearse the academic
literature in this area, or debate issues such as the psychological, economic and social
beneﬁts attributed to the WLB. Instead, we seek to contribute to the discussion andcritique of the concept through insights from NSW. In the following two sections we
examine two distinct categories of non-standard workers, drawing mainly on data fromthe Labour Market Dynamics Research Programme (LMDRP).

Skilled, ‘New Economy’, Non-Standard Workers
The LMDRP material used in this section draws on interview data from 57 non-standard
workers whose work involved either a knowledge or technology component. These
participants were selected through non-probability sampling and restricted to people
living in the Auckland and Hawkes Bay areas. Following Arthur et al.’s (1999) study,
the occupations of those interviewed were organised into clusters: administrators andmanagers (4); professionals (17); technicians and associated professionals (30); clerks
and administration personnel (2); and sales and service personnel (4). The types of
non-standard working arrangements comprised three broad categories: contractors,
employers and employees. Within the contractor category there were ﬁve dependent
contractors, 34 independent (own account) and 11 independent (with partners)
contractors. Five participants were employers. Of the employees 14 were direct and two
were temporary agency employees. Since some research participants engaged in morethan one form of employment types of non-standard working arrangements exceeds thenumber of participants in the sample (Firkin et al. 2003: 26-33).
Issues explored in the interviews included planning, education and training, autonomy,
surveillance, work intensiﬁcation, job security, the roles of networks, the use of technology,
compliance and the regulatory environment, the work-life nexus and the advantages anddisadvantages of NSW. The literature indicates that work itself and lack of ﬂexibility
have been the major impetus for the encouragement and promotion of the WLB. Ourinterview ﬁndings however, showed that on average these workers were characterisedby considerable control, autonomy and ﬂexibility in their work arrangements (Spoonley
et al., 2002). We therefore draw here on our ﬁndings in order to look critically at the

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26 Anne de Bruin & Ann Dupuis

assumed disadvantages of work intensity.
Many participants in our sample felt that NSW was more intense than standard
arrangements. This was experienced in a range of ways. Those with more than one
job usually felt that they worked harder in each of these jobs and that the combined
effect was far more than a single job. Even those with a single work role found that they
worked more intensely. However, work intensity was not necessarily equated with workoverload. It was not uncommon for participants to feel that greater work intensity had
advantages:
Well you haven’t got the distractions, I suppose. I mean I just sit down and getstuck into it, generally.
I work harder and am more focused.
I try and work faster and smarter all the time.
Consequently these non-standard workers perceived themselves as working moreproductively than when in previous standard arrangements. In addition, many said they
provided better value for their clients.
We’re a lot more productive, a lot more efﬁcient.
If I put in ten hours a day here, that would have easily been a 14 to 16 hour day
in the ofﬁce.
Balancing a number of pieces of work at any one time as many contractors reported
doing, could also increase the work intensity. Though agreeing that he worked more
intensely, one man added that this had always been the nature of the industry he worked
in and was not simply a feature of contract work. Another contractor saw ebbs and ﬂows
in the intensity of his work, something that he utilised to his advantage. Some people
acknowledged that while many of the pressures on them to produce and work hard wereself-induced, these were often seen as part and parcel of being a contractor. One man
observed that the quantity and quality of work is vital for continued employment.
Pressure comes from within – when you’re working for yourself, you realise you
have to do it right.
Interestingly, since some people felt that their work was much more intense and their
output far higher, this impacted on how they charged for their work. As a result, somefelt that they needed to work far fewer hours to generate a comparable income as an
employee. For one woman, the intensity in one of her jobs as a contract writer, and themanner she was paid, freed up time for other work or more pleasurable activities.

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Non-Standard Work 27

So really this job at the moment, I’m probably doing three or four hours a day andit probably should be full-time. But the thing is that I can get the work done in thattime and then it allows me time for doing my other work. And you see one thingthat’s really important to me is I walk over the ﬁelds every day. I do a big hour
and a half walk in the country, I don’t do it every day but I do it sort of ﬁve days of
the week. That’s really important to me, so it’s important that I have time to do
those things.
In light of the acknowledged greater work intensity, we were interested in how work wasorganised and how it interacted with relationships, responsibilities and activities in theprivate sphere, since an external structure was absent or certainly weakened. Almost
all participants reported at least some time ﬂexibility and well over one third noted thatthey had complete ﬂexibility. Even those workers with set hours commented that theirsituations were not necessarily inﬂexible. Flexibility did not however, imply a lack ofroutine or pattern, with many participants noting how they structured their routines andpatterns to suit themselves. For example, personal preferences meant that people
liked some of their day ‘to themselves’, liked working at unusual times, or ﬁtted inwith established household or family rhythms. The most common factor affecting thestructuring of time was the variable demands of workﬂows. Uncertainty was a prominent
feature of NSW, particularly, though not exclusively, for contractors. This meant that
there was an unpredictable quality to how much work people would have at any time.
Consequently, they often had quiet periods and very busy periods.
Our interviews also highlighted the fact that NSW forms, with their greater blurring andblending of home and work life, clearly upset the old public/private divide of work andhome. When the vexed question of “what is work” is added to the mix, the boundaries
become even less clearly demarcated, as illustrated by the comment below:
We always have this debate, what is work? If I was selling cars it’s pretty obvious
what is work, I turn up I go to the yard, I sell cars, I come home and I’m not working
anymore. We’re writing a book at the moment … I’ll go home, and if I read a[related] book … is that work? Even if I sit down and start writing, and I really likewriting, is that work? Even if there’s a dollar attached to that, does that count aswork? And if it’s only ever work when it feels like work, then it’s hardly ever work.
We talked in the beginning about blurring of distinctions and the hardest one forme is actually working out what work is. It’s particularly difﬁcult when you dowhat we do because, let’s say we work 50-60 hours a week and that varies all thetime, we might only charge out a third or a half of that, so you can’t even say what
you charge out is work … Then there’s some other stuff that is legitimate workand there’s other stuff around the periphery of that which directly inﬂuences andimpacts upon our work that you would never charge.

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28 Anne de Bruin & Ann Dupuis

The following quote further highlights the blurring of boundaries:
My work and my passions and my interests and hobbies are all spent doing thesame things. Most of my friends are like activists, strategists and schemers sothat’s how we spend our spare time. … When some friends who don’t sort ofunderstand my life say you’ve got to have a break from your work, it’s like having a
break from your life. I work every day, it might be even the books that I read, eventhe ﬁction that I read. I’ve always got my eyes scanning for ideas with everything,even conversations that you have it’s like oh that’s a good idea and you make amental note, it’s a never ending process really. I never know the boundaries. I
won’t be at my computer at 8.00am and at 5.00pm be in the kitchen.
Both these quotes highlight the irrelevance of the notion of WLB for some non-standard
workers. The merging boundaries and the way work and life interpenetrate are notcaptured at all through the metaphor of the WLB. For these knowledge workers, workand life, and the various aspects that make up these elements, are strongly integrated,rather than separated out as the WLB metaphor implies. That many people in our sample
worked from home, that work itself ebbed and ﬂowed and that many of them were unable
to treat work as if it were controlled by an on/off switch, makes us question the value ofthe WLB conceptualisation as a dominant metaphor for contemporary work.

Non-Standard Workers at the Margin
This section of the article draws chieﬂy on in-depth interviews with 30 men and women
who participated in our LMDRP study and who might be described as being part of
the growing secondary labour market, periphery workers or ‘workers at the margin’(McLaren et al., 2004). The interviewees represented people working in a variety of nonstandard ways in roles that were seen to be low-paid and working in alternative and/or
contingent working relationships. Participants worked casually, on a ﬁxed-term basis,few had permanent jobs but supplemented their incomes by engaging in one or morecasual jobs and many had more than one job. Two participants chose the strategy ofsupplementing their income from standard work with casual or temporary employment.
Five participants spoke openly about being ‘paid under the table’ and at least six received
a partial social welfare beneﬁt from Work and Income New Zealand. With the exceptionof one permanently employed shift-worker, our interviewees were in short-term, casualand temporary employment and as such substitutable and therefore less secure. They
were from the so-called ‘lower-end’ of the non-standard continuum which Tucker (2002:4)
suggests consists of temporary and ﬁxed-term workers who are more likely to be inprecarious employment than those at the ‘higher end’.
Employers tend to offer more advantageous employment terms and conditions to ‘core’
employees to attract and retain them (O’Reilly and Bothfeld, 2002). Conversely, inferior

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Non-Standard Work 29

conditions are associated with less permanent or precarious employment and areoffered to ‘periphery’ workers in the so-called secondary labour market. Many employers
combine a highly-attached, well-trained, core workforce with jobs linked to opportunityand promotion (Deeks and Rasmussen, 2002) with a growing number of peripheral, lowattachment employees (Klare, 2002:17) who are vulnerable to cycles of employment,
underemployment and unemployment.
The pervasiveness of NSW schedules of the “24/7” economy and the implications for
American workers and their households have been recently delineated by Presser (2003).
She argues that with two ﬁfths of all employed Americans working outside traditional
daytime hours and week-days – during evenings, nights, weekends and on rotating lateshifts, there are new complexities in family functioning. Importantly, she contends thatthe burden of these non-standard working arrangements weigh disproportionately on
the working poor, since they have little choice and are forced to work these hours as acondition of their job (Presser, 2003). This contention received support in our ﬁndings.
Many aspects of the lives of those we interviewed were affected by the temporary orcasual nature of their employment relationships. For instance, unpredictable working
hours had a signiﬁcant impact on the family life of one man in a manual labouring role.
He had worked in this role for over a year and still had to work split shifts determined forhim by his employer.
There’s no [way of knowing] when you’re going to go to work, when you’re going
to ﬁnish at work. If you do go to work, they might send you one hour … likerainy days, the full-timers they don’t want to stay back, so we have to stay back.
Sometimes I have to ring back and tell someone to pick my daughter up, mydaughter will stay at her nana’s place for another hour, while I work.
This case is an example of a more general trend that we identiﬁed among people working
casually, whether this was by choice or involuntarily. These lower-paid non-standard
workers had to ﬁt in with employers’ requirements and permanent employees generally
got the preferred shifts. A balanced family and social life is often unattainable for workers
in these circumstances and those having to work shifts:
Oh God. My social life and my home life is … like Christmas time and holiday
time when all my friends have their time off, that’s when I work the most and I need
to work the most ‘cause I need to save the money for the weeks when it’s more
quieter, when I have one shift a week or whatever, so it stuffs up my private life
and it stuffs up my family life and things but they understand.
You come off work at 4.00 in the morning, you can’t go … social things, let’s meetfor lunch, I don’t think so, I get up at 3.30pm. Going to lunch is like, hey let’s
have breakfast 3.00am. Cultural and religious observances are right down the

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30 Anne de Bruin & Ann Dupuis

drain, you can’t … on the feast day of the deity of your choice, because you’reeither sleeping off the night before or you’re at work on the day. … The impact on
domestic and personal relationships can be devastating.
It’s had probably a bad inﬂuence on my social life in some ways. … Recently
when I’ve been single and … like my new job at Avondale, I work Saturdays … I
work Friday, Saturday, Monday, and then at [place of work], I do Sunday, so it’s
… that main block of work is exactly when everyone else is having their weekend.
It’s quite antisocial in that respect. Since I’ve been starting to date someone new,I’ve been … I’ve found it quite hard to actually see them, ever.
Work-life balance policies are introduced essentially to enhance the autonomy ofworkers. However, most WBL initiatives introduced by organisations generally apply tothe permanent ‘core’ group of employees and exclude peripheral workers because of thecontingent nature of their contracts. Therefore, the question can be asked as to whether
these policy initiatives actually increase the insecurity of those working in contingent
ways. In their research into low-paying labour markets, Dean and Shah (2002:70) foundthat in organisations with ‘family friendly’ policies, employers acknowledged that this wasmore likely to beneﬁt those higher trained with more specialist skills, rather than the lessskilled lower paid workers. In fact, one employer in their survey emphasised the needto protect the company’s ‘intellectual capital’ which, by implication, meant that those withfewer skills had less value. Dean and Shah (2002:77) claim that while their evidence
is limited, there is the possibility that WBL initiatives may inadvertently fuel inequalities.
Our interviews, however, suggest that evidence may not be so limited.
Other literature on temporary agency work (Rasmussen et al., 1996; Alach and Inkson,
2003, Burgess et al., 2004) also indicate that there is a lack of control over working
arrangements and ﬂexibility is limited at the lower paid end. For example, Burgess et al.
(2004:5 of 10) note that:… for some workers with skills in high demand they can exercise control overwhen they work and for whom they work. While the industry promotes an imageof choice, new economy jobs and “entrepreneurial” careers, the bulk of jobs are
low paid and semi-skilled … who are placed in a cycle of insecure and short term
employment, with very low and unpredictable earnings.
In a similar vein, La Valle et al. (2002:60) concluded that control over working
arrangements depends largely on bargaining position. Workers at the margin have little
or no bargaining power and hence the relevance of the WBL notion and its corollary of
ﬂexibility have low relevance for them. While not denying that NSW arrangements canhave positive effects on people’s quality of life even at the low end of the labour market,
especially through temporal ﬂexibility, collectively, the people we interviewed had a morenegative view of the impact of their working arrangements (McLaren et al., 2004:63-65).

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Non-Standard Work 31

As Beaumont, the CTU (Combined Trade Union - New Zealand) Secretary, observed
recently, any strategy addressing WLB issues had to include decent working conditions
rather than free gym membership or coffee machines (Dearnaley, 2003). Beaumontalso observed that many people were forced to work on-call which had an impact on theirlives, as several of our interviewees attested to. She argued, rightly in our view, that any
initiatives should be as much about low-paid workers having to hold down multiple jobs
as executives under pressure to work unpaid hours.

Unsettling the ‘Balance’
The WLB has become accepted as a normative model for a healthy worker in a healthy
workplace. As such it echoes other currently prevalent discourses of ‘balance’ like theimportance of ‘balanced eating regimes’, or the desire to produce ‘healthy balanced
children’. Put another way, we argue that the WLB has become another buzz word of ourtime and agree with Benn (2002) who notes not only the ‘new age element’ associatedwith it, but that ‘[b]eing against WLB would be a bit like being against summer or goodsex’. Notwithstanding Benn’s comment, in this section we brieﬂy critique the model
before focusing more explicitly on the balance metaphor itself.
With respect to the model we argue that even if something approximating the balance
could be achieved, it could only be achieved by relatively few people. The types oforganisations most able to manage ﬂexible hours and family friendly workplace policies
are those of sufﬁcient size, that if workers are not present for one reason or another,others can pick up their tasks, for a limited time at least. In a labour market like New
Zealand’s where 86 percent of enterprises employ ﬁve or fewer people (Statistics New
Zealand, 2002), the notion of balance appears to be problematic.
Given the extent and rapidity with which the notion of the WLB has captured the hearts
and minds of people in all walks of life, we might be forgiven for thinking this is a newconcern. If so, it is worth a reminder that the theme has a long history. While castsomewhat differently, Marx’s alienated worker could be seen as suffering from an‘imbalance’, although in a Marxist scenario the sharp dichotomy between work and life
has little meaning. Yet even before the neo-liberal changes of the 1980s, when a job forlife was still a taken for granted, concern was expressed over the imbalance resulting
in work becoming oppressive. For example, Weil (1978:84) noted that ‘[e]verybody isbusy repeating, in slightly different terms, that what we suffer from is a lack of balance,
due to a purely material development of technical sciences’. While similar statements
about lack of balance are common, from Weil’s perspective the content of many family
friendly workplace policies would do little to address the nature of the problem of work.
She argues that what transforms work from an oppressive to a rewarding process areworkers’ interpretations of the tasks they are doing as worthwhile, as well as providing
the opportunity through which workers can fulﬁl their obligations to others and to thewider society. The extent to which WLB programmes and legislation can facilitate these

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32 Anne de Bruin & Ann Dupuis

conditions is one that requires further research.
While the notion of balance in the workplace is not new, nor are criticisms of the WLB
metaphor and we are certainly not the ﬁrst to comment on its limitations. For example,
Thompson and Bunderson (2001:17-18) argue that the balance imagery suggests there is‘an appropriate distribution of hours that an individual should achieve among the domainsof work, family, community, religion, recreation and so forth’. In a phenomenologically
based argument that critiques the balance orientation on the grounds that it ‘limits thework-nonwork relationship to a zero-sum allocation exercise’, they assert the need to go
beyond the balance metaphor. By way of alternative, they posit the metaphor of time asa container of meaning, arguing that while this metaphor recognises that time is ﬁnite andzero sum, it also ‘allows us to address the nature of the activities that occupy our time,
including the signiﬁcance that they assume’ (Thompson and Bunderson, 2001:18).
Agreeing with Thompson and Bunderson that it is important to go beyond the notion oftime assumed in the WLB metaphor, we believe, however, that the alternative metaphorof ‘time as a container of meaning’, that they offer, has limitations. It fails to do what ametaphor should do which is to ‘provide a powerful tool for us to express ourselves, andat the same time betray[s] deeper constructs in our thinking’ and ‘describe the world in a
vivid, lively, yet familiar way, enabling us to see events from a special perspective’ (Inkson,in press: 3/18). Our contention is that ‘time as a container of meaning’ falls short in termsof Inkson’s criteria. Although potentially useful as a framework for academic research,the metaphor of ‘time as a container of meaning’ does not conjure up an image that would
be sufﬁciently vibrant to become the basis for workplace legislation or regulation.

Concluding Comments
Internationally it has become fashionable in larger organisations and governmental
circles to promote the idea of WLB as a panacea for achieving greater ﬂexibility in theworkplace. In New Zealand, WLB has only more recently moved onto the government’s
agenda. It is our contention in this article that the concept has generally been viewed
too simplistically. Our empirical ﬁndings on non-standard workers support the conclusionthat for many of these workers the idea of a WLB may be less than relevant.
Non-standard workers are a disparate group. The exposition that we presented on twocontrasting groups of non-standard workers serves to highlight that the notion of WLB
is not particularly meaningful for a varied spectrum of non-standard workers. Firstly, forthe skilled ‘new economy’ workers in our research, where the boundaries between workand life were inevitably blurred, the notion of equilibrium that underpins the WLB concept
was not pertinent. Secondly, for this group there was an inevitability of work intensity,often arising from the deadline-driven, project-based nature of their work and contracts.
Ebbs and ﬂows of work intensity characterized their mode of work. By contrast, the nonstandard workers at the margins were at the mercy of the vicissitudes of a contemporary

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Non-Standard Work 33

labour market by the very nature of their precarious, contingent and part-time work. They
were, in effect, a means through which employers could ‘balance’ the demands of a “24/7”
economy and society. Ironically, this employer balance was achieved at the expense of
WLB of these non-standard workers for whom the option of a WLB was virtually absent.
For both these sets of workers therefore, we are forced to question the usefulness ofthe notion of a WLB, with its assumed dichotomy between the two aspects of ‘work’ and‘life’. Crucially however, the ability to derive enhanced quality of life, or, for want of better
terminology, an improved WLB, depends vitally on the degree of choice and autonomy
that workers have in both their paid work and personal lives. Certainly for workers at thelower paid end of the NSW spectrum, corresponding with their very low labour market
bargaining power, the extent of their autonomy and choice is highly limited in the paid
work domain. For those NSW workers with higher order task discretion, as Spoonley et al.
(2002:440) emphasise, ‘… amicable blending of work-leisure-home domains, however,depends not only on prevailing social structures but also on individual personalities andabilities to devise effective strategies of self-management which minimise their own work/
non-work conﬂicts’.
In conclusion, we draw attention to the challenge of developing conceptualisations of thework-life interface that are sufﬁciently encompassing to cover the spectrum of workers in
the 21st century. In previous LMDRP research the concept of the work-life mosaic wasdeveloped in an attempt to better capture the breadth and complexity of the personal,
paid and unpaid work lives of non-standard workers and the interconnections among
these elements (Firkin et al., 2002; Firkin, 2003). In arguing for the idea of a mosaic,
there was recognition of the basic and hardly novel idea that people’s lives are composedof more than paid employment. The concept is similar in some respects to Handy’s
notion of the portfolio in which he identiﬁed two broad categories of work – paid andfree (or unpaid) work, with both these forms of work then further subdivided (Handy,
1990:184). Nonetheless, it was elected to employ the mosaic metaphor to emphasise
the combining of pieces, many of which may be very different in size, shape, colour andcomposition, and to highlight that while the edges of some pieces are sharp and clear,others are less so. In a mosaic some of the joins can be close and neat and others moredispersed. The work-life interface can be similarly visualised as made up of different
mosaic-like pieces. Together these portray the combining of different forms of work,
each with various characteristics, as well as aspects of workers’ personal lives. The
distinctions between components can be very clear in some places and less distinct inothers, thus demonstrating the lack of predictable patterns.
On reﬂection however, it was thought that the work-life mosaic was possibly too rigid.
The image of a mosaic is of a ﬁnished piece that is cemented in place in the way amosaic table top or mirror surround is crafted. The problem with this metaphor is its‘concreteness’ which does not fully recognise both the dynamic context in which the mosaic
is located and the evolving nature of an individual worker’s networks and relationships.

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34 Anne de Bruin & Ann Dupuis

Given these conceptual shortcomings and in order to emphasise the dynamic andinteractive nature of work roles, both alone and together with non-work and other unpaid
activities, ideas such as ‘conﬁguring lifestyles’ and ‘integrated lifestyles’ were introduced
to better capture dynamic process of interdependence and tension between work andhome (Dupuis and de Bruin, 2004; Firkin, 2003). Nevertheless, while these alternative
concepts offered a more appropriate depiction of the work-life nexus for workers who
experience considerable control, autonomy and ﬂexibility in their jobs, they fail to capture
the experience of workers at the lower end of the work hierarchy, who have much lessdiscretion and control over their working arrangements. There is a need therefore to
re-think conceptualisations so as to better encapsulate the essence of the changes incontemporary society and the realities and work demands for the non-standard worker.
Until such a conceptual framework is developed however, we must not lose sight of theurgency for more research and policy action on ways in which both spheres of life might
be enhanced particularly for non-standard workers.

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New Zealand Journal of Employment Relations, 29(1): 39-61

Varieties of Industrial Relations in
the Shipping Industry:
A Comparison of two Anglo-Saxon
Liberal Market Economies andtwo European Coordinated Market
Economies
THOMAS KLIKAUER* & CLIFFORD DONN*

Abstract
The paper examines industrial relations in the shipping industries of two Liberal Market
Economies (LMEs), Australia and the United States and in two Coordinated Market
Economies (CMEs), Germany and Denmark. Hall and Soskice’s (2001) theory of Liberalversus Coordinated market economies has been used to discuss two polar approaches
to the issue of reform in industrial relations in the context of globalisation pressures. The
scope to which local institutional factors offset the major trend towards the ‘globalisation’of the shipping labour market is assessed by discussing the role of state policies onshipping, trade unions, and employer organisations. The paper argues that in shipping
two distinctly different policy approaches and reforms of industrial relations at theindustry and national levels can be identiﬁed. The paper delivers empirical evidence
to the understanding of industrial relations differences in liberal and coordinated market
economies.

* Thomas Klikauer is senior lecturer in employment relations and teaches international employment relations at theCollege of Law and Business at the University of Western Sydney. He is currently researching regulation in international
shipping with speciﬁc focus on Europe and Asia-Paciﬁc.
** Professor Clifford Donn is Professor of Industrial Relations and Human Resource Management and teaches U.S.
and comparative industrial relations at Le Moyne College. He is currently researching the impact of global maritime
competition on maritime employment relations in the United States and in ﬂag-of-convenience ﬂeets.
The authors thank the late Professor Richard Morris, College of Law and Business (CLAB) at the University of Western
Sydney for his insightful knowledge, help and support. Special thanks goes to CLAB’s Research Support Scheme forﬁnancial assistance and Bronwyn Fahey and Khalida Malik for their editorial work.

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40 Thomas Klikauer & Clifford Donn

Introduction
It is commonly believed that the economies of the world are increasingly interwoven intoa single global economy, or at least that economic activity is much more international
than it has been in the past. This trend has been described as “globalisation” (Leisink,
1999; Katz & Darbishire, 2000; Hardt & Negri, 2000; Goldsmith & Mander, 2001).
Despite such global trends, Hall and Soskice argue in their work Varieties of Capitalism– The Institutional Foundations of Competitive Advantage (2001) that some economies“converge” (Kerr, et al.; 1960; Ohmae, 1990; Katz and Darbishire, 2000) towards a more
liberal approach while others tend towards coordinated systems. Hall and Soskice’s(2001: 8) distinction between liberal and coordinated market economies can be summed
up as:“In liberal market economies, ﬁrms coordinate their activities primarily via
hierarchies and competitive market arrangements.
Market relationships arecharacterised by the arm’s-length exchange of goods or services in a context ofcompetition and formal contracting. In response to the price signals generated bysuch markets, the actors adjust their willingness to supply and demand goods orservices, often on the basis of the marginal calculations stressed by neoclassicaleconomies. In many respects, market institutions provide a highly effective meansfor coordinating the endeavours of economic actors.
In coordinated market economies, ﬁrms depend heavily on non-market
relationships to coordinate their endeavours with other actors and to constructtheir core competencies. These non-market modes of coordination generally
entails more extensive relational or incomplete contracting, network monitoring
based on the exchange of private information inside networks, and reliance on
collaborative, as opposed to competition, relationships to build the competenciesof the ﬁrm. In contrast to liberal market economies (LMEs), where the equilibriumoutcomes of ﬁrms behaviour are usually given by demand and supply conditionin competitive markets, the equilibria on which ﬁrms coordinate in coordinatedmarket economies (CMEs) are more often the result of strategic interaction amongﬁrms and others actors.”
Hall and Soskice (2001: 20) identify several countries showing characteristics of either
LMEs (mostly Anglo-Saxon countries such as Australia and the USA) or CMEs, such
as Japan, and a number of European countries, such as Germany and Denmark. To
characterise LMEs and CMEs, the authors argue that coordination problems must
be solved in ﬁve spheres: a) industrial relations, b) vocational training, c) corporate
governance, d) inter-ﬁrm relations, and e) employee-management coordination. For the
purpose this paper, we will focus on industrial relations in an industry common to both
LMEs (Australia and the USA) and CMEs (Germany and Denmark). The objective of

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Industrial Relations in the Shipping Industry 41

the paper is to discuss whether industrial relations in two LMEs and two CMEs provide
enough evidence to support Hall & Soskice’s theory. Furthermore, the paper seeks toclarify whether or not industrial relations in one of the most globalised industries, theshipping industry, has converged towards a single global model of shipping industrial
relations or has it remained inside the parameters of LMEs and CMEs?
In many ways, the maritime industry with its highly mobile assets has been in the forefrontof the internationalisation of economic activity. Ocean transport is the principal meansof moving goods among nations. World seaborne trade grew from 3,977 million tons in1990 to 5,230 million tons in 1999, continuing a long-standing trend (UNCTAD, 2000: 3).
The ocean transport industry has seen the appearance of vessel operators, both old andnew, eager to shrug off traditionally tight regulatory frameworks, registering their ships
in loosely regulated Flags Of Convenience (FOC) or in new maritime countries such as
Taiwan, South Korea and China. The growing globalisation of the maritime industry has
been demonstrated by the rise of vessels registered in FOC states in the post-WorldWar II period. While only 5.6% of the world’s ﬂeet was registered in FOCs in 1950, thisnumber grew to 46% in 1990 and reached 48.1% in 1999 (ITF, 1997; UNCTAD, 2000).
As a corollary, the percentage of the world’s ﬂeets belonging to the “traditional” maritime
nations has been declining.
An indication of the growth of less developed nations as leaders in maritime registrationis the decline in the carrying capacity of the traditional leaders. In 1970, the ﬁve largest
were (in order): the United Kingdom, Norway, Japan, Liberia, and the United States (MA,1998). Around 30 years later, in 1999, the ﬁve largest were, Panama (with almost double
the tonnage of any other ﬂeet), Liberia, the Bahamas, Malta, and Greece (UNCTAD,
2000) with about 17% of the world’s ﬂeet being registered in Panama. Thus, in 1970
only one of the leading ﬂeets was a FOC country, Liberia, while in 1999 only one of theleading ﬂeets was a non-FOC country – namely Greece (Zarocostas, 1999).
Changes in ship registration patterns have affected the off-shore employment of 404,000
ofﬁcers and 823,000 ratings currently employed in the global shipping industry (BIMCO,
2000). Developing nations, have found that maritime employment can be a signiﬁcantsource of foreign exchange. The top ten maritime labour supply nations in the late
1990s were the Philippines, Indonesia, Turkey, China, Russia, India, Japan, Greece,
Ukraine, and Italy (ITF, 1999). The Philippines, Indonesia and India are all excellent
examples of nations whose seafarers sail largely on vessels owned by non-nationals
and are registered in the ﬂeets of other nations. By 2000, seafarers from the traditional
maritime countries (mostly the economically developed countries) contributed only about
27% of the global marine workforce compared to 31.5% in 1995, again continuing along-term decline (ISF, 2000; BIMCO, 2000). The Crews Of Convenience, who staff thegreater part of world shipping, represent something of a ‘Trojan horse’ for the seafarersof the OECD, in terms of an intractable threat to jobs, security, wages and conditions(Klikauer & Morris, 2001b). While many of the traditional maritime nations limited or

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42 Thomas Klikauer & Clifford Donneven forbade the use of such crews, vessels registered in FOCs have had few limitations
on their ability to hire crews wherever they please.
Traditional maritime LMEs (Australia and the United States) as well as CMEs (Germany
and Denmark) are all excellent examples of maritime employment whereby theirindustrial relations systems are closely tied to national patterns and institutions. In all
four countries, wages and beneﬁts were determined for seafarers much as they werefor other (shoreside) employees. This reﬂecting closely Hall & Soskice’s (2001: 7)
coordination problem in the area of “coordinated bargaining over wages and working
conditions with the labour force, the organisations that represent labour, and other
employees”. In the shipping industry, these arrangements were further supported byvarious protective measures to reduce exposure to international competition (Donn, etal., 1996; Morris, 1993; Morris & Klikauer, 2001a). During the last decade the growinginternational competition had dramatic effects on maritime industrial relations in the
LMEs and CMEs. The LMEs (Australia and the United States) and the CMEs (Germany
and Denmark) have developed shipping policies that highlight the differences between
them. To illustrate these differences, the paper begins with a discussion of the two LMEs
and the two CMEs. The discussion and conclusion sections draw together the different
industrial relations’ responses to increased globalisation in all four countries.

Industrial Relations in a Liberal Market Economy: AustralianShipping
The Australian ﬂag ﬂeet consists of a mixture of predominately passenger ferries,
container ships and oil-bulk-ore carriers engaging in coastal trade. By 2000, some 59
out of 120 Australian owned vessels were registered under foreign ﬂags (LR, 2000).
As such, there are about 2,500 seagoing and 500 shore based jobs left in the industry,compared to some 10,000 in 1988 (ANMA, 1989: 16). Blue-collar seagoing personnel
are organized in a de facto union shop by the Maritime Union of Australia (MUA), a 1994
amalgamation of unions representing stevedoring and seagoing staff (Charles, 2000).
Seagoing engineers, mates and masters are members of two separate craft unions(Byrne, 2000; Ross, 2000): the Australian Maritime Ofﬁcers’ Union (AMOU) (which
also recruits stevedoring supervisors) and the Australian Institute of Marine and PowerEngineers (AIMPE).
These seafarers were employed on 61 Australian ﬂag vessels in 1998, some 17 fewer
than in 1994. At the same time, the relaxation of cabotage regulations has led to a
substantial increase of foreign vessels in the coastal trade. A 27% increase in cabotage
exemption permits over the previous year is reﬂected in the 1996 ﬁgures (ASA, 1999:
38). Major domestic ship operators still include the marine divisions of minerals andmanufacturing conglomerates, local subsidiaries of the oil majors, and specializedinternational ‘integrated’ transportation providers. In the world hierarchy of signiﬁcantmaritime countries, Australia has continued to move downward, although the island

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Industrial Relations in the Shipping Industry 43

continent continues to account for about 12% of the world’s seaborne trade and in 1998,
it occupied 34th position; below Croatia but above Kuwait (ASA, 1999: 24-5). According
to the ship operators interviewed, the continuing decline of the Australian ﬂeet coincides
with the withdrawal of Federal Government ﬁscal support, uncertainty with regard to
government shipping policy, and the comparatively high costs of Australian registeredshipping (ASA, 1999: 16).
As business groups continued to demand cheap shipping and the maritime labour unions
remained entrenched in high wage union shops, progress toward low cost shipping
became stalemated. One possible solution for the government (who had been drawn
into labour-management disputes over the ofﬁcial stafﬁng requirements of the Navigation
Act of 1912 and the wage determinations of the Commonwealth sponsored compulsory
arbitration tribunals), was to attempt to engineer a consensus over cost-reducing reforms
between shipowners and unions. In principle, this meant the promotion of ‘integrative
bargaining’ and new compromises between owners and labour.
Between 1985 and 1989, the Federal Government promoted the modernization of theindustry though programs of subsidies and tax concessions on investment that wereintended to act as incentives for labour reforms as a way of reducing operating costs.
This process led to the establishment of the Shipping Industry Reform Authority in
1989. The Federal agenda was moving at a brisk pace toward market-based solutions.
The Cabinet approved the sale of all government’s shipping interests. The Ministerof Transport emphasized the return of the industry to “commercial arrangements” as apolicy direction (SIRA, 1994).
The incoming business-oriented Liberal/National Coalition Government in 1996
accelerated the shift towards a neo-liberal model with anti-protectionist measures and in
1997 the government began considering a raft of deregulatory measures (Manser, 1997).
Such reforms were most cogently exempliﬁed for Australian policy makers by nearneighbour New Zealand, where cabotage was abolished by the 1994 Transport Maritime
Act. Although this agenda was never realized in full by 2000, the government had
abolished remaining special tax and subsidy beneﬁts to shipping, further liberalized thecabotage system, and closed down the government sponsored seamen’s engagement
centres, which were the monopoly hiring halls for blue collar seafarers. With thisbuttress to the union shop removed, the Minister for Workplace Relations and Small
Business, whose brief included maritime transport, sought further reforms to reduce theunion shop monopoly by the abolition of regulations prohibiting ‘crimping,’ as the use ofprivate employment agencies had been known in the bad old Victorian days (Hansard,
1998: 5369). By 2000, Australian shipping policy had moved from support of the highcost national regime in the style of the US merchant marine, to a position where an
expensive national ﬂeet, even in token form, was no longer to be defended (Klikauer &Morris, 2001).

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44 Thomas Klikauer & Clifford Donn

Traditionally, Australia’s ship operators handled labour relations in a reactive fashion,
through a centralized wage ﬁxing system under the umbrella of compulsory arbitration.
Protected from price competition by cabotage and by the vertical integration of manyshipowning entities with mineral extraction and manufacturing conglomerates, ship
operators did not vigorously resist the acceleration of crew costs to levels exceeding
OECD norms. However, as a result of the 1980s revitalization movement and piloted by
the Federal Government, a new policy body appeared, the Australian National Maritime
Association (ANMA) which institutionalised the employer voice in a new holistic approachto shipping reform (Morris, 1993).
By 2000, a number of factors were exerting pressure on the industry’s employer
organizations. On the issue of cabotage, employer opinion was divided. Lobbying
by their ofﬁcials against the abolition of Federal subsidies and tax concessions had
not proved fruitful. In addition, the decline in industry-wide collective bargaining andcompulsory arbitration, and the new emphasis on enterprise level bargaining, therole of central employer organization in industrial relations had been reduced. The
organizational reconﬁgurations of Australian shipping employers can be interpreted as
an attempt to cope with these challenges.
Once the zone of early compromise had been explored, further negotiated reform proved
increasingly difﬁcult. Pressures from shipowners for freight rate reductions added tothe tension which meant that it was harder to reconcile the priorities of employers andtrade unions. New entrants to the shipping business with multi-divisional structures andcompany-wide human resource departments lobbied for enterprise control over hiringand labour allocation, which reﬂected the liberal policies then gaining currency in muchof the rest of the Australian economy. In 1994, the ANMA dissolved itself as the tripartite
consensus ended, and the employers collective re-emerged as the Australian Shipowners’
Association (ASA). The ASA redeﬁned its mission and organizational structure thatformally broke with the corporatist traditions of the previous decade. By late 1999, thisbody had transformed into the Australian Shipping Federation, incorporating the tradeassociation for largely foreign ship operators and the Australian Chamber of Shipping as
employers sought to retain a collective voice through further organizational re-structuring(ASA, 1996; ASA, 1999; Payne, 2000).
Changes in the balance of industrial and political power adverse to the unions in mostrespects have also occurred and reﬂected in part by the dramatic drop of spontaneous
vessel level disputes between about 1983 and 1999. The main reason for this was the
support for the revitalization movement by union ofﬁcials and their subsequent efforts
to discourage unsanctioned rank and ﬁle disputes in the interest of ‘strategic unionism’.
This move did in some respects sacriﬁce the defence of the wage and conditions
aspirations of the members (Morris, 1997). With the withdrawal of employers and theFederal Government from tripartite arrangements in 1994, the maritime unions moved tocollective bargaining in which ‘enterprise agreements’ negotiated primarily between head

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Industrial Relations in the Shipping Industry 45

ofﬁce ofﬁcials, company human resources departments and speciﬁc vessels or company
ﬂeets became the norm. Reﬂecting the decline in its bargaining power, in 1998 the MUA
quietly dropped its campaign to retain the industry wide hiring hall system for blue collar
seafarers, but it was successful in retaining a de facto union shop for the time being.
Political and industrial campaigns to thwart the sale of ANL (the government-owned
shipping line) met with early success, but eventually, the government ship operator was
sold and staffed with ‘crews of convenience’ (AIMPE, 1998). However, government
plans to de-unionise the Australian maritime sector were successfully resisted. The
major stevedoring strike in 1998 put an end, for the time being, to Federal Government
and employer plans to introduce non-union labour en masse on the waterfront. Similarly,
so far, the MUA and the Australian Council of Trade Unions have been able to muster
political support to shelve legislative proposals for the blanket opening of the coast to low
wage foreign seamen recruited through crewing agencies (Hansard, 1998).
As the organisation of the maritime industry changes, the interests of professional andblue-collar seafarers continue to diverge. Protected by professional qualiﬁcations but
exposed to the full impact of low wage competition, members of the AMOU and AIMPE
look to the growth of well-compensated job opportunities in the world’s ‘quality’ ﬂeets. At
the same time, AMOU and AIMPE showed less interest in the ‘Crews off Convenience’issue threatening the lower-deck seafarers. This separation of interests was reﬂected in a
1998 dispute when MUA personnel put to sea with marine engineers ofﬁcially designatedas “scabs” by the AIMPE (AIMPE, 1998). Although still effective enough to yield only
slowly to government and employer pressure for changes, thought to be unfriendly tolabour, Australia’s shipping unions have nonetheless become more fragmented in theirdirection and strategy as exposure to international maritime product and labour market
trends have accelerated.

Industrial Relations in a Liberal Market Economy: US Shipping
The United States ﬂag ﬂeet consists largely of tankers, container ships and roll-on/rolloff cargo vessels in which many of them are involved in the protected coastal and Great
Lakes trades. Container vessels are the fastest growing category with almost half of theforeign trade ﬂeet as of 2001 in that category (MARAD, October, 2001). The domestic
ﬂeet was dominated by tankers, which constituted over half the ﬂeet.
This relatively small ﬂeet reﬂects only a small portion of that owned by US nationals.
Most US owned vessels are ﬂagged overseas, especially in FOC states. For example,
although the cabotage restrictions require that vessels carrying oil from Alaska to the US
be registered under the US ﬂag, US-based petroleum companies importing their productfrom overseas are allowed to have their large tanker ﬂeets registered overseas. Thus,
the US ranks 12th in the world in the size of its ﬂag ﬂeet but 4th in terms of the size of theﬂeet its nationals own (MARAD, October, 2001).

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46 Thomas Klikauer & Clifford Donn

The seafarers on US-ﬂag vessels have been largely unionized since the 1930s. They
belong to a variety of unions with more than one organizing every category of bothofﬁcers and ratings. These unions compete with each other vigorously. Employers weretraditionally organized into various associations for purposes of collective bargaining.
Those associations varied according to which unions the employers bargained with,whether the employers were directly subsidised, what kind of cargo they carried andwhich coast (east or west) they operated from.
The number of jobs on the US-ﬂag ﬂeet has been in a long-term decline since at least the
1950s. This reﬂects changes in technology (which have permitted larger ships carrying
more cargo, loading and unloading faster and sailing with smaller crews) and the decline
in the ability of the US-ﬂag ﬂeet to compete except in those market segments where it
received either a direct subsidy or an indirect subsidy (cabotage or cargo preference).
As of January 1999, there were 8,956 seagoing jobs in the ﬂeet, compared with 13,446
in January 1987. This compares with over 40,000 workers from around the world who
sail on ships under the Liberian ﬂag alone (TI, 2001).
Traditionally, the US Government has regulated the maritime industry in terms ofcommercial policies (e.g. attempting to regulate pricing and monopolistic practices) andhas provided both direct and indirect subsidies to maritime vessel operators. It has also
regulated maritime operations in terms of safety, requiring certain levels of stafﬁng andtraining as well as insisting that the vessels themselves meet certain requirements interms of safety and environmental standards.
Direct subsidy has been provided since 1936 in terms of both vessel operation andvessel construction. Only vessels constructed in the United States were eligible for direct
subsidy or were allowed to be use in the US domestic trades. Construction subsidies
disappeared in 1980 when the government ceased to fund the existing program (a programof subsidised loan guarantees remains). This made it harder and harder to maintainthe system of operating subsidies, which were based on long-term contracts. Vessels
had to be built in the United States but when operating subsidy contracts for individual
vessels expired, it was not cost-effective to replace those vessels with unsubsidised US
construction. Therefore, except for temporary periods in which operators were allowed
to purchase vessels overseas, arrangements were made to extend the subsidy life ofexisting vessels, rendering the ﬂeet older and technologically obsolete.
The Maritime Security Act of 1996 replaced this system. Construction subsidies (except
for loan guarantees) no longer exist but operating subsidies (which were changed fromlong-term contracts to annual appropriations) became available for a relatively small
number of vessels that no longer had to be built in the United States. This Maritime
Security Program (MSP) also changed the subsidy formula in a crucial way (as well as
reducing total subsidy payments and the total number of vessels eligible for subsidy).
While the pre-1996 formula had speciﬁcally compensated ship operators for inter alia,

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Industrial Relations in the Shipping Industry 47

the high cost of using US crews (the difference between US-ﬂag costs and other costs
under other ﬂags), resulted in the MSP providing ﬁxed subsidies per vessel (at a levelof about US$1 million per year per ship below what the previous system had provided).
Accordingly, the MSP provided vessel operators with a considerably increased incentives
to keep the wage, beneﬁt and stafﬁng-level costs of crewing each ship down.
At the same time, although domestic trade vessels cannot receive a direct subsidy,
cabotage has been largely preserved whereby the domestic trade is still open only to
US-ﬂag and US-built vessels. Again, this system has encouraged an aging and out-ofdate ﬂeet that, if the coast-wide trade were opened to competition, it would be unable tocompete effectively.
For most of the period since World War II, the US-ﬂag maritime industry was a paradigmof strong unionism and strong collective bargaining relationships. Employers wereorganised into a variety of associations for bargaining purposes and collective bargaining
agreements met or exceeded standards set by the strongest industrial unions on
shore (e.g. the automobile industry). This resulted in high wage and beneﬁt costs
and large crew sizes compared to most other ﬂeets in the world. However, during the
1980s and 1990s, as the subsidy system became less and less signiﬁcant, centralized
bargaining also gradually became less important. Employers played off competing
unions against each other, forcing them to make frequent downward exceptions to theircollective bargaining agreements in order to win various government cargoes. In thisnew more competitive and more cut-throat environment, the internecine warfare among
the competing unions which had been ongoing since the 1930s, continued. In a few
cases, the employers simply rid themselves of certain unions entirely. However, by the
1980s this once strike-prone industry saw the virtual disappearance of strikes in the faceof declining government support and inability to compete internationally.
It also became increasingly impossible for the US-ﬂag ﬂeet to compete with FOC and otherinexpensive (e.g. second registry) ﬂeets because of the low levels of wages and beneﬁts
associated with FOC ﬂeets. Accordingly, US-based vessel owners have continued tomove their operations elsewhere (to “ﬂag out”) except where direct or indirect subsidy
or particular market niches makes it impractical to do so. Clearly, the result has been
declining work opportunities for US-citizen seafarers. As US-vessel operators have
ﬂagged out, they have sometimes taken some of their American licensed ofﬁcers withthem (albeit at much reduced wage and beneﬁt levels). However, as in the Australiancase, unlicensed ratings have had a worse fate and job opportunities for them are rapidly
disappearing.
This new ‘ﬂag market’ has changed collective bargaining in the industry dramatically.
Some vessel operators insisted that lower subsidies under the MSP should becompensated with lower labour costs. This would stabilise the quid pro quo for those
operators agreeing to participate in the subsidy program as opposed to ﬂagging out.

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48 Thomas Klikauer & Clifford Donn

Wage and beneﬁt cuts of 20% were common. Some ofﬁcers’ unions negotiated theright of members to work on US-owned foreign ﬂag vessels but this typically reduced the
beneﬁts by up to 40% and required the workers to give up collective bargaining rights.
In summary, the change in Government policy toward reduced subsidy and greater
exposure to market forces has accelerated the decline of the US-ﬂag ﬂeet, reduced job
opportunities for US-citizen seafarers, and resulted in the demise of centralised collective
bargaining structures. As such, dramatic reductions in wages and beneﬁts have occurred
for most of the remaining seafarers. Because of the ideologies and approaches of U.S.,
the maritime operators and workers have been increasingly exposed to market forces
and have found it difﬁcult to compete in the world market.

Industrial Relations in a Coordinated Market Economy: German
Shipping
Germany’s position as a manufacturing export nation is reﬂected in a relatively large
number of container ships (6,252), while dry cargo carriers only amount to 1,285 andship types such as tanker (204), ﬁshing vessels (29) or special purpose ships (76) play
only a limited role. In the same year (2000), the total tonnage registered was 19,924
million tons which was roughly equally distributed between ships registered under
Germany’s second register (6.5 million tons), ships registered under German ﬂag but
chartered out (bare-boat charter) with 6.7 million tons, and ships registered under FOC
with German owners (6.6 million tons). The number of German nationals employed onthese ships has continuously declined from 17,879 in 1983 to a mere 7,594 in 1999 withthe overwhelming majority being ofﬁcers and shipmasters (Titel, 2000). German ratings
have been virtually non-existent in the year 2000 as a result of industrial relations policy
during the 1980s and 1990s.
The industrial relations actors in the German shipping industry consist of a number ofparties, not only employers, trade unions and government agencies, but also voluntaryand professional organisations. The employers’ federation – Verband Deutscher
Reeder (VDR), represents approximately 400 shipowners. The VDR represents mostly
shipowners whose ships that are “ﬂagged out” to FOC registers and as a result many
VDR policies are driven by the consideration of those members. However, inside the
VDR there are different factions supporting different policies on shipping. While thepro-FOC group of shipowners register its ships under FOC ﬂags and supports FOCs, theother group uses the German or the GIS register. There are also conﬂicts over policy
and strategy between international ship operating companies and smaller companies
that, according to their members, are usually won by the small and medium shipowners(Stuchtey, 2000).
Apart from VDR’s ‘economic lobbying unit’ consisting of all shipowners, the ‘employers
unit’ also engages in collective bargaining for shipowners using the German ﬂag and

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Industrial Relations in the Shipping Industry 49

German crews. However, the membership in VDR’s collective bargaining unit is declining
because more and more employers ﬂag out to FOC registers or use individual agreements,
leaving only 10% - 20% of shipowners inside the bargaining unit. Another source ofchange is the separation of VDR’s traditional membership of owners and operator or
shipmasters (Klikauer & Morris, 2001c). The so-called ‘captain’s shipowners’ (that is,captains who own their ship or small ﬂeets), are increasingly separated into two groups:
shipowners and captains. New companies have also taken up VDR membership, suchas “ship managing” companies, based on market considerations rather than on thefamiliar networks of the past (Benze, 2000; Noell, 2000).
Representing the interests of employees are two trade unions and one association. In
the German system of industrial trade unionism, the transport industry is represented
by the ötv, a union that actually covers two industries: public service (öffentlich) andtransportation, with a strong shipping division located in Hamburg. When the second
register policy began in 1989, ötv had 18,000 off- and on-shore union members but
soon declined to 15,000 members in which approximately three-quarters of whom wereGerman nationals mostly working on GIS registered ships (Meyer, 2000). The second
trade union is the DAG or Deutsche Angestellengewerkschaft which represents around12,000 white-collar workers in the maritime industry, with some 2,000 workers linked
to sea-going activities and only 900 workers in offshore shipping. Apart from the two
trade unions, the professional association VDKS (Verband deutscher Kapitäne und
Schiffsoﬁziere) or the Association of German Masters and Ship Ofﬁcers, represents thescholastic and ethical interests of masters and deck and engine room ofﬁcers (VDKS,
2000).
Despite earlier divisions in 1977 created when DAG works councils in shipping quit tojoin ötv because of dissatisfaction with ‘management friendly’ policy, the two unions havebecome more united in their views. There was general agreement between the twounions over the Germany’s shipping tax and the German International Shipping Register(or GIS) that allows shipowners the use of FOC like second register. At the time ofwriting, the DAG is not afﬁliated to the International Transport Federation (ITF), the supranational union body that has co-ordinated industrial action against FOC and GIS tonnage.
However, during the 1980s both unions united to oppose deregulation under the GIS andargued for alternative institutional reforms involving the transfer of German shipping to a
proposed EU registry, together with tax concessions for shipowners employing nationalcrews (Müller, 2000; DAG, 2000).
As a third actor, the state is represented through the Federal Department of Transport(Bundesministerium für Verkehr, BMV) and through departments at the State (Länder)level in coastal regions, for example Hamburg, Bremen, Lower Saxony, and SchleswigHolstein. However, the latter, although involved in the subsequent debate, were not activein the debate to introduce a second shipping register, that is, the German International
Shipping Register (GIS).

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50 Thomas Klikauer & Clifford Donn

As with the previous examples of countries, the severe global competition has led to
an increasing trend among German shipowners to ‘ﬂag out’ which in turn has resulted
in a decline in employment as ships under FOC ﬂags operated with non-citizen crews.
Employment sank from 55,000 at the beginning of the 1970s to 11,429 in 1997 (Dörr,
1988: 366). Yet, as the trend developed, Germany’s Federal Parliament debated whether
Germany needed a commercial ﬂeet at all (Hoffmann, 1984: 10). Both the VDR and theötv were of the view that the government could not stand by and watch the decline of its
maritime ﬂeet without attempting to stop it and therefore demanded action from the policy
makers, who had no great sympathy for new liberal “open market solutions” (Herber,
1988: 645).
In spit of being in favour of reform, that would underpin German employment in its mostglobalised industry, the unions strenuously opposed the introduction of a second register.
However, the German International Shipping Register (GIS) concept became thepreferred option because it is a “virtually tax free” system (Strothmann, 2000). It allows
the crewing of non-German ratings to be paid non-German wages, while still protecting
the employment of German shipmasters and ofﬁcers. Consequently, signiﬁcant industrial
conﬂict ensued between the union members and ship managers, including personal
attacks on shipping managers, hunger strikes, demonstrations and boycotts (Birk, 1978
& 1983; Däubler, 1997; Meyer, 2000). The ötv organised a series of demonstrations inmajor port cities, including a sit-in at Hamburg’s City Hall, strikes by ferry workers, hunger
strikes by members of shipping works councils and boycotts of meetings with shipowners(ötv-Reports, 1986-90).
The proponents of the GIS argued that the new register would make German shipping
more cost effective (Stuchtey, 2000) if the “GIS was organised like a FOC” (Schönberg,
2000). Although there were minor job losses mainly amongst the ratings, the proponentsof the GIS maintained that this was a small price if Germany’s maritime industry wasto survive and in fact job losses through ﬂagging out would be far higher. Moreover,the mixed crews of different national, cultural and linguistic groups, which the GIS were
designed to permit, would not pose signiﬁcant safety concerns and communications
problems.
According to Gefken (2000), it was a sad day for German seafarers when the GIS was
introduced as it has had severe implications for employment in the German shipping
industry, already declining over the past 12 years prior to the GIS’s existence. Since its
introduction, there has been a steady move out of the standard register system into the
GIS, thus allowing shipowners to exchange German ratings with ratings from labour supply
countries such as the Philippines. Moreover, the GIS has moved working conditions andwages on board GIS registered ships downward to ‘third world’ levels hitherto unseen
in Germany. As a consequence, the GIS has not only introduced German shipping
to a world previously seen only in reports by the International Labour Ofﬁce and by
the ITF on sub-OECD maritime working conditions but has also accelerated a declining

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Industrial Relations in the Shipping Industry 51

union membership, particularly amongst ratings (Klikauer & Morris, 20021b). Under
the banner of cost cutting and competitiveness, the problems of third world labour havegained a foothold in German shipping. Rather than moving working conditions, wages
and shipping standards upward, the GIS has promoted a downward trend, althoughsevere operational problems have, to date been avoided, probably with the aid of highcapital investment.
Further, the GIS introduced social fragmentation and cultural apartheid on board of German
ships with foreign crews. While enabling access to cheaper non-German labour, it hascreated objectionable working conditions and has reduced German maritime training andemployment to levels that are hardly compatible with a ﬂourishing port infrastructure ofnational maritime industries geographically anchored in Germany. It is hard to argue
that the GIS has been an unreserved success for the German public interest and national
economy. Employer preference for the low wage, ‘low road’ approach is at odds with thetrade union concerns and government support for alternatives. In conclusion, despite
the departure from traditional neo-corporatism (Culpepper, 2001: 281) in favour of acoordinated approach among the state and employers, with the exclusion of trade unions,
Germany’s cooperative industrial relations had led to the introduction of a regulated
system – namely the GIS.

Industrial Relations in a Coordinated Market Economy: Danish
Shipping
Even though Denmark occupies a geo-strategic position between north and continental
Europe, Denmark’s core shipping does not lie in ferries or coastal transport ships but ininternational trade. In terms of world shipping, Denmark’s commercial shipping ﬂeet
ranked in 22nd position behind FOC state Bermuda and in front of Taiwan. Even thoughmost of the 523 vessels registered under the Danish ﬂag in 2000 (DR, 2000: 7) are
general cargo ships (232), the vast majority of Denmark’s total tonnage lies in oil tankers
and bulk carriers (61%). While the Danish shipping industry employs roughly 50,000
workers, the vast majority are to be found in on-shore employment. Denmark’s off-shore
shipping industry employed 13,700 seafarers in 1999 with 9,800 Danish nationals and3,900 foreigners (DR, 2000: 15) or 5,353 ofﬁcers and 4,522 ratings (UNCTAD, 2000).
Moreover, Denmark’s shipping industry is highly monopolised by A. P. Moller, owner ofMaersk Shipping.
During the 1980s, Danish shipowners became increasingly exposed to international
competition and felt that their ﬂeet was declining because of high employment costs.
In 1988, Denmark introduced the Danish International Ship Register (or DIS) modifying
Danish shipping in two ways. First, Danish shipowners could now employ overseas
seafarers at overseas wages, whilst maintaining a Danish master. In reality however,about 70% of all seafarers are Danish but some ratings come from overseas. Danish
ratings can be found almost exclusively on new technically advanced containerships.

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52 Thomas Klikauer & Clifford Donn

Second, the shipowners pay no income tax and only pay net wages. Thus, the DIS has
become the backbone of Danish shipping with virtually all newly built ships registeredunder it. In practice, the DIS is not Denmark’s ‘second register’ but the main register.
One ﬁnds mostly ferries operating locally in Denmark’s traditional or ﬁrst register. DIS
follows the normal rules of Danish shipping, with the exception of the modiﬁcations as
outlined above. Under DIS, a seafarer pays no income tax but the company pays a normal
business tax. If a seafarer earns 200 Krona, he/she has to pay 50% income tax, so whathe/she gets at the end is 100 Krona. However, under DIS, the shipowner only pays 100
Krona and thus saves the seafarer another 100 Krona that he/she would otherwise pay inincome tax. Therefore, the main advantage of the DIS is that it reduces the wage costs
by 50% for Danish seafarers. As a result, it has kept Danish seafarers on board Danishﬂag vessels while at the same time Danish shipping has remained competitive. However,
only about one-fourth of Danish ships are registered in the DIS register. Most Danishowned ships are in foreign registers for political or economic reasons. Some are underArab ﬂags because they operate in those areas, while others are under the Singapore
ﬂag as they operate in these waters. The shipping company Maersk, for example, hassuch a policy and has ships under US ﬂag for reasons of market access.
The Danish shipping company, Maersk, which is owned by A.P. Moeller, is not only
the biggest shipping company in Denmark, but it is also the largest shipping company
in Great Britain and Singapore (Lund, 2000). It is also Denmark’s biggest liner trading
company and is three times the size of the second biggest company. Overall, morethan half of Denmark’s ﬂeet is owned by Maersk, with around 250 ships in the liner
trade. Maersk is also expanding its overseas interests and now owns Sealand, one of
the largest US-ﬂag vessel operators. Although Moeller’s main business is shipping oil,he has a diverse portfolio including “Netto” supermarkets. He and his company also playa strong role in the Danish shipowners’ association.
The Danish’s shipowners’ association, the Danmarks Rederiforenig (DAS, 2000) not only
has 20 of the biggest shipping companies as its members, but it also includes ownersof small vessels. According to Lund (2000) “the association’s strongest members are
Denmark’s ﬁve biggest shipping companies: Maersk, Nordon, Torn, Lauritzen, DFDS”.
Ganzhorn (2000) adds that “… the Danish shipping industry is run by Moeller (Maersk)
with 3.02 million tons, followed by Torn (0.4), Norden (0.29), Scanlines (0.24), DFDS
(0.22), ELSAM (0.18), Elite (0.15), Lauritzen (0.09)”.
In an effort to balance the impact of the powerful Maersk within the shipowners’ associationand to maintain the level of Danish-ﬂagged ships and Danish employment on those
ships, the association has pushed for more governmental assistance. According to Lund
(2000) the unions are also in agreement with the aspirations of the Danish shipowners’
association as they too want maintain the level of Danish employment in the shipping
industry. He added that “… on the whole, Denmark has a tradition of a close working
relationship between unions, the state and employers; they seek mutual agreement on

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Industrial Relations in the Shipping Industry 53

employment issues”. Kelly (1998: 93) and Thelen (2001: 102) further acknowledge thisview and state that Denmark’s cooperative and centralised industrial relations indicatesa Cooperative Market Economy approach.
The militant ratings’ and general workers’ union, the Specialarbejderforbundet i Danmark(SiD), has been critical of Danish policies, although there are some strong elements within
SiD that see the DIS as positive. SiD is the biggest union in Denmark organising ratingsand manual workers. The ratings’ union used to be an independent sailors’ union but in the
1990s it merged with SiD. SiD also has a strong political character representing Danish
seafarers in all political issues at national and international levels. Recently the unions
have secured a new agreement with the shipowners. The agreement between unions
and owners extends the unions’ right to negotiate wages for overseas seafarers (section
10). It is designed to produce understandings between owners and unions before theowners go to the Philippines to negotiate wages with unions there. Shipowners, anxious
to avoid any industry trouble, endeavour to comply with ITF standards and will even pay
for union observers to travel to the Philippines to assist in negotiations.
The second union is the Danish ofﬁcers’ union, known as the Danish Navigators Union
or Dansk Navigatorfoening. This ofﬁcers’ union organises mostly navigators or deckofﬁcers (around 5,000) and some masters, mates, pilots, harbour masters, and captains.
It also organises chief engineers, engineers and on-shore engineers. Among its 5,000
members, the Dansk Navigatorfoening has 3,100 active members who work on ships inwhich approximately 500 to 600 members work for Maersk. The union has a standard
agreement with Danish shipowners, including Maersk. Dansk Navigatorfoening has also
begun to negotiate on behalf of the foreign ofﬁcers in an effort to steam its declining union
membership amongst the Danish ofﬁcers as a result of their declining employment, andto narrow the pay and beneﬁts gap between Danish and foreign ofﬁcers.
Apart from trade unions and employers, Danish shipping policy and industrial relations
are also inﬂuenced by the third actor, the Danish Maritime Authority (DMA) which ispart of the Ministry of Trade and Industry. Founded in 1988 by a merger of six different
governmental shipping agencies, today DMA is the sole state authority for shipping. DMA
is the agency that registers ships, oversees safety, provides training and is involved inindustrial relations. Traditionally DMA has had a close working relationship with unions
and employers in tripartite committees that operate inside a long established cooperative
framework common to Danish industrial relations. According to a representative fromDMA (2000):“… for many years DMA has a memorandum of understanding with trade unions
and employers. We seek to enhance high standards in shipping within our
cooperative framework based on common understandings but without written
rules of conduct.”

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54 Thomas Klikauer & Clifford Donn

In summary, Danish shipping policy and industrial relations includes three actors, the state(DMA), the employers, with Maersk as a strong dominant company, and a trade union for
ratings and one for ofﬁcers. Traditionally, trade unions and employers operated within acooperative and tripartite framework supported by the state in the form of the Maritime
Authority (Lind & Knutson 2001: 65). By the mid-1980s Denmark’s shipping industry
felt more and more exposed to low-cost international competition. Utilising Denmark’s
tradition of cooperative industrial relations, the state successfully introduced a newshipping register that has subsequently become Denmark’s main ship register. Initially,
the ratings’ union strongly criticised the introduction of the second register because of afear of job losses among ratings. However, the introduction of the second register did notlead to a dramatic loss of employment but rather it seems to have slowed its downward
trend. Overall, industrial relations in the Danish shipping industry have been cooperative
despite conﬂicts over the introduction of the second register.

Discussion
As we look at the industrial relations in the liberal (LMEs) and the coordinated (CMEs)
market economies, we ﬁnd that both have been responding to the same external stimuli
brought to their economies through increased competition under globalisation. While theresponses have differed based on national industrial-relations traditions and systems,
the range of responses is limited by the similarity of the challenges faced. Our ﬁndings
support the LMEs and CMEs theory because the variations in employment patterns andindustrial relations we found in the LMEs and the CMEs, are reﬂected their industrial
relations policy which in turn are a response to strong competition in the global shipping
industry. Australia and the USA (LMEs) as well as Germany and Denmark (CMEs) found
two distinctly different ways of responding to the increased competition based on their
institutional foundations. That is, while the two LMEs have responded in a deregulated
fashion, the two CMEs have introduced detailed changes to their institutional foundationsin shipping industry’ industrial relations.
Accordingly, the CMEs, Germany and Denmark, have created “second registries” as new
institutional foundations for industrial relations in international shipping while the LMEs,
Australia and the United States, have deregulated or reduced direct and/or indirect state
support and subsidies to vessel operators. However, initially Australia, as a country
under a Labour government, tended towards a cooperative solution reﬂecting a CME
approach much in the same way as Germany. Denmark also opted for somewhat
stronger corporatist solutions to the challenge of globalisation as a classical institutional
solution for industrial relations under CME conditions. While Denmark has had somesuccess with their approach, Australia has abandoned its cooperative IR policy. This
shift in policy occurred when a change of government brought a change in industrial
relations supporting a deregulatory approach favouring highly deregulated industrial
relations emblematic for a LME’s approach to IR. Germany’s regulatory approach

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Industrial Relations in the Shipping Industry 55

favoured a second register supported by a coalition composed of government andemployers indicates a cooperative - not corporatist - CME solution, even thought there
was strong opposition from the trade unions. As an example of a LME’s approach toindustrial relations in the shipping industry that has had to respond to increasing global
competition, is the USA, in which the key parties in its shipping industry – namely thegovernment, employers and unions – have shown very little cooperation. Instead thestate has deregulated the industry and decreased subsidies which in turn increased thehardship of employees in the shipping industry.

Conclusion
Neither the CME’s nor the LME’s approach to employment and industrial relations wereable to stop the increased appearance of ‘crews of convenience’ under globalisation.
However, the crucial difference between LMEs and CMEs lies in the different levels ofprotection for each of the different levels of employment. The introduction of ‘second
registers’ by the CMEs has, to some extent, protected the core employment in off-shore
shipping because masters, captains, and ofﬁcers have received limited protection by
being on such registers. While neither LMEs nor CMEs have been able to stop increased
competition in ocean going shipping, LMEs have exposed their shipping industries tothese forces without protection, while CMEs have sought to protect core sections of offshore employment. The two CMEs achieved this by a coordinated approach to industrial
relations policy in shipping. In sum, while all four countries were faced with the same
competitive forces brought to them by globalisation in the world shipping industry, thetwo coordinated market economies maintained their competitiveness by developing
innovative employment strategies that protected core employment while at the sametime securing the continuation of their coordinated pattern of industrial relations.

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New Zealand Journal of Employment Relations, 29(1): 63-87

Organisational Downsizing andRedundancies: The New ZealandWorkers’ Experience
KEITH A. MACKY*

Abstract
This paper explores the experiences of organisational downsizing and redundancy fora national population sample of 440 workers. Most were found to have experienced
redundancy or downsizing either directly and or by knowing someone who had been maderedundant. Males, older workers and those with more years in the workforce were foundto be disproportionately represented among those made redundant. Older workers werealso found to spend longer out of work due to redundancy and, perhaps realistically, tohave poorer perceptions regarding the length of time it would take to obtain reemployment.
Employers were found to have used few of the range of downsizing practices know toameliorate its adverse impacts. In general, workers who had experienced a downsizingor redundancy were dissatisﬁed with both the management of the downsizing process
and with the support provided to the survivors and victims by their employers.

Introduction
Organisational downsizing is a deceptively complex construct that is conﬂated with avariety of other terms, including restructuring, redundancies, delayering and rightsizing(e.g., Ryan & Macky, 1998). While lacking precise theoretical determination (Littler,
2000), downsizing is at its most fundamental a deliberate reduction by management to
reduce a ﬁrm’s size in terms of the number of employees it has. There are many ways
in which this can be done, including outsourcing some of the work previously done byemployees, eliminating functions, cutting hierarchical levels or ‘delayering’ (Tomasko,
1987), eliminating business units, using the natural attrition of employees combined withhiring freezes, offering early retirement incentives and, most commonly, via redundancies.

* Keith A. Macky is a Lecturer in Human Resource Management at Massey University, Auckland. The research was
funded by a Massey University, College of Business, Business Research Fund grant (no A02/R/828).
The author would like to thank Professor J.H.K Inkson and Associate-Professor S. Carr, both of Massey University, fortheir support and comments on various stages of this research. The author would also like to thank the hundreds ofpeople who gave freely of their time to participate in this research.

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New Zealand Journal of Employment Relations (2004), 29(1): 89-103

Research Notes: Cultural Diversity
and Organisational Efﬁciency
JAKOB LAURING* AND COLIN ROSS**

Abstract
The expected positive link between diversity management and organisational efﬁciency
is often used as a reason for pursuing diversity management and equal employment
opportunity programmes. However, this positive link is only supported to a limited degree
by in-depth empirical research and therefore it is often based on normative expectations.
Recent research has further indicated that the link between diversity and efﬁciency may
be more complex and cannot a priori be taken for granted. This article argues that sometheoretical rethinking of the issues is necessary and suggests that the combination of
more theoretical cross fertilisation and in-depth research may be the way forward. Basedon our own empirical research, barriers preventing a positive link between diversity andefﬁciency can come in different forms and our case studies illustrate situations where
both containing and constraining patterns have to be overcome.

Introduction
Diversity management has become very important in most OECD countries over the last
20 years. This has often been driven by a range of factors such as internationalisationof business, legislative reform and demographic changes (including higher growth ratesof minority groups and changing immigration patterns). At the same time, there has
been in shift in justiﬁcation for pursuing diversity management and equal employment
opportunity (EEO) programmes. The debate on diversity management has moved froman initial focus on overcoming discriminatory employment practices to a ‘business case’view which justiﬁes diversity management and EEO programmes predominantly through,increased organisational efﬁciency and competitive advantage. Currently, the businesscase view features strongly (Wrench, 2002) where the ‘real’ beneﬁts of diversity are seen
as: an increase in organisational efﬁciency, improved staff morale, and better accessto new market segments through the application of diverse knowledge and knowledge
synergies (Thomas and Ely, 1996).

* Jakob Lauring is a PhD student at the Aarhus Business School, Aarhus, Denmark.
** Colin Ross is a research assistant at the University of Auckland, New Zealand.
The authors would like to thank Dr Erling Rasmussen and the anonymous referees for their comments and suggestions.
Please email any comments about this article to: JaLa@asb.dk.

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90 Jakob Lauring and Colin Ross

This article questions the normative postulation of a positive link between diversity
management and organisational efﬁciency found in the business case view. Instead, it
argues for a more complex understanding grounded in empirical research, which opens
up a range of possible efﬁciency outcomes. It is suggested that the business case viewof diversity management is mostly built on assumptions, with only a limited amountof research; therefore diversity management literature fails to address the potential
difﬁculties arising from implementing diversity programmes. Besides emphasising amore complex, research based understanding, it is also suggested that it is necessary
to widen the literature base and draw on other strands of research such as international
business and strategic human resource management. It is a real problem that diversity
management and EEO programmes have long debated the issues in relative isolation
with little communication and cross fertilisation with other strands of research. Therefore,
it is suggested that in order to get a greater understanding of diversity, organisational
context and group dynamics need to be taken into account.
While we acknowledge that diversity management and EEO programmes encompass awide range of factors such as ethnicity, gender, age, disability and sexual orientation – andthat these factors cannot be treated in isolation - we are conﬁning our discussion in thisarticle to ethnic and cultural diversity. As well as discussing recent academic research,
we also present the ﬁndings from two case studies. These indicate the existence ofboth containing and constraining obstacles to the ﬂow of knowledge within culturally
diverse organisations, due to social structures arising from diversity. It will be argued thatknowledge sharing within diverse organisations could beneﬁt from recognition that thesebarriers restrict the ﬂow of cross-cultural knowledge.

From Equal Opportunities to Organisational Efﬁciency
The rising interest in organisational diversity has mainly come from demographic
changes found in many OECD countries, due to faster growth rates of minority groups,
immigration and business internationalisation. Cultural diversity has changed from being
an optional choice or legal obligation to being an inevitable reality in many organisations(Smith, 1998; Fernandes, 1991). This can be illustrated in countries such as Australia
and New Zealand, which have some of the most culturally diverse workforces in theworld (Tung and Thomas, 2003). Thomas, Ravlin and Barry (2000) identify some
Australian manufacturers who employ as many as 35 different cultures within theirworkforce. Likewise, the general internationalisation of business has made the ability
to understand ethnic and cultural differences an important aspect of running a business(Henkoff, 1993).
In the 1980s, workplace diversity management focused mainly on giving all employees
equal opportunity in the labour market, regardless of group afﬁliation, leading to a revisionof meritocracy and its acclaimed neutrality towards race and gender (Kirton and Greene,2000). This prompted a concern with structural discrimination in the labour marked andArticle 5 Lauring.indd 2

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Research Notes 91

it was argued that to provide the same opportunities for all employees would requirethem to be treated differently, in regard to recruitment, retention and promotion (Kirton
and Greene, 2000). But the growing political critique of afﬁrmative action gave rise tooppositional arguments from the beginning of the 1990s (Hall, 1995). It was stated that
equal opportunity and afﬁrmative action programmes were stereotyping dominant groups(Denton, 1997; Linnehan and Konrad, 1999; Konrad, 2002), causing them to lose interestin seeking management positions (Hemphill and Haines, 1997). Initiatives have also
been criticised as being ineffective in introducing real organisational change, and forfocusing on a single minority group without any wider coordination (Hall, 1995). Finally,a substantial issue associated with diversity management was the lack of organizational
beneﬁts in terms of the ‘bottom line’ and competitive advantage. This point was tackled
head-on by Thomas (1991) when he presented a move to a more business-oriented
position. He argued that social responsibility, legal compliance, and better community
relations might be sound reasons for learning to manage diversity but, given the natureof today’s competitive challenges, only business reasons would supply the necessary
long-term motivation for diversity.
It has subsequently been suggested that the potential business gains from diversity anddiversity management are extensive and go much further than the classical beneﬁts
ascribed to equal opportunity programmes. Some researchers focus on cultural
diversity leading to more diverse approach to business resulting in better problem
solving (Harrison, 1995; Adler, 1997). Others, such as Smith (1998) and Burton (1992),
argue that culturally diverse groups produce more creative and innovative solutions.
Broader market intelligence and internationalisation are also mentioned as some of the
beneﬁts of cultural diversity (Cox and Blake, 1991). Diversity management can enhanceinternational product development, improve subsidiary management and facilitate
global networks and alliances (Hogg and McGarty, 1990; Stanley and Ingram, 1990;
Fujimoto, Hartel et al., 2000; Lau and Nicholas, 2001), and also offers an advantage
in the selection, development and circulation of expatriates (Zeira and Adler, 1980;
Tung, 1981; Torbiorn,1982; Thomas, 1990). Intuitively, these arguments sound bothdesirable and plausible, but comprehensive, in-depth evidence to support the businesscase argument has yet to be presented. Until research shows unequivocal support for ageneral link between diversity management and organisational efﬁciency, the businesscase argument remains unsubstantiated.
Furthermore, it is more than just a matter of insufﬁcient research since some of theavailable research must also be questioned. The business case argument is often built
on empirical evidence gathered from a number of laboratory and classroom experiments
conducted during the 1960s (Cox and Blake, 1991; Nkomo and Cox, 1996; O’Flynn,
Ricciotti et al., 2001). Much of this research refers to studies conducted by Hoffman
and Maier (1961), which showed that groups with mixed backgrounds and gender - as
opposed to more homogenous groups - produce better quality solutions to problems.
However, a closer examination of these studies reveals mixed outcomes, limitations andArticle 5 Lauring.indd 3

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92 Jakob Lauring and Colin Ross

reservations, overall they vaguely conclude that organisational diversity will produce both
beneﬁts and difﬁculties. Subsequent research has had mixed results: some researchers
found a positive effect on organisational efﬁciency from group diversity in well-integrated
groups (Maznevski, 1994; McGrath, 1984), while others found that heterogeneousgroups can be damaging to organisations due to the social conﬂicts that occur withinthem (Stephenson and Lewin, 1996). Further studies showed evidence of conﬂict indiverse groups but at the same time gains in innovation and creativity (Jehn, Neal &Northcraft, 1999; Williams & O’Reilly, 1998), while others found no effect from diversity
at all (Campion, Medsker & Higgs, 1993). As well as mixed results, the problem withmany of these studies is that by being conducted in an isolated situation, they cannot
be related directly to diversity issues in everyday organisational life. To a large extent
they do not include a time perspective, conﬂict of interest and power relationships. Even
though these studies have been used to support the business case argument, the results
show that attaining competitive advantage from organisational diversity cannot be taken
for granted. Beneﬁts and drawbacks seem to be highly dependent on context. Based onthese studies, it would be very hard to predict the speciﬁc cultural effect of organisational
diversity within an organisation. Until now, some proponents have argued that even if
the results of laboratory experiments were ambiguous, any negative outcomes could be
explained by the absence of ‘real’ diversity management. This has given further impetus
to the idea that some of the slightly positive results could be dramatically enhancedby more extensive implementation of diversity management programs (Cox and Blake,
1991; Nkomo & Cox, 1996).
The superﬁcial evidence for the business case argument has meant there is a requirement
for more in-depth research. A recent study by Kochan et al. (2003) could shed some lighton the relationship between diversity and bottom line results. Since 1997, this researchgroup has worked on documenting the connection between diversity management
and organisational efﬁciency and innovation, based on a quantitative and qualitative
investigation of four large American companies with ‘well-deserved reputations’ for theirlongstanding dedication and commitment to building a diverse workforce and working
with diversity management (Kochan et al., 2003). Although these companies havedifferent characteristics such as size and type of business, the results were strikingly
similar. Kochan et al. (2003) found that diversity does not have the positive inﬂuence onorganisational efﬁciency suggested by some of the more optimistic line of research, butneither does it have the negative effect on group processes which some identify. The
only positive correlation found between organisational diversity and improved efﬁciency
was in working environments where cross-cultural learning and knowledge sharing
were actively promoted. Kochan et al. (2003) suggest that organisational culture;business strategy, human resource policies and practices could facilitate the inﬂuence oforganisational diversity. This study highlights organisational context and group dynamics
as the two most inﬂuential factors linking diversity management to bottom line success.
However, the study also suggests that in some cases racial diversity can have a negative
impact on organisational efﬁciency, but this can be mitigated by training and development

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Research Notes 93

focused initiatives (Kochan et al., 2003). These results should motivate researchers tolook further towards solving the problems that arise from diversity.

Is it Possible to Develop a More Sophisticated Understanding?
In order to develop a more sophisticated understanding of the link between diversity
management and organisational efﬁciency, it is probably necessary to re-conceptualise
the business case view and draw on other theoretical ﬁelds. In the following, we draw
on research in international business, strategic human resource management andmanagement strategy as a way of illustrating the possibilities for theoretical crossfertilisation. However, there are probably other research ﬁelds that could add to ourunderstanding.
The ﬁeld of international business has worked extensively with problems arising from
cultural interaction with market knowledge, with cross-cultural communication andmulti-cultural teams being major research areas. Diversity could provide an obvious
advantage if the organisation has a workforce that reﬂects, and has knowledge ofthe market that it serves. The internationalisation of business along with the rapid
development of communication channels (internet and video conferencing) has led toa rapid development of cross-cultural teams. The sharing of knowledge amongst teammembers is a process where knowledge is created and maintained through humandialogue and interaction; therefore it cannot be disconnected from the social system.
Knowledge is seen as intertwined in the negotiation and development of social structuresand ‘communities of praxis’ (Lave & Wenger, 1991; Brown and Duguid, 1991). The
achievement of knowledge synergies has been one of the most discussed arguments
supporting the business case for diversity management (Thomas and Ely, 1996), but
this argument needs further exploration. Knowledge synergies can be described as thedevelopment and improvement of creativity, innovation, learning and problem solving
through the cross fertilisation of knowledge resources (Cox and Blake, 1991; Thomas
and Ely, 1996). Researchers such as Eisenberger, Fasolo, and Davis-LaMastro (1990)
note that cultural diversity can facilitate a more differentiated perspective when working
with creative assignments. Adler (1997), by drawing on a range of international studies
argues that multicultural teams have the advantage of an increase in innovation andcreativity due to knowledge synergies within them.
However, there are also disadvantages associated with cross-cultural workplaces
and work teams. A common theme is that team learning processes can give rise tointerpersonal and inter-group tensions (Bloor, 1987; Lave and Wenger, 1991; Bloor,1991; Wenger 1998). Thompson and Gooler (1996) argue that while diversity issues
lie at the heart of team functioning and effectiveness, successful diverse teams do nothappen by themselves without effective design, implementation and management (which
we discuss further in our two case studies). Several studies - for example, Linnehan
and Konrad (1999) and Konrad (2002) - suggest that reducing conﬂict may be the most

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94 Jakob Lauring and Colin Ross

proﬁtable gain from diversity management and therefore more research is needed on
how to avoid the negative consequences of diversity.
Diversity management is discussed in human resource management literature and similararguments to the business case view can often be found (Macky and Johnson, 2003).
Based on the resource based view of the ﬁrm, one strand of strategic human resource
management (SHRM) argues that it is possible to gain competitive advantage on the basisof talented employees and their organisation-speciﬁc interactions (Barney, 1991, Barney
and Wright, 1998; Boxall and Purcell, 2000; Wright and McMahan, 1992). For example,
Richard (2000) argues that the value created from a large number of diverse individuals
is high, difﬁcult for competitors to imitate and acts as a source of sustained competitive
advantage. Furthermore, he suggests that organisations with diverse perspectives havemore resources to draw on, enabling them to be more creative and innovative. There areclear links to the current discussion of ‘knowledge economies’ and ‘learning organisations’and Sammartino et al. (2001) argue that organisations have become increasingly awareof the importance of knowledge as a source of competitive advantage. Overall, thishas led organisations to implement strategies and structures that increase learning andknowledge management, including the management of cultural diversity (Tenkasi and
Boland, 1996; Senge, 1990; Becker, 2001).
Conversely, writers such as McMahan, Bell and Virick, (1998) point out that much
SHRM research uses tacit assumptions about the similarity of workers which may not
be appropriate for the future study of diversity as a source of competitive advantage.
For example, the application of incentive pay systems developed for employees inindividualist cultures (as opposed to those from collectivist cultures) can becomecounterproductive. It may also be a problem that a homogenous organisational culture isoften seen as an integrated part of business strategy for many multinational enterprises(McGraw, 1998). This can create tension between standardisation of human resource
management practices across business units and attempts to effectively accommodate
a diverse workforce.
Whereas diversity management is often treated as a speciﬁc area of study ultimately it
may become ‘business as usual’ by being totally integrated into management strategy
and processes. Writers such as Kramer (1997) argue that diversity management, rather
than being seen as the next generation of afﬁrmative action, should be seen as an
approach to management. Kwak (2003) advances this further by saying that there islittle point in arguing whether the effects of diversity are good or bad as it is a reality ofthe modern day labour force and the focus should be on maximising the positive beneﬁts
while minimising the negative effects.

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Research Notes 95

Case Studies – Dan Foods and Pharma
One of the authors conducted two case studies in an attempt to understand more
about the accepted practice of knowledge sharing and the development of knowledge
synergies in culturally diverse organisations. The studies attempted to answer questions
on how cultural diversity relates to organisational efﬁciency, especially in relationshipto the achievement of knowledge synergies. In other words, how does cross-culturalcommunication and knowledge sharing apply in an organisation that has the opportunity
to gain competitive advantage from employing a culturally diverse knowledge resource?
The empirical investigation revealed some of the barriers that culturally diverse
environments may experience when trying to utilise diverse knowledge resources andknowledge synergies. The case studies were generated as ethnographical ﬁeldwork in
two Danish multicultural and international corporations. To gather and generate the datamaterial, participant observation and interviews were applied as methodological tools.
The two organisations shared a common need for internationalisation and an enhanced
knowledge of non-Danish markets. They each had a very different approach to culturally
diverse knowledge as a resource. (For a more detailed discussion, see Lauring, 2001a;
2001b; 2003; or the case description on www.employment.org.nz).
Case Study 1 – Dan Foods
Dan Foods Saudi was a Saudi-Arabian subsidiary of an international Danish corporationand the most proﬁtable subsidiary in the corporation. At the time of the study, Dan Foods
employed 500 third country nationals from thirteen different countries. All employees
were men with the biggest number of employees’ coming from India, Egypt and thePhilippines. The company employed twenty Danish expatriate managers and the same
number of Saudi-Arabian nationals. The parent corporation had a formal policy of sending
expatriates to subsidiaries, which aimed primarily to increase knowledge sharing acrosscultural boundaries. This cross-cultural interaction was intended to develop international
skills such as language, market knowledge and cross-cultural knowledge. However,it was found that group dynamics within Dan Foods Saudi had a negative inﬂuenceon knowledge sharing: the Danish employees developed a very tight and integrated
group structure with intense internal socialisation which allowed fast, extensive internal
knowledge sharing, but little dialogue with other nationalities. Interaction with othernationality groups was conducted as one-way communication or as instructions given
from one nationality to another. Over time, the Danish management fostered an ethnicalhierarchy where managers tended to be Danish and supervisors tended to be Egyptian.
Strong internal group socialisation created suspicion between the different nationalities
and over time vicious circles of antagonism developed, keeping them even further
apart. These organisational and group dynamics contained knowledge sharing and theynegated the potential positive effects of having a multi-cultural workplace. Whereas
the corporation had formulated a need to develop the international understanding of its

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96 Jakob Lauring and Colin Ross

staff, the expatriate Danish managers failed to develop cross-cultural communication
skills, tolerance, openness and ﬂexibility. They developed what they themselves termedas ‘sound scepticism’, although some would interpret it as ethnocentrism or even as
racism.
Case Study 2 - Pharma
Pharma International Marketing is a marketing department within a large international
Danish corporation staffed by 150 highly educated employees - twenty percent having nonDanish nationality. Among the foreign employees there were employees from overseas
subsidiaries, and foreign immigrants (Lauring, 2001; 2003a; 2003b; 2003). In Pharma,
recruitment for cultural diversity and internationalisation arose from a requirement to gain
both ‘multi-local’ – that is, a range of individual perspectives on different national markets- and global knowledge resource. Within the multi-local perspective, Pharma needed
local societal, legal and cultural knowledge of their market and links to their subsidiaries
through the knowledge and contacts of the inpatriates. Pharma wanted to develop atrue global perspective through facilitating knowledge synergies and achieving crosscultural innovation, creativity and learning. Through cultural diversity, management tried
to erase the inherent Danish ethnocentrism and develop multiple perspectives to dailytasks. In many ways, Pharma succeeded in creating a truly multicultural organisational
environment, few social conﬂicts between different cultural groups were observed andthere was interaction between staff of different cultural backgrounds.
However, the collection of so many nationalities meant the creation of a formal work
environment and, due to cultural and language differences small talk vanished fromthe organisation. Social activities were initiated but often failed due to lack of support
from staff. Being staffed by predominantly young, ambitious people, with a culture that
supported intense focus on personal assignments there was little time for or interestin outside social activities. While the company culture created minimal conﬂict it left
individuals with little knowledge of their colleagues’ personalities, competencies andqualiﬁcations. Furthermore, the project focus did not allow staff to have a wider knowledgeof other projects and company matters. Many activities were not coordinated anddifferent teams would conduct the same task simultaneously. It proved difﬁcult to utilise
the potential knowledge synergies from diversity because of insufﬁcient knowledge ofstrengths and weaknesses of other projects and team members. Management achieved
a sustained balance in the multicultural environment and avoided interpersonal or intergroup conﬂicts but it lost a great deal of the potential beneﬁts from the culturally diverse
knowledge resources. The sharing of knowledge was not conﬁned to certain groupsof employees, as in Dan Foods, but the formal environment and limited interaction
generally constrained knowledge synergies and thereby reduced the potential level oforganisational efﬁciency.

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Research Notes 97

The two case studies illustrate two different types of barriers in culturally diverse
environments: the Dan Foods case study shows the way that knowledge can be contained
while the Pharma case study highlights the constraints of knowledge sharing. They
also highlight situations where knowledge resources are not being applied efﬁciently
and while management may consider that cultural diversity and knowledge synergies
constitute a superior strategy, the actual beneﬁts really depend on whether management
understands how to facilitate them. The cases also demonstrate how social interaction
can create barriers for cross-cultural knowledge sharing and that organisations need
to be focus on applying knowledge resources to corporate strategy. In other words
knowledge synergies in culturally diverse environments cannot be taken for granted,
sharing of knowledge is promoted only when openness and trust exists between
employees. For knowledge synergies to manifest themselves there has to be the rightbalance between differences and similarities in people’s knowledge and praxis in thecommunity (Gudykunst and Young, 1997; Brisling, 1981; Brisling, 1990). Knowledge
sharing is restrained if people are too similar to come up with new ideas or if people are
too different and fail to communicate properly.

Conclusion
There is no doubt that diversity management is a difﬁcult and complex discipline, whichsits uneasily with other management functions. Therefore, it is tempting to argue thatdiversity management will facilitate organisational efﬁciency and we have discussed
several reasons why this is an intuitively plausible outcome. Unfortunately, the businesscase for diversity is not the easy proposition argued by many researchers, consultants,
and practitioners as the bottom line beneﬁts of diversity are varied. While there arepotential gains from diversity the business case has not been supported by empiricalresearch, no substantial proof has been published that cultural diversity has a positiveinﬂuence on organisational efﬁciency and it must be accepted that in some situations
there are no beneﬁts or even a reduction in efﬁciency. It has also been argued thatthe main beneﬁt of diversity management is to avoid or limit problems associated withdiverse environments. In short, the business case for diversity management cannot betaken for granted, the link is questionable and varies across different contexts.
This does not mean that diversity management should be readily dismissed. The initial
focus of diversity management on overcoming discriminatory employment practices isstill very valid. Diversity is a reality in the labour markets of most western countries andthis creates a need for organisations to understand how diversity affects organisational
efﬁciency and innovation. Diversity management will have been helpful even if it justhelps managers rethink strategies developed for more homogenous organisations andlabour markets.
Finally, we have argued that further empirical studies need to be aligned with improved
theoretical conceptualisation of the business case view. This could, for example, be

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98 Jakob Lauring and Colin Ross

through more cross fertilisation from other research areas such as international businessand strategic human resource management. Our case studies have indicated thatmanagement of diverse cultures is a balance between organisational integration anddifferentiation. Both containment and the constraints of knowledge sharing can hamper
the development of knowledge synergies. Cultural diversity carries the potential forboth embedded creativity and conﬂict, which cannot be separated. Whereas crosscultural communication is now often regarded as crucial for the constructive utilisationof diverse knowledge resources, the potential for conﬂict and misunderstanding can be
difﬁcult to avoid. In some cases, it may even be counterproductive to avoid conﬂict andmisunderstanding since it is often the social interaction and constructive conﬂict thatcreates the potential for innovation, creativity and learning.

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New Zealand Journal of Employment Relations (2004), 29(1): 105-114

CHRONICLE
October 2003
Several settlements of collective agreements were reported in the media. Around 400
senior nurses in the lower North Island ratiﬁed a new multi-employer collective agreement
after 15 months of negotiations between the nurses’ union and seven district healthboards. The agreement will increase salaries by 3% to 11%, including annual salary
increments for service and merit pay. However, negotiations between district healthboards and the senior doctors’ union, the Association of Salaried Medical Specialists,
had to be referred to mediation after a negotiation stalemate. Quarantine and Services
staff at the Ministry of Agriculture and Forestry (MAF) ratiﬁed a new collective agreement
which included a 3% pay rise plus allowances for each of the next two years. Membersof the Professional Fireﬁghter Union also ratiﬁed a new collective agreement which gives
them a 3% wage increase in each of the next three years.
Minister of Education, Trevor Mallard, responded to complaints from the Secondary
Principals Association and announced that both union and non-union members amongst
primary and secondary school principals would automatically receive three months
back pay of their 5% salary increase. The salary increase was part of the primary andsecondary principals’ collective agreement which was ﬁnalised in September and was
originally only backdated for union members. Principals on individual agreements would
have had to negotiate their own arrangements. The Post Primary Teachers Association
expressed its anger that non-union members had been able to free-ride on the unionnegotiated agreement.
The Employment Relations Authority agreed with two unions - the Service and Food
Workers Union and the Nurses Organisation - that the Employment Court should decide
whether it is legal for employers to indicate to non-union members that any beneﬁts
arising from collective bargaining would automatically be passed on to them. According
to the Dominion Post, Authority member Greg Wood stated that it was an importantquestion of law whether such indications were in breach of an employer’s duties of goodfaith to the union and its members.
The Council of Trade Unions (CTU) held its biennial conference in Wellington, with over 200
delegates representing 300,000 members from 34 afﬁliated unions. Minister of Labour,
Margaret Wilson, was expected to announce changes to the Employment Relations Act,but disappointed the conference by merely outlining the background thinking behind theamendments. This included: making it more difﬁcult for non-union members to ‘free-ride’
by discouraging employers from automatically passing on settlements from collective
bargaining to employees on individual agreements, and clarifying the expectation thatcollective bargaining would lead to settlements. The conference was advised that

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106 Chronicle

amendments to the Act would be introduced this year, and should take effect from the
middle of next year. Prime Minister Helen Clark gave a strong signal that legislation for
four weeks annual holidays would be introduced – but not until after 2005, with earlier
reports stating that this was to allow time to phase in the economic consequences.
The Dominion Post reported that another major topic at the CTU conference was New
Zealand’s dismal occupational safety and health record – 73 workplace deaths wererecorded in the year ending June 2003. CTU President, Ross Wilson, was quoted assaying the solution to this problem lies in improving workers’ ability to bargain collectively.
The need to promote for all workers better work-life balance was also discussed, withcalls being made to lobby for protection of the ‘precarious nature of part-time employment’and for a change to a 35-hour working week.
Minister of Labour, Margaret Wilson, announced a new consultation round where theGovernment would contact community groups to ﬁnd ‘champions of work-life balance’ tounderstand how New Zealanders cope with increasing work demands. Recent Cabinet
brieﬁng papers pointed to the shrinking working-aged population and New Zealand’s
ability to compete for international talent as key considerations behind various legislative
attempts to lift working conditions.
Auckland hosted a special International Labour Organisation (ILO) forum on ‘decent
work’ which discussed how to improve working conditions in the Paciﬁc and South-East
Asia. The conference was attended by government, employer and union representatives
form 10 different countries.
The Dominion Post reported that jobs losses were predicted in the Kapiti and Horowhenua
hub of clothing and footwear industries, following the planned reduction of import tariff
rates on these items. However, Chief Executive of Norsewear, Paul Spicer, commented
that the 2% tariff reduction was unlikely to make much of an impact as a small movementin the dollar would offset the reduction.
Various surveys painted a picture of a strong labour market. Statistics New Zealand annual
survey of labour costs showed a 2.2% rise in the year to June 2003 - the highest rate
for six years. The monthly ANZ-Business New Zealand Performance of Manufacturing
Index reached 59.6, the highest point this year and indication of a manufacturing activity
expanding strongly (an index score above 50 suggests that manufacturing activity is
expanding). The quarterly survey of business opinions by the NZ Institute of Economic
Research showed that employment intentions were at the highest level since 1994, and
16% of ﬁrms reported that labour shortages were the most important factor constraining
their ability to increase output.
Air New Zealand announced plans to cut 1,500 jobs from its 10,000 strong workforce
over the next four years, and although most of these would be achieved through natural

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Chronicle 107

attrition, around 300 compulsory redundancies in back ofﬁce support areas were expected.
NZ Herald reported that the Council of Trade Unions (CTU) expressed its anger that theairline had not given unions advanced warning of the media announcement, given thesigniﬁcance of the announcement and the good faith obligations in both the Employment
Relations Act and its collective employment agreements.
In a landmark case, six unions challenged Air New Zealand’s plan to introduce random
drug and alcohol testing for all of its 10,000 employees in the Employment Court (seeAugust Chronicle). According to the NZ Herald, union witnesses in the case focusedon the effectiveness of tests as a measure of impaired performance, arguing that there
are no substitute for efﬁcient performance management to identify unsafe workers.
Furthermore, drug tests were described as breaching fundamental rights such as theright to privacy and the right to refuse medical treatment. However, Air New Zealandfocused on the safety aspects, the positive effects that random drug testing has on
reducing usage levels, and the fact that impressions of people’s performance were often
unreliable. The case was adjourned until December for other interested parties, including
the Privacy Commissioner and Business New Zealand to make submissions.
The Dominion Post reported that a restaurateur was ordered to pay $35,000 arrears
in minimum pay and holiday pay to a cook who had been working without proper pay
whilst he was in breach of his immigration entry permit. The Authority highlighted theimportance of enforcing minimum codes and noted that breaches of Immigration Law
were matters for the Immigration Service. It also imposed $14,700 in penalties on therestaurateur for breaching the Minimum Wage Act and the Holidays Act.

November 2003
Several media reports speculated that the Holiday Bill would retain the following key
changes: a minimum of time-and-a-half pay for work on public holidays, as well as time
off in lieu; the provision of three days leave for bereavement leave and ﬁve days leavefor sickness; an allowance for sick leave to be accumulated for up to 15 days; provisionfor ‘pay as you go’ for annual leave entitlements for workers employed for less than ayear so that they can forgo holidays for extra pay; and increased enforcement penalties
for offences against the Act. Four weeks paid annual leave were likely to be introduced
in 2007, rather than a phased introduction since this would lessen compliance costs forbusinesses. The law change would be passed this electoral term as part of the review of
the Holidays Act due back before Parliament in December.
The media reports highlighted the controversial nature of the Holiday Act changes.
Following strong objections by employers groups, the Bill would be amended to allow
an employer to request proof of sickness when an employee had been absent for threeconsecutive days, rather than the original proposal of ﬁve days. Speculation about thecost and effect of the change was rife. The Dominion Post reported that government

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108 Chronicleofﬁcials had estimated that the maximum cost would be $500 million if all employees onleave were replaced while economist Brian Easton had estimated that the cost would
more likely be around $350 million. These estimates were much less that the $908
million estimated by Business New Zealand who feared that staff who already had fourweeks leave would attempt to negotiate more (see July Chronicle). It was estimatedthat one-third of state sector workers and two-thirds of private sector workers currently
received only the minimum 3 weeks annual leave entitlement.
The amendments to the Employment Relations Law Reform Bill were delayed further.
The NZ Herald reported that the Bill would not come into Parliament until shortly before
Christmas. The sticking point appeared to be Cabinet disagreement over the ‘transfer ofundertakings’ clause, which had been altered to include ‘succession contracts’ – whenwork already contracted out is moved to another contractor.
Around 650 special education ﬁeld staff ratiﬁed a collective agreement giving them
two pay rises of 2.5% each plus a $500 lump sum. Special education workers include
psychologists, counselors and other therapists who work with preschoolers, and primaryand secondary school children.
The Dominion Post reported that around 4,000 nurses, midwives and health assistantsfrom seven North Island health boards began pay negotiations in a bid to gain pay levels
equivalent to their Auckland counterparts. Meanwhile, Oamaru Hospital nurses accepted
an offer that gave them parity with their South Island colleagues (see September Chronicle).
According to the Nurses Organisation, while there were 2000 nursing vacancies aroundthe country it was still difﬁcult for many graduate nurses to ﬁnd jobs because many public
hospitals favoured experience and specialisation.
Around 300 Service and Food Workers Union members at 15 Presbyterian Support Central
rest homes went on strike for 24 hours as their pay negotiations had failed. However,lockout and strikes notices issued by the IHC and the Service and Food Workers’ Union
were lifted as the parties agreed on back-pay of the 2% wage rise previously settled (seeSeptember chronicle).
The ﬁnancial sector union, Finsec, entered pay talks with TSB Bank after a 12-year gap
between collective agreements. According to the Dominion Post, a Finsec spokeswoman
said that the union had now rebuilt sufﬁcient membership to start negotiations.
An Employment Court ruling could impact on other collective agreements. The Court
ruled that the NZ Herald journalists’ collective agreement, which allowed workers to leave
the collective but remain members of the union, breached the Employment Relations
Act and International Labour Organisation conventions. The case was brought by theEngineering, Printing and Manufacturing Union after managers told senior journalists thatthey could only receive pay rises if they left the collective agreement. The Court ruled that

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Chronicle 109

people covered by a collective agreement could not change to an individual agreement
unless they resigned from the union. Furthermore, the Court stated that any offer of apay rise that was conditional on an employee leaving the collective agreement would failto promote collective bargaining and would be ‘inimical’ to promoting the observance of
freedom of association principles. It would undermine voluntary union membership andviolate prohibitions on giving preference to workers on the basis of whether they were orwere not union members.
The Employment Court case involving six unions against Air New Zealand’s random
drug-testing plans was postponed to early February, after unionists requested more time
to assess recent changes proposed by the airline (see October Chronicle). Meanwhile,
the NZ Herald reported that the Dairy Workers Union had negotiated a non-punitive
drug and alcohol program with New Zealand Dairy Foods, which eliminated the need forinvasive drug testing by encouraging employees to seek help for abuse problems.
Following the death of one man and the serious injury of another on an Auckland
construction site in January, a property developer and two of his companies were ﬁned
$89,000. The site foreman was ﬁned $5000, which was described by the Judge as being
consistent with his means.
An employee who was dismissed for calling his supervisor a ‘dumb arse’ and drinking
beer minutes before the 5 o’clock time that was allowed, was awarded $3000 for
humiliation and stress, plus compensation for lost wages. However, this was reducedby half since his behavior was found to have contributed to his unjustiﬁed dismissal.
According to the Dominion Post, the Employment Relations Authority found that theworker’s behavior did not amount to serious misconduct. In addition, the employer had
conducted a deﬁcient investigation into the worker’s actions – it was revealed that theemployer had not ascertained that the worker had been called ‘bloody pathetic’ by thesupervisor. Furthermore, the worker was not properly advised of the reason for thedisciplinary meeting and did not have the chance to gain representation.
The job market was described as exceptionally strong. Unemployment was at 4.4%, thelowest level since the share market boom of 1987 and, after Switzerland, the second
lowest unemployment rate amongst OECD countries. According to the Dominion Post,
wage and salary rates rose 0.8% in the September quarter, which was the highest
rate since Statistics New Zealand began assembling statistics in 1992. The annual
rate was 2.3%, compared with an annual inﬂation rate of 1.5%. Still, business groups
expressed concern that wage increases were not enough to stop New Zealand workers
from being lured overseas. Chief Executive of Business NZ, Simon Carlaw, pointed
out that Australian average weekly wages were already $200 ahead of ours becauseof faster economic growth. Alasdair Thompson, Chief Executive of the Employers andManufacturers Association (Northern), noted that most of the latest wage and salary
increase had originated from the public sector, with private sector average hourly earnings

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110 Chronicle

only rising 0.5% in the last three months.
An Otago University study revealed that 29% of workplace deaths were caused by car
accidents. OSH inspectors visited 62 construction sites and 82 businesses in Taupo
and found that half did not have a health and safety system. The inspectors issued 355
improvement notices and 10 prohibition notices.

December 2003
The long awaited release of the proposed changes to the Employment Relations Act– the Employment Relations Law Reform Bill - brought widespread reaction from various
interest groups. The main changes included: preservation of jobs and conditionsof vulnerable employees when a business changes hands; a ban on employers fromdiscouraging employees to bargain collectively, including forcing employers to front up forthe ﬁrst round of multi-employer talks, inhibiting free-riding by stopping employers fromautomatically passing on union-negotiated collective deals to non-union workers; thecourts being empowered to set employment conditions if good faith bargaining provisions
were seriously breached and to impose heavy ﬁnes. Predictably, these proposals werelabelled a backward step by the Opposition and business groups but they were welcomedby unionists. While the President of Council of Trade Unions (CTU), Ross Wilson, called
the changes a ‘modest’ improvement, he also regarded them as a genuine attempt toaddress union concerns.
A number of business groups called for more time to consult their members about the
Employment Relations Law Reform Bill as the 27th February deadline for submissions
to Parliament’s Select Committee did not provide enough time because of the holiday
interruptions. Lobbyists for 7,500 employers threatened to ignore the deadline forsubmissions.
Parliament passed the Holidays Act 2003 which provided for four weeks annual leavefrom 2007 (see November Chronicle). Leader of the National Party, Don Brash, vowed
to repeal the legislation if the National Party got into government.
Kindergarten teachers covered by a new employment agreement would be paid a salaryrather than an hourly rate. Their union, the Educational Institute, said 800 teachers andsupport staff working in 150 non-proﬁt private early childhood education centres werecovered by the new agreement.
A dispute between supervisors and the Corrections Department went to mediation after
the supervisors had threatened with strike action and the Corrections Department had
had to send 700 offenders home. The supervisors, who were in charge of groups ofperiodic detention trainees, were objecting to the Corrections Department sending themhome when offenders did not turn up to do community work as ordered by the courts.

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The ongoing issue of skill shortages featured prominently in media reporting. The Ministerof Social Development and Employment, Steve Maharey, announced a four-year strategy,
costing more than $21 million, to help Auckland’s migrants and refugees ﬁnd work. It
would also help close the ‘skills gap’ faced by Auckland businesses. The Dominion
Post reported that the continuing boom in the construction industry had resulted in ashortage of qualiﬁed tradespeople which had created an expansion of job opportunities
and lifted new apprenticeships by 30% in the Auckland Region alone. Some construction
companies were forgoing hundreds of millions of dollars in contracts because they could
not ﬁnd skilled tradespeople to do the work. Nearly half of the 594 businesses, who took
part in Auckland Chamber of Commerce’s latest quarterly economic survey, reported thatit had become even harder to ﬁnd the right people over the last three months. Finally,
the Industry Training Federation, which coordinates New Zealand’s 42 Industry Training
Organisations, began a campaign to attract young people into ‘on-the-job’ training. The
campaign, called Skill Bill, encouraged young people to consider industry training insteadof studying at universities or other tertiary institutes.
An Auckland doctor, who was accused by the Employment Relations Authority of treating
it with contempt, was told to pay an award of $14,000 within a fortnight. This was related
to a case where the Authority found the doctor’s dismissal by email of a part-time
receptionist and ofﬁce manager “abrupt, harsh and unjustiﬁed on any basis it is lookedat”. The doctor had made no attempt to pay the money and the Authority had issued acompliance order requiring her to do so.
The Court of Appeal has cleared the Auckland City Council of breaking an obligation ofgood faith to some of its unionised staff. The ﬁnding was tempered, however, by the
proposed employment law changes, which lawyers believed would neutralise the effectsof the verdict.
The Dominion Post reported on a study that found men took the loss of a job harder than
women, probably because of an ingrained belief that they should be breadwinners. It
was also found that older people faced major obstacles, particularly the perception they
were ‘over the hill’ and unable to cope with change.
The Organisation for Economic Co-operation and Development (OECD) called forstronger policies to encourage welfare beneﬁciaries into paid employment. The
proportion of New Zealanders of working age who are employed was above the OECDaverage, but matching the OECD’s best performers would go a third of the way towards
the goal of returning New Zealand to the top half of the OECD’s income rankings. The
report claimed that “The labour market works well for the easily employable majority but
outcomes are less favourable for marginal groups such as the young, the less skilled andespecially single parents, who have one of the lowest employment rates in the OECD”.
The OECD also noted the wide gap between different ethnic groups, which it said partly
reﬂected the low average education levels among Maori and Paciﬁc Islanders, who were

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expected to make up a quarter of the working age population by 2020.
A study released by Retirement Commissioner Diana Crossan noted that a growing
numbers of people were working past the age of 65 years and that employers would
have to adjust to the changing face of the labour force or risk hurting their businesses.
The initial groups of New Zealand’s baby-boomer generation were now in their late 50’s
and half the workforce would soon be over the age of 40. Inevitably, employers would
ﬁnd that there are fewer young people to ﬁll vacancies. The Retirement Commissioner
predicted that the need to keep older people in New Zealand’s workforce would become areal urgency over the next decade as the baby-boomers moved through their mid- to late60’s. The study showed that ﬂexible work arrangements would be vital in encouraging
people to work longer. Many workers had reducing their hours gradually rather thanretiring abruptly and some large employers were getting the best out of their older staff
by assisting that.
Carter Holt Harvey conﬁrmed that it would close its Tokoroa sawmill leaving 90 salaried
and waged employees without work. It also announced that it would also cut more jobs
at its plywood and remanufacturing plants.
Former Auckland probation ofﬁcer Chris Gilbert was awarded more than $940,000 forwork-induced heart disease, but more than one third of this would go in legal costs. Mr
Gilbert made legal history three years ago when the Employment Court indicated that
it would award close to $1 million after ﬁnding that the Corrections Department did notprovide a safe workplace at its Otahuhu probation ofﬁce. After the Crown challenged theaward, the court had taken until now to deliver a judgment which calculated the loss ofpast and future earnings.

January 2004
The proposed amendments to the Employment Relations Act (ERA) - the Employment
Relations Law Reform Bill - were debated throughout January, with many businessadvocacy groups crying foul of insufﬁcient time to consult constituents and prepare
submissions (see December Chronicle). The changes found little popularity amongst
employers, particularly proposals regarding personal grievances, restrictions on passing
on beneﬁts to individual workers, greater penalties and the strengthening of good faithprovisions. New rules aimed at protecting employees deemed vulnerable during the saleof the business or the contracting out of services were particularly unpopular.
Prime Minister Helen Clark hit back at criticism by business groups as ‘silly rhetoric’,
while Labour Minister Margaret Wilson defended the proposals as necessary ﬁne-tuning.
Reports by Treasury and the Ministry of Economic Development expressed concernsthat the accumulative effect of the Bill’s proposals could have signiﬁcant economic
repercussions. While the CTU supported the new Bill, it argued that it did not adequately

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Chronicle 113

support multi-employer bargaining, nor restricted sufﬁciently employers from passing onunion-negotiated settlements to employees on individual agreements. CTU President
Ross Wilson suggested that employers resisted to implement the principles of the ERA as
they desired to continue employment practices allowable under the previous legislation.
NZ Herald published three business surveys which conﬁrmed the overwhelming opposition
to the Employment Relations Law Reform Bill, especially its proposals to promote multiemployer collective contracts and to discourage individual contracts. The surveys foundthat employers considered that the Employment Relations Act had had a negative effecton both businesses and employment relations. In particular, the surveys found negative
business reactions to several pieces of legislation: the Employment Relations Act, theEmployment Relations Law Reform Bill, the recently passed Holidays Act and potential
moves on the pay equity front.
On the other hand, the three surveys found a neutral reaction amongst employers to
the recent occupational safety and health changes, compared with other workplace law
changes. Overall, businesses believed that it would take some time before the new
regulations made an impact. However, small businesses were slightly more concerned
about the effect of the new safety provisions than larger ﬁrms. In regard to the recent
inclusion of work-related stress in the Health and Safety in Employment Act, employer
fears that the laws would prompt a rash of stress claims had not eventuated. Meanwhile,
newspapers reported that the Council of Trade Unions and employer groups had beenrunning training programmes for health and safety representatives.
The Holidays Act 2003, coming into effect in April, also attracted substantial media
discussion (see December Chronicle). A number of employers and employer groups
arguing that its associated, additional compliance costs would have major adverse
effects, particularly for small businesses. According to the NZ Herald, the cost of adapting
payroll software to the new rules was estimated by the Employers and Manufacturers’
Association (Northern) to be as much as $75 million. Upcoming compulsory penal rates
also raised concerns, with one Blenheim hospitality group arguing that opening on public
holidays would not be sufﬁcient proﬁtable to meet the increased labour costs, and thata number of small businesses would probably opt to close for the day, or charge an
additional 10% to 30% surcharge for services. Minister of Labour Margaret Wilson
conceded that understanding the new Act could be difﬁcult and there had been a 22%
increase in inquires to the Infoline of the Department of Labour.
It was suggested by business groups that the increase in the use of the drug ‘P’,
perceived to have reached epidemic proportions, would lead to widespread workplace
drug testing. Although the focus would primarily be on maintaining safe workplaces,
security consultants suggested that it could also be used to prevent theft and disruptive
behaviour.

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114 Chronicle

Part of the Government’s Jobs Jolt plan to reduce numbers of unemployment beneﬁciaries
had been delayed due to some Mayors’ concern that their districts would be declared as‘dead’ economic zones. The $104 million 10-point Jobs Jolt initiative was revealed, andit involved drawing up a list of ‘low-unemployment zones’ to which beneﬁciaries would not
be able to move and still collect the unemployment beneﬁt. According to the NZ Herald,
Minister of Social Services Steve Maharey stated that the list of affected areas had beenﬁnalized but he declined to reveal those areas before the end of the year. Although
Northland and the Bay of Plenty had relatively higher unemployment rates, other areas
would also be targeted. The Deputy Chairwoman of the Mayors Taskforce for Jobs Sukhi
Turner viewed the policy as punitive and based on stereotypes of the unemployed.
Many small exporters were forced to lay-off staff, extend holidays and reduce working
hours as a result of the rising value of the New Zealand dollar. According to Export New
Zealand’s Gilbert Ullrich, the falling value of the US dollar had seriously damaged thecompetitiveness of New Zealand exports because the majority of export sales, including
those throughout Asia, were made in US currency. While big exporters such as Fonterra
were able to run long-term currency hedging policies, this was not an option for smaller
businesses. The rising dollar had also forced some boat builders to reduce staff numbers.
However, the labour market was still buoyant, with the number of jobs ads rising between
November and December and several reports of labour shortages.
The latest biennual CubikSurvey of salaries found that more general staff than top
executives had received pay rises last year, though pay rises were higher for executives.
However, top executives and general staff received smaller pay rises than for the previous
years. According to the NZ Herald, the CubikSurvey covered 23,000 individuals working
in 389 job titles across 449 companies in 21 industry groups. While the average top
executive salary increased by 5.6%, average general staff salaries increased by 4.5%.
Survey manager Kevin McBride commented that the increase in the rate of base salaryappeared to be stabilised.
Australian hospitals adopted more aggressive recruitment tactics in New Zealandbecause of a chronic shortage of doctors and doctors were offered free airfares andaccommodation, generous penal rates and the ability to work on either a temporary or
permanent basis. According to the Dominion Post, the Resident Doctors’ Association
estimated that between 200 and 400 doctors had left for Australia’s greener ﬁelds.
The New Zealand Nurses Organisation (NZNO) began a campaign pushing for pay equity
and argued that nurses were grossly underpaid, earning $8,000 to $14,000 less than thecomparable professions of teachers and the police.
Erling Rasmussen, Robin White, Colin Ross, Damian Treanor and Karen Lo
The University of Auckland

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