Contents Page: NZJER, 2016, 41(1)Name
Felicity Lamm, Erling
Rasmussen, and Rupert
Tipples

Title

Page
Numbers
1

Tribute from the Editors

Chief Judge Graeme
ColganEulogy: Rosemary Monaghan

2

Nigel Haworth

Eulogy: John Deeks

3-4Paul Chalmers

Eulogy: Peter Conway

5-6

Ray Markey

Eulogy: Gay Simpkin

7

Margaret Rayner-Thomas,
Robyn Dixon, Janet
Fanslow, and Cannis Tse

The Impact of Domestic Violenceon the Workplace

8-21

Shamika Almeida andSantina Bertone

The Role of Contextual Factors in
Employer Recruitment Decision
Making: Evidence from Regional
Australia
Some willingness to engage: A
survey of employment relations
practices and employee voice
opportunities in SMEs in regional
New Zealand

Barry Foster and Deirdre
Farr

Toby Boraman

Michael Sharp

Merging politics with economics:
Non-industrial and political work
stoppage statistics in New
Zealand during the long 1970s
Research Note: Pay Gaps
Between Management And NonManagement Employees

22-40

41-63

64-82

83-97

New Zealand Journal of Employment Relations, 41(1): 1

Tribute from the Editors
It is with great sadness and loss that we farewell four of our friends and colleagues – Chief ofthe Employment Relations Authority Rosemary Monaghan, Prof John Deeks, Mr Peter
Conway and Dr Gay Simpkin. To lose four such important individuals in a short space of time
has been extremely hard for all of us. Each of these remarkable people made enormous
contributions to the discipline of Employment Relations and in particular our understanding of
the complexities of the changing world of work. One of the many characteristics they shared
was courage – the courage to stand up and to argue for what they believed was right. The othercharacteristic they shared was determination. They continually strived to combat the rhetoricwith solid, rigorous research. In particular, the value of their research was to document theeffects of neo-liberalism and the rise of managerialism and to draw attention the steadydeterioration of wages and conditions of New Zealanders. Finally, they were nurturing. They
supported and encouraged hundreds of young scholars and practitioners ensuring that the next
generation will also have life-long passion for Employment Relations.
Haere, Haere, Haere Rest in peace.
Felicity Lamm, Erling Rasmussen, Rupert Tipples
Editors

1

New Zealand Journal of Employment Relations, 41(1): 2

Eulogy: Rosemary Monaghan
CHIEF EMPLOYMENT COURT JUDGE GRAEME COLGAN *I have known Rosemary as a lawyer and, more recently, in my role as a Judge of the
Employment Court where I got to assess, critically, some of Rosemary’s work. I also had
frequent informal but professional dealings with Rosemary about matters of common interest
in employment law. I am speaking not only on behalf of my current fellow Judges of the
Employment Court, but also of the now former Judges of the Court.
As I have said, in many ways, my professional relationship with Rosemary was rather likebeing an examiner marking her exam papers but without any end to that role in sight. Rosemary
was the eternal student sitting exams and I, and my colleagues, the eternal markers of those
exam papers. I know also that, as Chief of the Employment Relations Authority, Rosemary
had a job that is sometimes described as ‘herding cats’, with the cats being the individual andindependent judicial decision makers on the Authority. Rosemary herded her cats and kept
them as well contained, albeit temporarily, as any musterer could have done.
Rosemary was, in all things, professional and discreet. In discussing a problem or a difficult
issue, Rosemary always anonymised the participants so that it remained an issue of principle
and not of personality. Rosemary took professional criticism professionally although I have tosay it is difficult to find much for which to criticise her in her important work as an Employment
Relations Authority Member. Rosemary was both objective and sensitive to human frailties.
She was unafraid to make what might be perceived as unpopular decisions, but expressed themalways in a way that left the participants with their dignity intact. These were all judicial
qualities and, I suspect, ones influenced by, if not inherited from, Rosemary’s late father,
District Court Judge Gerrard Monaghan.
Rosemary was a ‘proper’ person, not in a conventional or fusty sense but one who knew
instinctively what was the right thing to say at the right time, how to say it, and to whom.
‘Proper’ has its place in the world in which Rosemary and I operated and, in my view, she got
it just right. She was also committed to improving the quality of Employment Relations Act
decision making through her own leadership by example and through continuing education forher colleagues. Two of my colleagues, Judges Christina Inglis and Tony Couch, have spoken
warmly of working closely with Rosemary on continuing professional programmes.
In our different ways, we will all miss Rosemary enormously but I know that her legacy toemployment law and employment relations will long endure. If others of us do as well as
Rosemary did, we will indeed have succeeded.

*

Chief Employment Court Judge Graeme Colgan, chief Judge’s Chambers, Employment Court.

2New Zealand Journal of Employment Relations, 41(1): 3-4

Eulogy: John Deeks
NIGEL HAWORTH*
Emeritus Professor John Deeks died in September 2015. John was a leading scholar in
employment relations in New Zealand and, rightfully, claims a distinguished place as a founderof the discipline here. He was deeply respected and liked as a colleague, mentor and friend.
John’s roots lay in the post-war UK, where he developed a love of both scholarship and sport,
and a particular interest in literature. Indeed, in his undergraduate career at Cambridge, heattended lectures by Raymond Williams, WH Auden and FR Leavis. However, half way though
his Cambridge degree, John turned to Economics and Sociology, as a result of work experiencein ice cream manufacturing and working in Harrods during his gap year. He learnt from thatexperience two things – never to eat mass-produced ice cream, and working-people need to beprotected from predatory employers.
John was a thinking Social Democrat by inclination, but his work experience made him apowerful advocate of work relations that are fair, respectful and responsible. He developed thatinterest in work and working-people in his postgraduate course in the London School of
Economics, where he worked with Baroness Nancy Seear, staunch advocate of women’s rights
and equal pay. During this time, John developed a love for research and for fieldwork,
particularly in the construction sector. His stories of fieldwork visits to the Glasgow
construction industry matched Billy Connolly in their earthiness.
Eventually, John came in 1972 to New Zealand and the University of Auckland. He had job
offers in the UK and elsewhere, but he liked the idea of New Zealand. He came, and he stayed
first in the University of Auckland’s Continuing Education centre, then in the newly-formed
Management department, which grew rapidly under his and others’ leadership.
He may have left English as a scholarly pursuit, but his fascination with literature continued
all his life. He was a very able poet, and produced a stimulating and challenging collection ofpoems. He also wrote two unpublished novels and much more, including a TV script. One
reason he gave for his untimely retirement was his desire to write creatively, an option notassociated in his mind with his scholarly outputs. In this, I think he was wrong. John’s capacity
to write in lucid, compelling style is precisely what a scholar should do, and we were the poorer
for his departure from the University.
His reading was wide and catholic, steeped in the classics but always in touch with the leadingedge of modern literature. And he loved poetry. His love of literature conditioned his academic
career. To the end of his working life, he abhorred poor quality writing. When he wasconfronted by such writing, his hackles rose, and he could be formidable. This was also true of*Prof Nigel Haworth, Department of Management and International Business, The University of Auckland, New
Zealand3

New Zealand Journal of Employment Relations, 41(1): 3-4
sloppy thinking by colleagues. John possessed the ability to ask the most precise and tellingquestions in seminars, never to polish his own reputation, always to require greater clarity ofthinking.
John’s impact in the University and beyond remains strong and well-recognised. He was justly
elevated to a Chair and led his department on several occasions. He was instrumental in setting
the foundations of what is today an internationally recognised department of 35 full-time staff,
a far cry from the six staff in place in 1988.
His leadership combined professionalism and high standards with compassion and judgement.
He could recognise nonsense at a great distance, and paid it short shrift. He loved rigorousargument, and could be a challenging questioner in seminars. He cared deeply for the wellbeing of staff and students, particularly when they were facing adversity.
His impact in employment relations in New Zealand was great. He was a founder of the New
Zealand Journal of Industrial Relations and contributed greatly to both academic and policy
debates in employment relations in the 1970s and 1980s. He created a strong employment
relations group in Auckland, which, in different form and locations, continues today.
He wrote well and often, but always because he had something thoughtful to say, and desire to
say it well. His approach to scholarship drew on his Cambridge years, where quality trumped
quantity and where books still mattered.
His book on business and modern culture (Business and the Culture of the Enterprise Society,
Quorum Books, 1993) captures his elegance in prose, the extent of his reading and the qualityof his insight. It is a brilliant book, yet remains somehow obscure, for John was also quite
unable to engage in self-promotion. His interest in small firms led to a range of international
publications. John also wrote knowledgeably and well about many issues in New Zealand,
including productivity performance, employment relations and neo-liberalism, and bargaining.
Of course, a major contribution was the writing with various collaborators of what was, formany, the best textbook on New Zealand employment relations. He also jointly edited two
major collections (Controlling Interests: Business, the State and Society in New Zealand, AUP,
1992, and Business and New Zealand Society, Longman Paul, 1994)
His contribution to university life went beyond departmental leadership and scholarship. He
actively campaigned for the construction of the University Marae, at a time when university
authorities could not see the point of such a building. He was a staunch member of the AUS(now TEU). He played an active and constructive role in Faculty management.
John is remembered in the University and in the wider employment relations world as an
excellent and valued colleague. He is sorely missed.

4New Zealand Journal of Employment Relations, 41(1): 5-6

Eulogy: Peter Conway
PAUL CHALMERS*
It is said of Peter Conway that he was soft on people and hard on issues. That was true
but there was one person he wasn’t soft on, and that was himself. One conversation I
had with Peter in his office in 2013 focussed on why he looked so grey and what was
the reason his left arm was shaking? He smiled at my concern and said “I’m just tired
mate”.
What tuckered Peter out and what got him in the end was the sense of responsibility hehad for holding together the Labour Movement in New Zealand, as it attempts toweather the passing storm of fundamentalist economics and the plundering by the superrich. Peter’s time as a leader in the Movement coincided with a period of membership
decline and the apparent inability of unions to connect meaningfully with the mass ofthe people they aim to represent.
None of this was Peter’s doing. His union trajectory took in the times of the qualified
preference clause and compulsory unionism; when union bosses could comfortably
argue the toss between the amazing Soviet model (would you like a study tour to
Moscow comrade? – he never went) or Chairman Mao and his workers’ paradise.
Meanwhile, workers in New Zealand happily picked up the ‘going rate’ and prepared
to forget about the movement that had brought them the weekend and decent pay. Peterobserved the frailties of this pseudo militant model and felt the new force of monetarist
economics brewing in the United States. I asked him in the 90s why he wanted to do
economics. He felt unions were being outgunned by economically literate employers
and the only way to fight fire was with fire. His Masters in Economics was
accompanied by a shrewd appreciation of strategic unionism encouraged by his greatfriend, Paul Tolich, and also by an understanding of the limitations economic analysis
had in dealing with the raw power of the boss. Both Peter and Paul saw the need forunions to be more proactive and positive at both the industrial and political level. Not
just at the table for their muscle, but for the sophisticated contribution they could maketo the debate.
Yet, Peter combined a sophisticated analysis with an ability to cut through the economic
mumbo jumbo and connect it with ordinary lives. Arthur Grimes notes in his obituaryof Peter that: “He was especially appreciated for his ability to explain economic issues
in a simple and convincing way through the media.”
Why was Peter so concerned about the plight of working people? His earlycommitment to fairness took root at home and his membership of the Christian Youth
Movement, as a teenager, saw him connect with the radical Young Christian Students(YCS) at Victoria University in the early 70s. YCS also had a passion for music andparties, and Peter felt right at home. At this point across the globe, student Christian
movements were questioning the role of both the state and the church in repressing
working people and liberation theology was on everyone’s lips. It was in this*Paul Chalmers Director of New Zealand Xtreme

5New Zealand Journal of Employment Relations, 41(1): 5-6
environment that Peter met Paul Tolich, Paul Swain, Pip Desmond, Sue Ryall, Petra
Van den Munkoff, John Ryall, Colin Feslier, Pat Martin, Gabriel Brettkelly, Celia
Lashley and others, and began to challenge the conventional views on feminism,abortion, the Vietnam War and NZ’s love of racist South Africa.
Given what we knew of Peter then; his commitment to the movement, his quiet
resolution and attention to detail and his determination, it was not hard to predict hislife path.
His final contribution was his contribution to the NZCTUs seminal piece on insecure
workers, which notes that “it would be surprising if the total numbers were less than
40% and may well be 50% and more.” When Peter looked at that figure, as a champion
for the working poor, it must have been very tough. Knowing Peter, he would havetaken it hard and redoubled the effort.

6

New Zealand Journal of Employment Relations, 41(1):7

Eulogy: Gay Simpkin
RAY MARKEY*
Gay Simpkin was one of those rare people who bridged the worlds of activism and the academy.
She was a passionate and effective feminist and union activist, as well as a highly successful,incisive, and reflective scholar in labour studies. Each sphere also benefited from the other – heracademic work was informed by the practical experience of her activism, which in turn benefited
from her sharp analytical ability and application of broad comparative, historical and theoreticalperspectives to practice. In these ways she was an inspiration across both spheres.
I came to know Gay well in 2005, soon after I arrived from Australia to take up a position at
Auckland University of Technology as Professor of Employment Relations. She was then an
organiser with the Post Primary Teachers’ Association. We soon teamed up in forming the Auckland
Labour History Group of which she became secretary. Gay was a very well organised and effective
secretary of the Auckland Labour History Group, which benefited greatly from her fine attention todetail, process and record keeping - it was basically her efforts that kept us ticking over. Under her
stewardship we organised a number of well-attended labour history events that many people
attending her tribute will remember.
Gay also became a valued contributor to the New Zealand Work and Labour Market Institute (nowWork Research Institute) when I formed it at AUT and she retired from the PPTA. She became a
Project Officer with the Institute, and she had main responsibility for two significant projects. The
first was conducting case studies of a small number of New Zealand schools for a comparative studyof employee participation and quality of the work environment in New Zealand and Denmark.
Based on this research, we subsequently wrote an article together with a Danish colleague, Herman
Knudsen, in the British based journal, the Industrial Relations Journal (I give a reference below,
and I’ll also send a soft copy by email upon request). In this study we were able to demonstrate that
if you give workers a say in decision making in their workplaces, they will rate their work
environment much more positively. Gay also led a major Institute project on Union Effectivenessin New Zealand Schools on behalf of the Institute, sponsored by the PPTA.
In my work with Gay I benefited greatly at a personal level from her support, loyalty and wise
counsel. My partner, Fran Laneyrie, also loved her warm spirit. The Institute benefited from her
research skills, her cool reflection and logic, her intelligence, her common sense, and again, her fineattention to detail in which she never allowed the big picture to be lost. In the Labour History Groupand the Institute her colleagues valued her collegiality, commitment, and wry humour. And becauseof all of Gay’s efforts, she made a significant contribution generally to the discipline of labour
studies, historically and in contemporary employment relations.
After I returned to Australia in late 2011, I saw Gay less frequently. But on periodic return visits to
Auckland I always looked forward to joining her over a meal and glass of wine at Vivace’s. Gay’s
style was quiet, but she was highly effective as a scholar and activist because of her integrity andintellectual depth. Gay will be sorely missed by activists and scholars alike.

*

Prof Ray Markey, Centre for Workforce Futures, Macquarie University, Ray.markey@mq.edu.au

7New Zealand Journal of Employment Relations, 41(1): 8-21

The Impact of Domestic Violence on the Workplace
MARGARETRAYNER-THOMAS*,FANSLOW*** and CANNIS TSE****ROBYNDIXON**,

JANET

Abstract
This study explored the impact of domestic violence on absenteeism, worker productivity, andworkplace responses to domestic violence, based on a survey of New Zealand employees. One
thousand six hundred and thirty-eight (1638) completed questionnaires were returned, 249
from respondents who had direct experience of domestic violence. The majority of respondents
were women. Domestic violence affected over a third of respondents’ ability to get to workand their work performance. The opportunity to discuss the violence with someone at work
resulted in positive outcomes. The study suggests that raising awareness of domestic violence
as a workplace issue and developing appropriate legislation and workplace policies andpractices would potentially benefit both workers and the employers.
Key words: Domestic Violence, Workplace

Introduction
Since the 1970s, the problem of intimate partner violence (IPV) has been framed as a criminal
issue, a health issue, and a human rights issue (Campbell, 2002; Carlyle, Slater, & Chakroff
2008; United Nations Population Fund, 2014). More recently, there has been a growing focus
on the impact of the experience of domestic violence on the workplace (e.g. Logan, Shannon,
Cole, & Swanberg, 2007; McFerran, 2011a; Reaves & O’Leary-Kelly, 2007). Such interest is
likely due to the influence of theories of “spillover,” first described by Wilenskey (1960), who
proposed that positive or negative influences in one context (e.g. family life) may impact or“spillover” to other contexts (e.g. work). The concept had its origins in business andmanagement studies and underpinned studies, such as those conducted by Bolger, Delongis,
Kessler, and Wethington (1989), who investigated influences of family life on career
aspirations and promotion, and reported a negative influence of home conflict on performanceat work. Over the years, and particularly in the 1980s and 1990s, such research expanded to
explore the relationships between job satisfaction and family life, and other life domains, suchas social and health (e.g. Crohan, Antonucci, Adelmann, & Coleman, 1989; Leiter & Durup,
1996; Loscocco & Spitze, 1990).
*

Margaret Rayner-Thomas, Social and Community Health, School of Population Health, University of
Auckland.
**Robyn Dixon, School of Nursing, University of Auckland, r.dixon@auckland.ac.nz.
***
Janet Fanslow, Social and Community Health, School of Population Health, University of Auckland.
****
Cannis Tse, New Zealand Family Violence Clearinghouse, University of Auckland.

8New Zealand Journal of Employment Relations, 41(1): 8-21

Domestic violence is a serious and widespread issue. Globally, it is estimated that 30 per centof women will experience physical or sexual violence by an intimate partner sometime in theirlife (Garcia-Moreno et al., 2013), which is comparable to the rates of IPV reported by New
Zealand women (Fanslow & Robinson, 2004). While directly comparable figures for men are
difficult to ascertain, recent figures from the USA suggest that around 14 per cent will
experience serious physical violence at the hands of an intimate partner in their lifetime(Breiding, Basile, Smith, Black, & Mahendra, 2015). However, while there is emerging
information on the prevalence of violence against men, to date, we are aware of no researchthat has explored the impact of this violence on men’s ability to participate in employment.
Women who have experienced IPV frequently report that perpetrators of domestic violence
engage in actions to sabotage their ability to go to work by a variety of means, including
controlling finances so that they cannot meet the costs associated with work, includingtransportation; failing to meet childcare commitments; and physically threatening or restraining
them (Brandwein & Filiano 2000; Swanberg, Logan, & Macke, 2005).
Harassment of victims while they are at work is not uncommon. Reports have been made of
perpetrators repeatedly ringing or texting or physically stalking the victim, coming to theworkplace and disrupting operations and, in some cases, violently attacking their victim andco-workers (LeBlanc & Barling 2005; Tiesman, Gurka, Konda, Coben, & Amandus, 2012;
Tombs, 2007).
Studies have also shown that individuals who experience IPV have difficulty maintaining
consistent employment as, frequently, they are forced to resign or their positions are terminated(Swanberg & Logan, 2005; Swanberg, Macke, & Logan 2006). In addition, their capacity towork is often compromised by a number of factors, including feeling distracted, tired andunwell; needing to take time off for medical or legal reasons; being late for work; and being
too upset to work (Crowne et al., 2011; McFerran, 2011a; 2011b; Moe & Bell, 2004; Swanberg
et al., 2006). In addition to jeopardising the person’s employment, these factors have thepotential to impact on the safety of themselves and those around them (Versola-Russo & Russo2009). Further, many women who have left their abusive partner have reported that they wereunable to look for work or accept a position because they were afraid their abuser would be
able to find them and cause them harm (Logan et al., 2007).
The inability to maintain regular employment can contribute to increased levels of poverty,
stress, and ill health, which creates far reaching consequences for those experiencing IPV, theirfamily, and wider society (Brush, 2000; 2004; Moe & Bell, 2004; Reeves & O’Leary-Kelly,
2007; Tolman & Rosen, 2001). For example, as a result of IPV, victims are more likely to haveadditional medical expenses; incur costs associated with relocation; need to replace destroyed
property, and pay for legal advice or representation (Day, McKenna, & Bowlus., 2005), whilst
perpetrators may take various steps to limit access to resources by using violence and harassing
behaviour to either stop the woman from working or make working difficult (Adams, Tolman,
Bybee, Sullivan, & Kennedy, 2012; Anderson et al., 2003). The instability created by the abuse
often results in victims being unable to stay with a single employer for an extended period oftime, contributing to loss of the opportunities that come with sustained employment such as
promotion and other benefits (Moe & Bell, 2004).

9

New Zealand Journal of Employment Relations, 41(1): 8-21

Importantly, employment and the subsequent economic security that can arise from
employment can help to create pathways out of the violence. We know that, when victims relyon the perpetrator for financial support, they are more likely to stay in the abusive situation(Tolman & Wang 2005) and that economic security provided by employment can result in astronger sense of self and feelings of competence (Rothman, Hathaway, Stidsen, & de Vries
2007). Furthermore, Tolman and Wang (2005) reported that the workplace can also serve as aplace of respite from perpetrators, providing important periods of time of physical safety whereplans to leave abusive relationships could be made.
The impact of IPV on the workplace can also have significant consequences for the employer.
Threats to safety and security may result in serious occupational, health, and safety
consequences for both workers and workplaces. In addition to the potential loss in productivity
noted above, IPV can result in substantial economic costs to the employer as a consequence ofstaff loss and the resultant recruitment costs (Reeves & O’Leary-Kelly, 2007).
Increased awareness of these consequences for individuals and employers has contributed to a
growing recognition of the need to address the impact domestic violence has on the workplace.
For example, in Australia, the Australian Domestic Violence Rights and Entitlements Project(McFerran, 2011a) has led to some of the world’s most progressive domestic violence
workplace policies. More recently, an international collaboration, led out of the Centre for
Research and Education on Violence against Women and Children at the University of Western
Ontario, has been established in order to mobilise knowledge about domestic violence and its
impacts on workplaces and workers. At present, however, little is known about the New
Zealand experience; therefore, the current study was designed to contribute to the international
movement and, more specifically, to begin to understand the impact of domestic violence on
the workplace in New Zealand.

Methods
The aim of the study was to understand the impact of domestic violence on the workplace in
New Zealand. In particular, to understand how experiencing domestic violence impacts on an
individual’s ability to fulfil their duties as an employee and, in turn, how the workplace
responds to domestic violence. To this end, the researchers worked in collaboration with the
New Zealand Public Service Association (PSA) to undertake an online survey of a sample of
PSA members. Approval to conduct the study was granted by the University of Auckland
Human Participants Ethics Committee (Ref # 9671).

Sample and Procedure
The PSA represents approximately 58,000 New Zealand workers and is New Zealand’s largest
union. Members are drawn from five employment sectors: community public services, district
health boards, local government, public service, and the state sector and represent a wide rangeof occupations, including allied health and disability support workers and clerical andadministration workers.

10New Zealand Journal of Employment Relations, 41(1): 8-21

The sample size was determined by the PSA to ensure representation from sectors across thebreadth of the membership without placing undue demands on members and employers by oversurveying the membership. Thus, 10,000 randomly selected PSA members were invited tocomplete the survey. In total, 1,638 completed questionnaires were returned representing an
overall response rate of 16 per cent. Of these, 249 (three per cent) were received from
respondents who reported having personally experienced domestic violence while in paid
employment.
The majority of those who had experienced domestic violence were women (n = 215, 86 percent) and were over the age of 35 (93 per cent), with most being in the 45-54 age range. Most
respondents were born in New Zealand (73 per cent) and identified as New Zealand European
or other European (77 per cent), with Māori accounting for 14 per cent. Respondents mostcommonly worked in District Health Boards (DHB) (40 per cent) or the local government
sector (27 per cent). When comparing the breakdown of the sample by sector to that of theentire PSA membership, the proportion of state sector employees was similar (Sample [11 percent] vs PSA [14 per cent]). However, overall the study sample was under-represented withrespect to public service employees (Sample [16 per cent] vs PSA [36 per cent]) andoverrepresented with respect to local government employees (Sample [27 per cent] vs PSA [10per cent]) and DHB (Sample [40 per cent] vs PSA [28 per cent]). With regard to the roles
employees held, the majority were clerical or administrative workers (29 per cent), in
professional roles (21 per cent), or were registered social, health or education professionals (22per cent). Nearly all reported that they were in permanent full time employment (80 per cent)or permanent part time employment (16 per cent).

Survey Distribution
Prior to the distribution of the survey, the PSA sent out an email to employers and PSA uniondelegates, informing them that the survey would be distributed to randomly selected members.
Subsequently, an email was sent via the PSA email system to the selected members inviting
them to complete the anonymous survey. A URL, embedded in the email, took them to thesurvey site, which included an explanation of the questionnaire and set out their rights as study
participants. A unique coded URL was attached to each emailed survey to ensure it was notpossible to identify the source of the returned questionnaires, thus, maintaining anonymity.
The survey was open for a period of three weeks from 14 June 2013 until 5 July 2013. Two
follow up reminder emails were sent to encourage participation, one at the end of the first week
and one at the end of the second week. When the survey closed, the PSA forwarded the data in
an Excel spreadsheet to the researchers for analysis. While the wider study involved the impactof violence from the perspective of those directly affected and that of co-workers, this paper
only reports the findings associated with those who had direct experience of domestic violence(n=249).

11

New Zealand Journal of Employment Relations, 41(1): 8-21

Survey Instrument
The Australian Domestic Violence Workplace Rights and Entitlements Project survey(McFerran, 2011a) was used. Questions were organised under seven sections/categories:
demographic profile, experience of domestic violence, impact of domestic violence on getting
to work, impact of domestic violence in the workplace, support in the workplace, protection
orders and family court, and employed friends/colleagues’ experience of domestic violence.
There were 38 questions in total, the majority of which also had sub-questions. For eachquestion/sub-question, respondents were presented with a number of response options andasked to select those that applied to them. Respondents were not required to answer allquestions in each section due to branching. The original questionnaire was modified for localuse.

Data Analysis
For the purpose of analysis, the data were imported into SPSS V. 21.0 (IBM Corp, 2012).
Descriptive statistics (percentages and frequencies) were generated. Where appropriate chisquare tests were also conducted to determine if there were differences in the experiences ofdomestic violence according to gender, age, sector of the PSA the respondent was employedin and their role.

Results
Respondents’ experience of domestic violenceChi-square analysis was undertaken to determine if experience of domestic violence while inpaid employment differed as a function of gender, age, sector, role, or employment type. A
significantly greater proportion of those experiencing domestic violence while in paid
employment were female (n = 215, 86 per cent), (male, n = 30, 14 per cent), X2(df1) = 24.28, p= .000, and aged over 45, with most being in the 45-54 year age bracket: 18-44 (n = 70, 28 percent); 45-54 (n = 105, 42 per cent); 55 and over (n = 74, 30 per cent), 𝜒 2(𝑑𝑓2) = 12.83, p = .002.
Of those who provided information on when they had experienced domestic violence (n = 234),
79 per cent reported it had occurred more than 12 months ago.
Relationship to perpetrator
Respondents were asked about the perpetrator, their relationship, and their living arrangements.
The majority of respondents identified the gender of their perpetrator as male (n = 239, 85 percent). Most of the respondents (77 per cent) reported that they were not currently living withthe abusive/violent person, while 8 per cent reported they were employed at the same place as
the person perpetrating the violence.

12

New Zealand Journal of Employment Relations, 41(1): 8-21

Impact of domestic violence on ability to work
The impact of the violence on respondents’ ability to go to work is summarised in Table 1.
Over a third of respondents reported that the abuse impacted on their ability to get to work.
This was most commonly due to physical injury or restraint (62 per cent) or fear for theirchildren’s safety (41 per cent). More than half reported having to take time off work, mostcommonly for health or medical reasons and/or to attend counselling. Analysis showed thatreasons for taking time off did not differ as a function of age (𝜒 2(𝑑𝑓2) = 5.773, p = 0.056), sector(𝜒 2(𝑑𝑓5) = 3.208, p = 0.668), role (𝜒 2(𝑑𝑓1) = 0.004, p = 0.095), or employment type (𝜒 2(𝑑𝑓2) =3.759, p = 0.153).
Table 1. Impact of Domestic Violence on Ability to Work
MeasureAbility to get to work affected (n = 248)
Yes
No

n

%

95
153

38.3
61.7

What affected ability to go to work (n = 95)
Physical injury or restraint
Fear of leaving children alone with abusive/violent person
Hiding or stealing car keys or transportation money
Refusal or failure to show up to care for children
Verbally berated or threatened
Mentally/emotionally unable to cope with work
Personal documents hidden or stolen
The threat of deportation

59
39
25
23
19
19
14
1

62.1
41.1
26.3
24.2
20.0
20.0
14.7
1.1

Took time off work because of domestic violence (n = 245)
Yes
No

131
114

53.5
46.5

Reason for time off (n = 131)
Health/medical reasons
68
Attend counselling
64
Attend appointments (e.g. Police/lawyer)
41
Accommodation purposes (e.g. Had to move house)
36
Attend Court
29
Note: Percentages do not all equal 100 per cent due to multiple responses possible.

51.9
48.9
31.3
27.5
22.1

Impact of domestic violence in the workplace
Over half of the respondents (55 per cent) reported that they directly experienced domestic
violence while at work. As can be seen in Table 2, 30 per cent reported being harassed via
phone calls, email, or text messages, and 30 per cent reported being stalked in or around theworkplace. When asked how the experience of domestic violence impacted on their work
performance, the majority said that they were often late to work, while a smaller number
13New Zealand Journal of Employment Relations, 41(1): 8-21

reported being distracted, tired or unwell while at work. Respondents also indicated that thedomestic violence they experienced affected their relationships with co-workers, with 60 per
cent, reporting that it resulted in tension and conflict.
Table 2. Impact of Domestic Violence in the Workplace
MeasureExperiences of domestic violence in the workplace (n = 139)
Harassed through phone calls, emails, or text messages
Stalked outside/in/around the workplace
Abusive/violent person turned up at workplace and wanted to talkThreatened you
Abusive/violent person disrupted the workplace
Threatened co-workers
How domestic violence impacted work performance (n = 224)
Was late for work
Distracted/tired/unwellNote: Percentages do not equal 100% to due to multiple responses possible.

n

%

41
41
25
16
12
2

29.5
29.5
18
11.5
8.6
1.4

189
35

84.4
15.6

Help seeking and workplace support
Respondents were asked a series of questions about what help they sought in the workplace
and what support was offered. Slightly more than half (53 per cent) of respondents chose not
to discuss their abuse with their co-workers. Disclosure rates did not differ as a function ofgender, sector, role, or employment type. Only age showed a significant difference, with agreater proportion of older workers disclosing (45-54 years [22 per cent] and over 55 years [19per cent]), than those in the 18-44 year group (12 per cent), 𝜒 2(𝑑𝑓2) = 86.23, p = .013.
Of those who disclosed, most were likely to speak about the violence with a co-worker (69 percent) or supervisor/manager (54 per cent) than an HR person (7 per cent) or union delegate (4per cent) (see Table 3). However, among those who did not discuss the abuse with co-workers,
24 per cent of respondents said their co-workers knew about the violence anyway. Privacy andshame were the most common reasons given for not discussing the abuse/violence at work.
The outcomes of disclosing to someone in the workplace are shown in Table 3. Around two
thirds reported positive outcomes as a result of disclosing; with almost 50 per cent of this groupreporting that they were given paid time off. In all cases where a co-worker asked for time off
to support their colleague, (n = 9), this was granted.
Chi-square analysis revealed no difference as a function of age (𝜒 2(𝑑𝑓4) = 2.201 p = 0.699),
employment sector (𝜒 2(𝑑𝑓10) = 5.635, p = 0.845), role (𝜒 2(𝑑𝑓2) = 2.976, p = 0.226), or type of
employment (𝜒 2(𝑑𝑓4) = 2.701, p = 0.609) on the outcome of discussing the violence withsomeone in the workplace.

14

New Zealand Journal of Employment Relations, 41(1): 8-21

Table 3. Help Seeking and Workplace Support
MeasureReasons for not Discussing Abuse/Violence (n = 132)
Privacy
Shame and privacy
Shame
Fear of dismissal

n

%

49
25
20
8

48.0
24.5
19.6
7.8

Possible of Person the Abuse was Discussed with (n = 95)
Co-Worker
Supervisor/Manager
HR Officer
Union Delegate

81
63
8
5

69.2
53.8
6.8
4.3

Outcome of Discussing Abuse with the Workplace (n = 112)
Positive things happened
Negative things happened
Nothing happened

73
3
36

65.2
2.7
32.1

Responses by the Workplace (n = 73)
Time off (paid)
36
Time off (unpaid)
7
Alerted security staff
7
Changed/screened work numbers or emails
6
Alerted the police
5
Provided transport between work and home4
Moved you to a safer place at work
3
Note: Percentages do not all equal 100% to due to multiple responses possible.

49.3
9.6
9.6
8.2
6.8
5.5
4.1

Summary
In summary, most respondents in this study were women over the age of 35, who had been
abused by men and were in full-time employment at the time they experienced the domestic
violence. Around 40 per cent reported that their ability to get to work was impacted by domestic
violence, mainly due to physical injury or restraint and/or concerns for the safety of theirchildren. Over half reported that they had to take time off to deal with issues related to domestic
violence, with the most frequent reason being physical and mental health issues. Similarly,
over half of the respondents who had experienced violence while at work with harassment,such as texts, phone calls, emails, and being stalked in and around the workplace, being
reported as the most common forms of violence. Most respondents did not discuss the abuse
they were experiencing with anyone in the workplace, with the majority stating that shame andprivacy were the main reasons for not doing so. However, around two thirds of those who did
disclose the domestic violence to those in the workplace reported positive outcomes.

15New Zealand Journal of Employment Relations, 41(1): 8-21

Discussion
The results of this study adds to the growing body of knowledge about the ways in whichdomestic violence impacts the workplace, from the perspective of those who have directly
experienced domestic violence. The majority of those who reported experiencing domestic
violence while in the workforce were women. Most reported that the abuse was historical andthat they were no longer living with the perpetrator. This may reflect the fact that victims are
more likely to feel comfortable reflecting on their experience after they have had theopportunity to address issues related to their safety. That said, about a quarter of respondents
with personal experience of domestic violence reported that they had experienced the violencein the preceding 12 months.
The findings confirm that experience of domestic violence has significant implications for the
workplace. For example, over half of the respondents reported that the violence theyexperienced impacted on work attendance, that is, their ability to get to work on time, or at all.
In addition, the findings showed the extent to which perpetrators are prepared to go to in orderto prevent victims from going to work. Physical injury or restraint and psychological abuse
were common reasons, as were concerns for the safety of children. Such findings are similar to
those found internationally, such as Swanberg and Logan (2005), who reported that the
majority of victims in their study were physically restrained or beaten to such a degree thatthey could not go to work. Further, Moe and Bell (2004) and Swanberg et al., (2006) reported
that the safety of children, while in the care of the perpetrator, was a frequent concern forvictims. This concern is not unfounded, as other studies have shown that children witnessing
domestic violence experience trauma and are more likely to also be experiencing abuse(Hamby, Finkelhor, Turner, & Ormrod 2010; Murphy, Paton, Gulliver, & Fanslow 2013).
Therefore, it is understandable that respondents in this study would report concern for the safetyof their children.
Fewer than half of the respondents reported that they had talked to anyone at work about theviolence. This is not surprising, in that the literature indicates that victims of domestic violence
often face repercussions, such as job loss or having their hours of work reduced. However,when employers are known to offer assistance, employees are more likely to disclose abuse,utilise services, and report more favourable outcomes (Swanberg et al., 2006). Given this, afinding of particular concern in this study is that, in approximately one quarter of cases wherethe violence was discussed with a supervisor/manager or someone from HR, and in almost athird of discussions with co-workers, there was no outcome and, in a small number of cases,
there was a negative outcome. It is possible that one of the reasons why respondents in thepresent study did not report more offers of assistance is because managers and co-workers
genuinely did not know what, if anything, they could do. There is also the possibility thatmanagers and colleagues feel that asking a co-worker about potential domestic violence would
be seen as intrusive, and that by not calling attention to signs of abuse they were respecting thevictim’s privacy. This finding lends support to previous research that points to the fact thatmanagers (and co-workers) need training on how to recognise and respond to the signs of abuse(Murray & Powell, 2008).

16

New Zealand Journal of Employment Relations, 41(1): 8-21

Given the number of respondents who identified issues related to children as a reason for work
disruptions, it could be beneficial for workplaces to consider the role childcare plays in a
victim’s ability to work and, if possible, to consider providing entitlements that might lessen
the difficulty in finding appropriate childcare. While childcare issues are commonly cited in
the international literature as being a concern for working women experiencing domestic
violence (Moe & Bell, 2004; Swanberg et al., 2006), there were no examples found in theliterature of workplaces taking steps to specifically address this concern.
Another concerning, although not surprising, finding was that around half of the respondents
reported that their ability to go to work was compromised by physical or emotional healthissues. The health ramifications of domestic violence have been well described (Campbell,
2002; Campbell et al., 2002; Coker, Smith, Bethea, King, & McKeown, 2000; Guruge, 2012)and have been shown to have direct, immediate, and long term impacts on victims’ ability towork (Swanberg et al., 2005; Swanberg et al., 2006).

Strengths and Limitations
The fact that men had an opportunity to participate in the survey is a strength of this study.
While males only accounted for 14 per cent of the sample, this aligns with Breiding et al.,’s(2015) assertion that 14 per cent of males will experience serious physical IPV in their lifetime.
However, the small number of men who participated in the present study precluded separate
analysis of the data according to the sex of the respondent.
There are several further limitations which should be kept in mind when considering thefindings from this study. First, the overall sample is relatively small. It is not known how manypotential participants did not complete the survey because they had recently resigned, were
between jobs, or were currently not in a position to take on employment as a result of an abusive
situation. Secondly, the sample does not reflect the full ethnic diversity of New Zealand, being
comprised mainly of New Zealand European or Other Europeans, and Maori. This might bebecause ethnic minority groups are underrepresented in the PSA membership. Thirdly, women
under the age of 35 were underrepresented. This could be due to the lower work participationof women with younger age. Statistics New Zealand (2016) has indicated that, in the fourth
quarter 2015, the labour force participation rate of women in younger age groups (20-24, 2529, and 30-34) was about 73 per cent, whereas that of women in older age groups (35-39, 4049, and 50-54) was about 82 per cent. The other alternative reason for this underrepresentation
may be that domestic violence is preventing younger women from returning to work.
According to the Annual Report of National Collective of Independent Women’s Refuges(2015), 54 per cent of women using refuge services between July 2014 and June 2015 wereaged under 35, compared with 41 per cent of women who were 36 years old and above.
However, further research to explore this underrepresentation issue would be worthwhile.
Representativeness of the sample is an issue that should be addressed in future research.

17

New Zealand Journal of Employment Relations, 41(1): 8-21

Conclusion
This study has produced important insights into the impact of domestic violence on theworkforce and, while similar studies have been conducted overseas, this is the first study toaddress this issue in New Zealand. The findings also lend support to spillover theory in thatthey clearly show that the effects of domestic violence are not confined to the home but havesignificant impact in the workplace. Finally, in light of the findings, and given that current
annual cost of domestic violence to New Zealand employers has been estimated to be at least$368 million (Kahui, Ku, & Sniveley, 2014), it is imperative that domestic violence isrecognised as an issue to be addressed in the workplace and that policies which support victims,
perpetrators and co-workers are implemented.

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21

New Zealand Journal of Employment Relations, 41(1): 22-40

The Role of Contextual Factors in Employer Recruitment
Decision Making: Evidence from Regional Australia
SHAMIKA ALMEIDA** and SANTINA BERTONE**

Abstract
Various scholars have suggested that the skills of accredited, permanent immigrants inAustralia are, on average, underutilised. However, most research to date has approached thisissue through a human capital perspective. Surprisingly, little is known of how the community
context in which employers operate can influence their recruitment and selection behaviour
towards immigrant professionals. This paper reports the findings of a study examining how
regional community characteristics such as dense networks, bonding activities and trust
influence employer screening of immigrant professionals in the IT and accounting industries.
The paper draws on 21 in-depth, face-to-face interviews with human resource professionals
and recruiters within a regional Australian town. We describe how these recruiters’ reported
lack of experience with newly arrived immigrant groups, and their dense community networks,
based on trust, appear to shape attitudes towards the employment of minority ethnic immigrant
professionals. A new conceptual framework incorporating community contextual factors isoffered for further research into this area.

Key words: employment outcomes, immigrant professionals, trust, community characteristics,
recruitment

Introduction
As is the case in several OECD countries, Australia has a formalised immigration program to
attract highly skilled professionals (Chaloff & Lemaitre, 2009). These skilled migrant policies
are aimed at institutional development and combating skill shortages (Cameron, 2011). The
top five countries of origin for General Skilled Migration visas granted include: India (21 percent), China (20 per cent), United Kingdom (14 per cent), Sri Lanka (five per cent), andMalaysia (five per cent) (Australian Bureau of Statistics, 2011). Despite the rigorous
assessment of immigrants’ qualifications and experiences, permanent skilled immigrants from
non-English speaking backgrounds (NESBs) are less successful in finding employment thatmatches their skills than their English-speaking counterparts who arrive in Australia under theskilled migration program (Hawthorne, 2011; Kostenko, Harris, & Zhao, 2012).
Green, McIntosh, and Vignoles (2002) define skill underutilisation as a case of ‘over education’of skilled immigrants where immigrants have excess qualifications relative to the requirements*

Shamika Almeida, University of Wollongong, Wollongong
Santina Bertone, Swinburne University of Technology, Melbourne**

Note: Early version of this paper was presented at the fifth International Community, Work and Family Conferencein 201322

New Zealand Journal of Employment Relations, 41(1): 22-40
of a specific job. Typically, this is the result of immigrants being forced to accept work in lessskilled occupations when compared with their occupation before migration (Productivity
Commission Research Report, 2006). This pattern of accepting lower skill jobs througheconomic necessity is particularly prevalent among Non-English speaking Background(NESB) immigrants and can lead to continuing under-employment and blocked career paths(Bertone, 2008).
The research to date on skilled migration and employment outcomes has mainly identified how
immigrant human capital and, to a lesser extent, other barriers such as discrimination andprejudices impact on unemployment and under-employment of immigrant professionals (Ho& Alcorso, 2004). In this article, we will provide an overview of these traditional or past
approaches to the problem. Following from this, we present a conceptual model which
incorporates community contextual factors (level of exposure to diversity at organisational
level, social networks, bonding and trust) which appear to also influence employers’
recruitment decisions towards skilled immigrants. We use the exploratory data collection
undertaken in our study as a platform for developing this framework and for future theorisingand research. Overall, our paper seeks to answer the question: What factors operating in aregional context potentially shape attitudes towards the employment/under-employment ofimmigrant professionals from (NESBs)?

Traditional approaches to the understanding of immigrant employmentoutcomes
Researchers have consistently postulated that immigrants’ inferior employment outcomes are
influenced by individual immigrant based human capital attributes. Edwards (2004: 80)
describes human capital as the “stock of productive knowledge, skills and competencies suchas numeracy, writing and reading”. This human capital is acquired through formal education(especially post-school education), labour force experience and communication skills(Productivity Commission Research Report, 2006).
Human capital theory assumes that differences in human capital result in differing labour
market outcomes. (Cobb-Clark, 2003; Ho & Alcorso, 2004). For instance, many researchers
including, Chiswick and Miller (2002), and Dustmann and Fabbri (2003), have called attention
to the English language skill deficits of immigrants and the tendency for these to result in lower
employability and earnings. According to much of this research, immigrants from English
Speaking Backgrounds (ESB) tend to have higher incomes than immigrants from Non-English
Speaking Backgrounds (NESB), in part because of the inferior level of English language
proficiency levels of the latter (Birrell, Hawthorne & Richardson, 2006).
While economic theory tends to view English language and other human capital attributes asobjective ‘supply side’ factors, critical social researchers, such as Alcorso (2003) and Ho &Alcorso (2004) have argued how susceptible these factors are to social biases, interpretationand perceptions by labour market players, viz managers, clients and co-workers. As someresearchers have noted, often it is not the level of proficiency alone which is important, butrather the way that English is spoken, including accent, idiom and syntax (Hosoda & StoneRomero, 2010). Moreover, the absence or possession of other ‘soft’ skills (beyond accent andidiom) can become crucial in the employment process both at recruitment and beyond (Ho &Alcorso, 2004; Cook, Zhang & Wang, 2013).
23

New Zealand Journal of Employment Relations, 41(1): 22-40
This line of analysis has led to theories about the interaction of cultural identities within theemployment context, given that such identities may be a powerful factor for all parties involvedin the employment relationship. Some researchers (Markus, 2009) have suggested that
immigrants may face discrimination and prejudices within the hiring process if their cultural
identities deviate significantly from the dominant Anglo-Celtic culture prevailing in Australian
workplaces. Research suggests that barriers to entering the labour market may be based on
identifiable features of group identity, such as cultural background (Watson, 1996), ethnicity(Dunn, 2004), names (Booth, Leigh, & Varganova, 2011), and to a lesser extent, religion(McAllister & Moore, 1989).
This paper builds on such theory and takes the analysis further. It examines how community
characteristics and social behaviour in a geographic context can shape the employmentoutcomes of skilled migrants. To this end, we will draw on the economic geography literatureon spatiality and sociological theories of social capital.

The spatial community context that shapes employer attitudes
Labour geographers emphasise the effects of place and specificity on the labour market (Peck,1996). Furthermore, they acknowledge that relationships happen over a particular space andthus recognise the relevance and influence of spatial context on labour market outcomes(Massey, 1994).
In this paper we examine how the “particular articulation of [social relationships].., a particular
moment in those networks of social relations and understandings” (Massey, 1994: 5, as citedin Mylett, 2003: 75) shape recruiter attitudes and the employment screening process involving
skilled NESB immigrants during the recruitment and selection phase. To understand social
relationships and how these influence recruiters’ behaviour within a community context, we
also examine the role of social capital in relation to skilled NESB migrants seeking
employment in the host community.
Social capital is built on relationships based on shared identity, common fate or social intimacythat lead people to draw on particular people to achieve a set of goals based on obligation,
track records, actions or responses (Coleman, 1988). It can be seen as the ‘glue’ that holds
groups of individuals together in communities (Pooley, Cohen & Pike, 2005). Social capital is
the combination of 1) networks: which can be defined in terms of geography, density (theproportion of people who know each other), and closure (intra versus inter community links);
2) social norms: rule, values and expectations shared by a group of people; 3) sanctions: formal
and informal rewards and punishments; 4) competencies: individual’s personal resources,
including self-esteem and self-efficacy; and, 5) trust, reciprocity, interaction within thecommunity (Halpern, 2005; Pooley et al., 2005).
According to Gao (2005), trust underlies successful relationships, transactions, andemployment and lays the foundation for a potential relationship between the job seeker and theemployer (Model & Lin, 2006). According to Lipnack and Stamps (1994: 188) “People
generate trust through their interpersonal networks of relationships”. However, immigrants andminority ethnic groups may have fewer interpersonal networks of relationships compared to
the native-born. This can become an issue within the labour market. For example, when trust
is embedded in the relationship between the jobseekers and the job informants, it benefits

24New Zealand Journal of Employment Relations, 41(1): 22-40
jobseekers and enables them to “gain an advantage over the competitors for a targeted position”(Gao, 2005: 198).
The greater the level of personal networks and trust established by immigrants within thecommunity they live in, the greater their potential for better employment outcomes. However,
Hatton and Leigh (2011) argue that immigrants assimilate as communities, not only as
individuals. This means that as an individual, an ethnic immigrant may find it difficult toestablish a sense of trust between their ethnic culture and the native-born culture on their own.
The longer the immigrant community has been established within the community, the more thehost society comes to accept that ethnic group (Hatton & Leigh, 2011). This then leads us to
the issues of bonding and bridging capital in relation to skilled immigrants.
According to Woolcock (2000), bonding is described as the strong ties developed between
people of similar background and interest. These types of bonding relationships will include
family and friends, where they provide material and emotional support to each other. (ibid.)
They tend to be more inward-looking, protective and reflect strong ‘in-group’ loyalty. Whencommunity groups are too tightly bonded and not accepting of diversity, Fukuyama (1999)
states that there are ‘negative externalities’ for the society. On the other hand, Woolcock (2000)
says that bridging is a relationship people make with friends, associates and colleagues fromdifferent backgrounds (different socioeconomic status, age, generation, race or ethnicity).
Putnam notes further that there is a positive link between the level of tolerance, acceptance andsocial participation among people (Putnam, 2000).
Accordingly, we postulate that if a particular community displays characteristics of low
exposure to diversity, and exhibits dense social networks and bonding activities that accentuate
the need for trust within the community, then employers and recruiters in such communities
will be unfavourably disposed towards the screening of new ethnic immigrant professionals.
This approach can be utilised to explain contextual community characteristics that shapeemployer/recruiter attitudes and job screening which in turn can result in underemployment(skill underutilisation) or unemployment of immigrant professionals, as outlined in following
figure.
Figure 1: Regional community characteristics’ influence on employer screening andrecruitment
Community factors shaping employer attitudes

Level of density in
networks and community
bonding activities

Level of importance placedon trust and commitment
to the community

Level of diversity andexperience with ethnic
groupsResearch strategy and process of analysis
This study employed a qualitative approach to the interpretation of recruitment behaviours ofa group of employers/recruiters in a regional area of New South Wales, Australia. It sought toexamine the interconnections and relationships within real-life phenomena that are toocomplex for survey based or experimental strategies (Yin, 2003). Such a strategy enabled the25New Zealand Journal of Employment Relations, 41(1): 22-40
researchers to build a descriptive, multi perspective and interpretive analysis of community
based contextual factors that can influence employers/recruiters in the recruitment andselection of migrant professionals. At the heart of this approach is the quest to shed light on“the social processes of interaction that individuals within a culture implicitly know but thoseoutside the culture do not” (Bluff, 2000: 115).
The selected regional town, Wollongong, is situated in the Illawarra region and lies directly
south and southwest of metropolitan Sydney and northeast of Australia’s capital city, Canberra(Illawarra Regional Information Service, 2008). Situating the study within Wollongong is
acceptable because it exhibits a suitable level of business activity, employer organisations andprofessional working population to examine the spatialised nature of social phenomena.
Wollongong is the tenth largest city in Australia, is a leading coal exporter, the location of thelargest integrated steel plant in the southern hemisphere (Illawarra Regional Information
Service, 2008), and there were, prior to this study, approximately 110,000 persons, including
11,000 and 22,000 professionals (Australian Bureau of Statistics, 2006). According to theAustralian Bureau of Statistics (2011), 73 per cent of the population living in Wollongong wereborn in Australia while the next largest group was from the United Kingdom. Forty-seven percent of the population indicated that both parents were either from an Australian, English, orof Irish heritage. Thus, Wollongong offers a suitable research context, characterised bysufficient employer activity, ideally suited to meet the research objectives of this study.
The research focussed on the recruiting practices of employers and agents into two professional
occupations – accountancy and information technology. Accounting and computing
occupations were selected because these are the top two nominated occupations by skilled
immigrants in Australia and, as such, form a large component of the skilled immigration
program with its focus on occupations in demand within the Australian labour market(Department of Immigration and Citizenship, 2009).
Data collection
According to Guest, Bunce, & Johnson, (2006: 61) “research that is field oriented in nature andnot concerned with statistical generalizability often uses non-probabilistic samples” and themost commonly used samples, particularly in applied research, are purposive (Miles &Huberman, 1994). The empirical data for this study were collected between 2008 and 2009.
We examined published recruitment advertisements on seek.com.au and in regional
newspapers over a period of six months (January to July 2008). Based on those sources, we
identified key organisations that had advertised computing and accounting based employment
positions. We then used word of mouth referrals to approach these organisations and their HR
managers to create a purposive sample composed of recruiters from these organisations. This
proved to be the most effective way of gaining access. Out of the referred participants, we wereable to achieve a 90 per cent success rate (20 participants agreed out of 23 potential participants
approached). In contrast, our success rate from cold calling or approaching potential
participants without any referral (using the contact HR professional on the computing andaccounting recruitment advertisements) was only 10 per cent (one participant agreed out of 10
potential participants approached). The characteristics of the interview sample are consistent
with those of the IT and accounting industries (i.e. male dominated) and of the type oforganisations that operate in a regional town.

26

New Zealand Journal of Employment Relations, 41(1): 22-40
Table 1: Research organisation and interviewed participant characteristics

Type oforganisations
Employees
Genderrepresentation ofsenior management
Age of interviewed
participant

4 (Semi-public)

17 (Private)

11 (Less than 50)
13 (All male senior
management)(5) Over 100(2) All female
senior management(2) Less than 30

13 (30-50 years)(5) Over 1000
6 (Combination ofmale and female
senior management)
6 (Over 50)

This informal process of seeking participation in the research defined the nature of therelationship, with trust an emergent outcome of the personal referrals made to gain access toparticipants. The element of ‘trust’ aided the participants’ ability to be candid and open about
the areas of discussion. As the research focussed on issues pertaining to immigrants and theiremployability at skill accredited levels, establishing a ‘trusting’ relationship with theparticipants was fundamental to this study. For instance, it was important that the research
participants were comfortable about discussing issues such as discrimination and racism
potentially facing NESB immigrant professionals.
Purposive sample size generally relies on the concept of saturation (Guest et al., 2006).
Theoretical saturation of categories occurs when no new properties are revealed about thesecategories and thus there is no need for collecting more data (Hood, 2007; Guest et al., 2006).
Similarly, we found that the later interviews in this study only reconfirmed the previously
disclosed community based factors as potentially influencing employers’ attitudes andbehaviours in a recruitment context. This suggests that the interview sample size (21) was
sufficient for our needs in this study.
In general, the interview length was between 70 to 90 minutes, and all interviews were recorded
digitally and then transcribed. Interviews were “guided conversations rather than structured
questions” (Yin, 2003: 89). We used open ended questions and ensured that the approach was
conducive for the research participant to answer questions (Yin, 2003). We used different
stages of the interview to verify participant feedback. For example, when inquiring about
participants’ views on recruiting immigrant professionals into computing and accounting roles,
generally the participants did not indicate any apprehension with regard to employing
immigrant professionals from diverse ethnicities. After discussing some other issues, we thenwent on to query their views on the immigrant professionals’ communication skills. Suchquestions generated fine-grained detail with participants sharing their personal experiences.
In addition to the primary data gathered through in-depth interviewees, the researchers also
made use of multiple secondary sources (Yin, 2003), such as participant observation andanalysis of organisational documents. This enabled the research to triangulate the findings andground theory generation in a dynamic manner (Sieber, 1973). Some of the key secondary data
sources included EEO policy documents and staff origins analysis provided by participants,
data provided by four representatives of relevant professional, migration and employment
based organisations and associations as well as participant observation at local businessnetworking events.

27

New Zealand Journal of Employment Relations, 41(1): 22-40
Data analysis
The study made use of codes, memo writing and integrative diagrams to analyse the data. Codes
help to “capture patterns and themes and cluster them under a ‘title’ that evokes a constellationof impressions and analyses for the researcher” (Lempert, 2007: 253). This then facilitated theformation of categories. Categories are higher level codes that have grown in complexity andabstraction (Bryant & Charmaz, 2007: 18). See Table 2 for a sample of coding and categories
developed from this study.
Table 2: Sample of coding and categories
Quotes
A lot of people are born and bred here,
whereas in Sydney a lot of them aretransients or people who are new toSydney.
Everyone knows everyone in Wollongong.
It might be on a conscious or sub conscious
level. Because of the ignorance, they
[Wollongong community] consider womenin a Hijab in some way related to the al
Qaida group. (HR Specialist)… it is better the devil you know. Stickwith who they know rather than risking
trialling with someone else. (Recruitment
Consultant)
The Macedonians, Italians, Croatians,
Maltese are already in. There is a different
group: Vietnamese, Chinese, Indians, Sri
Lankans, Singaporeans are still new. Evenin my own mind, they fall into two separate
groups. (Recruitment Consultant)
The employers are able to build
relationships, and see if that person isreliable and trustworthy, has got a goodwork ethic, and has got sound values.
When you build work experiences in avoluntary basis how many times will that
person get a job versus a person who does
not have that experience?
In our organisation there is a large English
percentage, followed by Italians andMacedonians. According to the Census, in
2006, the English and the Italians decreased
and Chinese have increased. So if you areto look at the representation of the Asians,
we only got a handful. Out there [in theresidential community], the Chinese
population is increasing but not in here [inthe organisation]. Our workforce does not
represent the changes.

CODES
More people bornand bred in
Wollongong andfewer transients
Family feel and low
anonymity
Media influence

THEMES
Dense
networks

Importanceof trust

CATEGORIESRegional
community
characteristics

Prefer to deal withknown persons andin-group loyalties
In-group and outgroup prejudices

Volunteering andengaging with
community

Commitment
tocommunity

Low diversity at
management level
and Fewer Asians
within thecommunity

Lack ofexperience indealing with
Asians28

New Zealand Journal of Employment Relations, 41(1): 22-40

Such analysis was combined with continuous memo writing (Charmaz, 2006) and use of
integrative diagrams (Strauss, 1987) to clarify relationships between categories and to expand
the definition of the categories and to understand the data (Urquhart, 2007; Weiner, 2007). For
example, coding, memo writing and diagrams made it evident that the community
characteristics influencing employers were interconnected and could influence each other tonegate or further shape employer behaviour in the region.

Findings and Discussion
1. Experience of dealing with non-European immigrant groups
According to the employer/recruiter interviewees, many Wollongong employers lackexperience of working with non-European ethnic immigrants in a professional capacity.
Although Asian students have attended the University and Vietnamese have worked at thesteelworks since the 1970s, it is only since 2003 that more immigrant professionals from Asian
countries/backgrounds (Chinese and Indians) have settled in Wollongong (Australian Bureauof Statistics, 2006). The region also features small business ownership by Vietnamese andLebanese immigrants, but this is in a community context where European and Anglo-Celtic
ancestries are dominant (Australian Bureau of Statistics, 2006). As such, the Wollongong
community lacks exposure to newly arrived immigrant ethnic groups such as Asian
professionals.
According to the interviewees, Wollongong also exhibits fewer numbers of transients and more
residents who have lived and worked all their lives in the Wollongong community.
Most people had never left Wollongong or only ever lived and worked in Wollongong(Recruitment Consultant, private organisation).
A lot of people are born and bred here, whereas in Sydney a lot of them are transientsor people who are new to Sydney…. in Wollongong it’s different. …..To a certain level,
even some of our social acquaintances, they sort of –have been here for ever and ever(Senior manager private organisation).
These comments indicate a particular view (which may or may not be correct) that suggests
Wollongong employers and the community generally tend to lack experience in dealing withdiverse, non-European ethnic cultures. Drawing on Putnam’s (2000) view that regional
communities may have fewer individuals who exhibit tolerance of social differences (incomparison to metropolitan communities) we can interpret the following interviewee
comments as indicating a slowness to adapt to cultural diversity in the community:
In our organisation there is a large English percentage, followed by Italians andMacedonians. According to the Census, in 2006 the English and the Italians decreased
and Chinese have increased. So if you are to look at the representation of the Asians,
we only got [sic] a handful. Out there [in the residential community], the Chinese
population is increasing but not in here [in the organisation]. Our workforce does not
represent the changes (HR professional, semi-public organisation).

29

New Zealand Journal of Employment Relations, 41(1): 22-40
You can see some organisations, where the majority of the staff is from Anglo Saxon
background, no one from ethnic backgrounds (Senior Manager, private organisation).
This visibly low ethnic diversity at organisational and community levels together with thelower degree of integration of Wollongong businesses into the international economy (Markey,
Hodgkinson, Mylett, Pomfret, Murray, & Zanko, 2001) may have contributed to interviewees’
lack of experience in dealing with behavioural differences and dress attire of particular newly
arriving ethnic groups, as the following comment suggests:
There are clients who will not be able to handle, for instance if an Arabian woman camewith a shawl. They would not be able to handle it culturally because they will haveinternal issues with their own people, because it will make their employees feel
uncomfortable. I think they would not know how to act (Recruitment Consultant,private organisation).
Altogether 30 comments were made along these lines, suggesting low levels of cultural
sensitivity and understanding of the ethnic behaviour and practices of newer minority groups.
These findings suggest that employers would be more cautious about employing NESB
immigrant professionals belonging to particular ethnic groups. These attitudes extended
beyond Asians (Indians and Chinese) to other groups, such as immigrants from the Middle
East, as the next section outlines.
2. Trust and proximity
Within the context of the Wollongong community, trust is an important aspect in establishing
relationships. For example, according to the interviewees, members of the Wollongong
community prefer to deal with people who are known and trusted, rather than take a risk withunknown persons. For example, a typical response was:Trust is an important element in Wollongong. I definitely come across that here. Hereeither their children go to the same school or they are on the same board or there issome kind of connection (Recruitment Consultant, private organisation).
Members of the Wollongong community display strong relationships that encompass networks
and interactions across both professional and personal spheres. Similar findings were observedin a study conducted in a regional town (Armidale, NSW), where the respondents (women
entrepreneurs) “used a range of formal and informal sources of support for their businesses”(Conway & Sheridan, 2005: 72). The inter-connections between personal and professional
spheres result in relationships that exhibit high levels of trust and mutual obligation. This is
supported by the work of Edwards (2004) who says that when people in a network actively andregularly interact, they are more likely to have high quality personal relationships, high levelsof trustworthiness, and a strong sense of obligation to and expectations of each other.
As a consequence of this strong affinity, familiarity and mutual obligations between thecommunity members living in Wollongong, interviewees noted that there was a prevailing
requirement to abide by community based values:
We have got that familiarity in Wollongong. We are small enough that if you do thesmall thing wrong, you can’t be anonymous. Anonymity comes with large cities. Say
we had an argument or something and then I go drop the kids we can be at the canteen
30

New Zealand Journal of Employment Relations, 41(1): 22-40
together working… You have to live by your values more. And you know more people
and more related to more people (Senior manager private organisation).
Within such a close-knit community, newly arriving non-European immigrant professionals
may find it difficult to establish trusting relationships. Evidence of this is found in the caution
expressed by Wollongong community members toward newcomers:
And I think it’s probably because for years and years they [Wollongong community]
had bands of different cultures coming in. and I think they [Wollongong community]
have become more cautious than before (Recruitment Consultant, private organisation).
This is supported by Pretty, Bishop, Fisher, & Sonn (2006) who note that a local community
may find it hard to trust new ethnic groups because Australians want familiarity, and act as acommunity to exclude people and things that are different. This lack of trust can be augmented
by perceptions created by the media about certain ethnic and cultural groups, as one interviewee
explained:
It might be on a conscious or sub conscious level. Because of the ignorance, they
[Wollongong community] consider women in a Hijab in some way related to the al
Qaeda group sic (HR professional, semi-public organisation).
You paint everyone with the same brush. People who look similar to people who do thewrong things, or dressed similar [al Qaeda terrorists] are thought to be the same.
Subconsciously it happens (HR professional, semi-public organisation).
The threat of terrorism has made Australian society adopt a protective approach (McKay,2005). Consequently, if and when an immigrant professional looks similar to those who areassociated with terrorism, such persons may be associated with this undesirable element.
According to Fevre (1992: 73-74), although “employers want to select the best person for thejob”, their lack of access to reliable information may lead them to take shortcuts and apply
categories. Fevre cites Banton’s (1983) study on highly qualified black professionals in the
United Kingdom and the United States to illustrate how employers mistakenly exclude
members of a category they regard as unsuitable for the job. Similarly, another interviewee
explained:
My sister-in-law was born in Sri Lanka, but lived in Sydney and speaks like an
Australian and when she moved into Wollongong she felt she was not accepted. People
go and look and say you look new. I really don’t think Wollongong is as multicultural
as Sydney is, as accepting, as diverse or assimilated (Recruitment Consultant, privateorganisation).
As did another:
Even for myself, I come from XXX and I lived [sic] here for years, I sometimes feellike an outsider. People coming from overseas are going to feel a little bit left out. And
I think it’s probably because for years and years they had bands of different cultures
coming in and I think they have become more cautious than before (Recruitment
Consultant, private organisation).

31

New Zealand Journal of Employment Relations, 41(1): 22-40
This attitude of ‘mistrust and exclusion’ results in what one recruiter referred to as a level ofcultural immaturity among particular Wollongong employers. Cultural immaturity can becharacterised by the employer’s cautious attitude towards demographic changes and theirinability to promote the recruitment and selection of immigrant professionals who are culturally
distant from their own origin:
The media has instilled in us that anyone wearing a Hijab – they are Muslims and thenthey are highly religious and they are different. Some of the organisations [clients]
would say, you know, ‘get us someone else’. We are just not culturally mature or readyfor that. They are used to the Italians, the Macedonian. Wollongong is still a bit
backwards, still a bit young culturally, to take more changes (Recruitment Consultant,private organisation).
Such community behaviour and attitudes potentially undermines the employability of new
immigrants, particularly in professional positions which they have not traditionally occupied,and as a corollary impacts on the transfer of their human capital to the new host country (Man,2004). Further, the community based trust and proximity of ‘insiders’ can augment theexclusion of some ethnic groups and congeal existing in-groups in Wollongong.
3. Dense networks: community affiliation and lack of anonymity
Wollongong is a regional city (or as community members describe a ‘country town’),
with fewer transients and more people who are born and bred in the region. You willfind that it is not uncommon to talk to someone and find out that they are somehow
connected to you – six degrees of separation from everyone. Everyone knows everyone
in Wollongong (HR professional, semi-public organisation).
From a social point of view, Wollongong has got a long standing family kind of a feel
about it. … Everybody knows bits and pieces about everybody (Senior manager privateorganisation).
This establishes stronger connections between people, a family oriented community culture
and low levels of anonymity between community members. According to the interviewees,
many people living and working in Wollongong have either been employees at one of thelarger organisations in the region or are acquainted with persons working within these large
employer organisations. This further accentuates the density of professional networks within
Wollongong. The following comments illustrate these tendencies:
It’s just strange the degree of separation. There doesn’t happen to be any. Really, reallyclose. There is always someone who has some connection to Company x, or someone
consulting there (HR professional, private organisation).
Wollongong is a big country town and people know people. It’s not like Sydney – alittle bit anonymous in Sydney, whereas here it’s not the case (Recruitment Consultant,private organisation).
Establishing strong formal and informal relationships and networks within the community
becomes central to the success of individuals and business organisations:32New Zealand Journal of Employment Relations, 41(1): 22-40
Networks are important in Wollongong. Business is relationship oriented. In someways, in Wollongong, you need to work at the relationships a bit more (HRprofessional, semi-public organisation).
As discussed, the Wollongong community is reported by interviewees as displaying high levelsof affiliation, strong relationships, and a strong sense of trust between community members.
Such characteristics indicate that the Wollongong community is characterised by dense
networks, as discussed in Edwards (2004).
3.1. Bonding activities
Edwards (2004) cautions against the development of intense levels of bonding relationships
within a community. According to the interview data, Wollongong community members tend
to establish relationships with people who they have known for many years.
… it is better the devil you know. Stick with who they know rather than risking triallingwith someone else (Recruitment Consultant, private organisation).
A further characteristic of the bonding activities within Wollongong is the way that
Wollongong employers seem to categorise community members into two groups: the in-groupand the out-group. The in-group consists mainly of persons originating from an AngloAustralian ancestry. However, persons originating from Italian, Greek, Macedonian, Lebanese,
Croatian and Maltese backgrounds (groups which have been residing in the region for decades)
are also considered as part of the ‘in-group’. These latter groups have lived in Wollongong
since the early days of the steel works and the coal mines and includes second and generation
community members. The out-groups are those ethnic groups that are new to the community s(e.g. Asians from India and China). As such, in-group members have not yet generated atrusting relationship with these new ethnic group members:
The Macedonians, Italians, Croatians, Maltese are already in. There is a different group:
Vietnamese, Chinese, Indians, Sri Lankans, Singaporeans are still new. Even in my own
mind, they fall into two separate groups (Recruitment Consultant, private organisation).
These new Asian ethnic groups are considered the most dissimilar culturally and in appearance
to the local residents of Wollongong, part of a broader phenomenon described as social distance(Portes & Rumbaut, 2001). Similarly, Wong’s (2010: 198) research on recruiters demonstrates
how recruiters viewed “Asian ICT professionals as ‘them’ and ‘they’ and as people unable tofit into ‘our’ way of life or share and/or enjoy our sense of humour”.
The manifestation of an in-group/out-group mindset can “cause positive and negative
discrimination, such as better jobs offered to members of the in-group, refusal of employment
to a member of the out group, or lower wages paid to out-group members” (Tubergen, Mass,& Flap, 2004: 709). As one interviewee noted:
Although Wollongong is multicultural, I still think there is a bit of discrimination. You
can see, some organisations, where majority of the staff are Anglo-Saxon backgroundbut no one from ethnic backgrounds (Senior Manager, private organisation).

33

New Zealand Journal of Employment Relations, 41(1): 22-40
Sometimes, employers will tell us, I don’t want these types of immigrants etc, because
they had some bad experience with some for example an Indian professional(Recruitment Consultant, private organisation).
This form of in-group loyalty has been noted previously within industrialised regional towns
in Australia. Ellem (2008), noted that the town of Broken Hill exhibited similar in-groupformations as Wollongong. During the early 1930s, the local union Barrier Industrial Council(BIC) created spatial eligibility conditions for admittance to union membership and jobs basedon birth, residence or marrying within the Broken Hill community. This literature, though
historical, suggests that the in-group loyalties observed in Wollongong may not be atypical inmodern regional Australia. These subtle in-group/out-group behaviours may create a social
barrier reinforcing and reproducing prejudices and preferences and increased distance between
the locals and the newly arriving immigrant groups.
When immigrant professionals live or work within communities that display in-group and outgroup behaviours, they may need to work harder to establish their credibility and become a partof the existing community relationships and networks. Accessing the existing community
networks and relationships is important as the Illawarra regional labour market tends to berelatively closed and relies on “word of mouth” as a recruitment method (Markey et al., 2001).
This is confirmed by HR professionals in Wollongong.
…only few jobs are advertised. The rest are filled through people you know
(Recruitment Consultant, private organisation).
Word of mouth recruitment is considered by employers to be cost effective and useful for arange of reasons (Jenkins, 1986). However, such recruitment practices tend to reduce the levelof diversity by limiting the chances of persons from under represented community groups andencourages a ‘like me’ employment outcome (Iles & Auluck, 1991).

Implications for employer screening of immigrant professionals during preemployment
The existing literature confirms that both overt and covert employer prejudices impact on thelabour market outcomes of immigrants to Australia (Productivity Commission Research
Report, 2006). However, so far, very little in-depth empirical research has been conducted tounderstand how community based contextual factors influence employer evaluation of
immigrant professionals’ candidate criteria during the pre-employment or recruitment phase.
The findings of this research identified some key contextual community characteristics andprocesses that potentially influence employers in their assessment and willingness to recruit
immigrant professionals.
One of the key contextual community factors identified was the dense social networks within
the regional community. Drawing on Edwards (2004), and Stone and Hughes’ (2001)
description of dense networks, this regional community displayed network arrangements built
on similarities in terms of background, age, level of education, social status, or shared attitudes
and interests.
The next contextual based community characteristic that potentially influenced the employer
evaluation was the level of importance the regional community members placed on dealing
34

New Zealand Journal of Employment Relations, 41(1): 22-40
with people they ‘trust’. The community’s experiences with previous waves of ethnic migrantgroups together with media generated fears created an apprehensive approach towards
newcomers resulting in an in-group and out-group mentality.
The findings also give insight into how employer policies and preferences on recruitment andselection reinforce the potential to “contribute to the creation of disadvantaged labour market
groups…” (Rubery, 1994: 53). For instance, the Wollongong employer preferences expressedby the 21 recruiters interviewed for this study seem to influence their level of tolerance,
stereotypes, and comfort levels, resulting in the reported short listing and selection of persons
who are closely matched to the existing profiles of professionals within their organisations. As
illustrated by Massey (1994) and Peck (1996), the webs of interconnecting relationships
between community based factors (level of density and bonding in the community networks,
level of exposure at work to new ethnic migrant groups, importance of trust) interact with eachother to create the conditions for inferior employment outcomes for NESB immigrant
professionals, including under-employment and unemployment.
To ensure fairer employment outcomes in the future for skilled immigrant professionals, HR
practitioners could become more externally focussed and build new alliances beyond theworkplace with the new migrant community groups. Such actions would then enable HR
practitioners to be engaged more strategically (Lansbury & Baird, 2004) and manage the futuresourcing of candidates into their organisations.

Conclusion
A significant proportion of permanent skilled immigrants in Australia remain underemployedin the labour market relative to their skill sets. Scholarly work attempting to identify the causesof this underemployment of immigrant professionals has tended to focus on immigrants’human capital deficits. Yet, other literature suggests that skill utilisation of immigrant
professionals can depend on employers – on their values, social conventions, informationexchange and awareness in relation to new immigrant skills and on the operation of social
networks that may facilitate and impede immigrant access to employment. Our study
recognises the need for more focussed research that examines the complex mechanisms bywhich group identity, including discrimination and prejudice, influence employer behaviour
within the screening process of immigrant professionals. In this paper, we have focussed on
the ways that trust, familiarity and community norms operate for and against immigrant
professionals within a regional recruitment context and in turn potentially contribute todiscrimination and prejudice.
The findings illustrate how contextual based community factors may operate to exert an
unfavourable influence on the employer’s screening process of NESB immigrant professionals.
However, it is possible that the webs of interconnecting relationships between contextual
community based characteristics can result in a favourable evaluation of skilled NESB
immigrant professionals during the pre-employment phase, depending on local circumstances.
The paper has put forward a new conceptual framework for understanding how such
community contextual factors interact and the results they may lead to. More research is
required across a range of regional locations and for different occupations and incoming groups
to test the usefulness and validity of the framework.

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New Zealand Journal of Employment Relations, 41(1): 22-40

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40New Zealand Journal of Employment Relations, 41(1): 41-64

Some willingness to engage: A survey of employment relations practices
and employee voice opportunities in SMEs in regional New Zealand
BARRY FOSTER* and DEIRDRE FARR**

Abstract
This paper addresses the paucity of data on employment relations practices and employee voice in
SMEs in New Zealand. The survey forms part of a larger project into determining the inter-relationshipof employment relations practices and occupational health and safety outcomes in SMEs through theconcepts of the ‘good employer’ and ‘decent work’. The survey data on practices and voice found that
there was some willingness on the part of some employers to engage in participative practices but, inothers cases, managerial discretion was predominant. Overall, it is unclear whether employment
practices and employee voice will improve even though there is supportive legislation in the new
Health and Safety at Work Act.

Introduction
Although researchers recognise the important contribution small and medium enterprises (SMEs)
make to innovation, job creation and economic development, the plethora of literature focusses on
finance, marketing and operational management in SMEs (Wilkinson, 1999). Researchers also draw
attention to a dearth of information on employment management practices and issues in SMEs
(Coetzer, Cameron, Lewis, Massey & Harris, 2007; Edwards, Ram, Gupta & Tsai, 2006; Forth,Bewley & Bryson 2006; Lamm, Massey & Perry, 2007; MED, 2004; NZHRC, 2010; Wilkinson, 1999;
Woodhams, Howard, Johri,Shulruf & Yee, 2007). The main assumption is that SME employers arepaternalistic and favour an individualistic approach to managing the employment relationship andoccupational health and safety (OHS) risk (Atkinson & Curtis, 2004: McDonald, 2005; Wilkinson,1999). This assumption is compatible with unitarist ideological beliefs and is a significant issue as theliterature shows that the unitarist management norm to protect managerial prerogative prevails in New
Zealand workplaces (Geare, Edgar & McAndrew, 2006; 2009) as well as Australian SMEs
(McDonald, 2005). Patmore (2015) argues that Australian and New Zealand legislative regimes thatare reliant on voluntary participation may contribute to a unitarist workplace culture. The available
literature also suggests there may be some tension between employment practices in SMEs andpluralist assumptions embedded in legislative employment protections, albeit eroding protections.
This article forms one part of a larger research project to determine the inter-relationship of
employment relations practices and OHS outcomes in SMEs through the concepts of the good
employer and decent work. The project addresses the lack of research on the inter-relationships
between employment relations (ER) and OHS systems and practices, particularly in SMEs. The
significance of the project lies in examining the complex relationships between management practices
and systems, and how these influence the control of hazards and risks in the SME workplace.

Barry Foster – Lecturer, School of Management, Massey University, Palmerston North, New ZealandAcknowledgement: This empirical research has been supported financially by the Industrial Relations Foundation (NZ)
and School of Management, Massey University.
**
Deirdre Farr, Assistant Lecturer, School of Management, Massey University, Palmerston North, New Zealand*41

New Zealand Journal of Employment Relations, 41(1): 41-64
Definitions of size vary between countries and over time (Forth et al., 2006; Storey, Saridakis, SenGupta, Edwards & Blackbrun, 2010; Wilkinson, 1999). Definitions of large enterprise also vary within
New Zealand. Whereas Coetzer et al., 2007 and Knuckey, Johnston, Campbell-Hunt, Carlaw, Corbett& Massey, 2002 define them as over 50, Ryan and Fursman, 2005 and Woodhams et al., 2007 definethem as employing over 100 employees. The definition of small enterprises (SE) and medium
enterprises also varies widely in international studies, however, fewer than 20 employees is commonlyused to define SEs in New Zealand (Coetzer et al., 2007; Knuckey et al. 2002; Legg, Battisti, Harris
et al., 2009) and Australia (Kotey & Slade, 2005). This study adopts the New Zealand Business
Demography Statistics (Statistics NZ, 2013) classification of enterprise size, i.e. SEs employ less than
19 employees, and medium enterprises employ 20-49 employees. As SMEs employing between 1-49
employees contribute a third of the GDP (MBIE, 2014) there is a growing need to understand thepolicies implemented in practice in these enterprises.
The article also provides an insight into SME management practices and reviews relevant literature on
employee voice in the determination of pay and terms and conditions of work and operational decisionmaking. The remainder of the article focuses on the survey methodology, results and findings.

Management Practices in SMEs
The literature supports the perception that compliance will not be sufficient if the employer wants togain strategic advantage, by attracting and retaining an appropriately skilled and motivated workforce
who fit into the organisation (Bewley, 2006; Boxall, 1991; Department of Labour (DoL), 2003, Hull
& Read, 2009; Sengupta, Edwards, & Tsai, 2009). However, employment management practices will
differ between large enterprises (LE) and SMEs. In general, management and organisational factorsthat influence management practices in SEs are training and industry experience, new technology,
influence of quality management, influence of large business, and use of advisors. Structural issues
that have an impact on management practices are size (Champoux & Brun, 2003; Coetzer et al., 2007),
industry and sector differences (Kersley, Alpin, Forth, Bryson, Bewley & Oxenbridge, 2006; Legg etal., 2009) and ownership influence (Knuckey et al., 2002; Marchington, 2015).
Although it is difficult to generalise ER practices, some studies have suggested personnel and OHS
management practices are more likely to be informal and ad hoc compared with LEs (Coetzer et al.
2007; Gilbert & Jones, 2000; Gilman, Edwards, Ram & Arrowsmith, 2002; Hasle & Limborg, 2006;
Legg et al., 2009; Massey, 2004; Wilkinson, 1999). Where formal practices are present these are often
related to the management of OHS (Coetzer et al., 2007; Gilbert & Jones, 2000; Massey, Lewis,
Cameron, Coetzer & Harris, 2006). Formal policies and practices are written down, regularly applied
within an organisation, and assured to take place (Barrett & Mayson, 2007). Though 35 per cent of
SEs used written mechanisms, such as emails, a suggestion box, and employee surveys that facilitate
upward communication, the presence of a human resources (HR) administrator was not significantly
associated with these arrangements in SEs (Forth et al., 2006). Furthermore, workforce meetings andteam briefings were less common and less regular in SEs than in medium enterprises and LEs.
Downward communication mechanisms, such as using a management chain, newsletters, notice boards
and company intranets were also less common in SEs.
Despite the presence of formal OHS practices in some SEs, there is concern that many employers are
isolated, lack knowledge of the enterprises OHS risks and legislative obligations, and lack theresources to implement effective OHS management systems (Champoux & Brun, 2003; Legg et al.,2009). Moreover, few SE employers seek external advice (Combined Chamber of Commerce ‘Red
Tape’ Survey 2003, as cited in de Bruin-Judge, 2006). An additional concern in New Zealand is that
42

New Zealand Journal of Employment Relations, 41(1): 41-64
few workplaces are large enough to sustain the formal structures necessary to achieve the standards
set out in employment legislation, and international and national standards (Haynes, Marchington &Boxall, 2006; Waldergrave, Anderson & Wong, 2003). Wilkinson, Dundon and Grugulis (2007) had
similar doubts whether employment law based on collectivist frameworks ensured the fair treatmentof employees considering the high degree of informality in employment relationships. A later study
showing that even the smallest enterprises in the UK had some formality, usually formal dispute
resolution procedures (Forth et al., 2006), corresponds with a growing recognition that adopting formal
practices is a means of reducing SME vulnerability to litigation (Harris, 2000; Kotey & Slade, 2005).
However, there is some debate on whether formal HRM practices are appropriate for SEs (Kotey &Slade, 2005; Rasmussen, 2009a; Storey et al., 2010), moreover, that informal practices are largely
well-founded, effective and not necessarily inferior to LE practice (Coetzer et al., 2007; Gilbert &Jones, 2000; Massey et al., 2006). Storey et al.,’s (2010) results confirm that formality is not always
the answer. Compared with LEs, employees in SEs had the highest levels of satisfaction decreasing asenterprise size increased. There is, nonetheless, agreement that formalising employment policies
ensures consistent and fair treatment of all employees as the number of employees increases (Knuckey
et al. 2002; Kotey & Slade, 2005; Storey, 1994; Wilkinson, 1999).
While the implementation of high levels of HRM practices were reported to enhance employment
relationships in Australian SMEs (Wiesner & McDonald, 2001; Wiesner, McDonald & Banham,
2007), Kotey and Slade (2005) cautioned that appropriate balance needs to be aligned with the sizeand strategy of the enterprise. They found that micro and SMEs adopted standardised HRM practices.
In addition, a significant number of enterprises implemented more formal practices with growth. The
authors proposed that formal practices may even be counterproductive at certain enterprise sizes andsuggested that SE employers need to maintain a balance between HRM practices that facilitate
accountability and control, reduce the risk of litigation, and ensure compliance with statutory
requirements, while at the same time offering adequate flexibility for timely responses to changing
strategies. Kotey and Slade’s (2005) advice fits with the public sector model of responsible
management practice or bounded goodness (Bewley, 2006; Boxall, 1991).
This body of literature suggests that it is difficult to achieve the right balance of formality forestablishing and maintaining effective ER and OHS practices that support continuous improvements
to efficiency, productivity and socially decent working conditions. Nevertheless, an increase in formal
practices is to be expected in enterprises employing more than 20 employees, because the advantagesof informal management practices are lost in enterprises with more than twenty employees (Knuckey
et al., 2002; Kotey & Slade, 2005; Storey, 1994; Wilkinson, 1999).

Employee Voice
Interest in employee participation schemes and research in New Zealand waxed and waned over the
past 100 years, particularly when it was associated with improving productivity through collaborationand engagement between employees and management (Foster, 1995; Haynes, Boxall & Macky, 2005;
Rasmussen, 2009b). Moreover, the Commission of Inquiry into industry democracy, in 1989,
recommendations for formal representative participative councils for all firms with over 40 employees
were ignored (Haynes et al., 2005). It would be difficult for policy makers and decision makers toignore the increasing body of research on employee involvement and participation in the workplace.
Researchers exploring LEs (Bonnet, Figueiredo & Standing, 2003; Rasmussen, 2009b; Robertson,1971) and SEs (Coetzer et al., 2007; Lawrence, Collins, Pavlovich & Arunachalam, 2006; Sengupta
et al., 2009; Weisner & McDonald, 2006) agree that employees should be involved in determining the43

New Zealand Journal of Employment Relations, 41(1): 41-64
formal and informal rules and processes that regulate the employment relationship (voice). An
increasing interest in employee involvement and participation in the workplace underpins a generalagreement in the LE (Bonnet et al., 2003; Rasmussen, 2009b; Robertson, 1971) and SE (Coetzer et al.,2007; Lawrence et al., 2006; Sengupta et al., 2009; Weisner & McDonald, 2006) literature that
employees should be involved (voice) in determining the formal and informal rules and processes that
regulate the employment relationship. The mechanisms for participation vary from union
representation, workplace councils, team meetings and one-on one communication. Academic debate
exploring voice mechanisms adopting social democracy or dependent on collective representation(unions) may be relevant in large organisations, the public sector and in SMEs in the context of some
European countries. However, the debate on individual participation in the workplace is more relevant
in SMEs where employment relationships are predominantly individualist.
The Workplace Employment Relations Survey (WERS) 2004 found a degree of formality even in thesmallest workplaces, but SE employers were less likely to provide regular formal and systematic
information and were less likely to inform employees about financial matters. The majority of SE
employers surveyed, however, informed employees about operational, staffing and job changes (Forthet al., 2006). Significantly, SE employers appear reticent to commit themselves to consultative andpartnership practices (McDonald, 2005; Ram et al., 2001) and more likely to share information inenterprises without an HR manager (Weisner & McDonald, 2001; Storey et al., 2010). Information
sharing may be effected when the family dynamic changes as some responsibilities are devolved to a
HR manager. The majority of Weisner and McDonald’s (2001) surveyed employers (58 per cent) evenrefrained from completing the section on sharing information. Storey et al., (2010) found theformalisation of procedures had a detrimental effect on SE employee satisfaction.
The variation in information mechanisms and consultation management practices in SEs draws
attention to the influence that power has on employment relationships. SE employers’ reticence toengage in genuine consultation is concerning particularly as extreme informality appears to mask
autocratic leadership (Rainnie, 1989) and exploitation (Holliday, 1995). Formal direct communication
has even been problematic in LEs and it is, therefore, questionable whether employees can realisticallyhave a genuine voice in SEs. As management control increases, the effectiveness of joint consultationcommittees diminishes. For example, in the New Zealand luxury hotel industry formal, regular anddirect communication channels provided little joint regulation, and non-union voice channels werelimited in comparison with strongly unionised settings (Haynes, 2005; Haynes & Freyer, 2001).
Significantly, these workers felt they had no autonomy or substantive sharing of power when nonunion voice communication channels were initiated by management. In more recent case studies ofhotels, schools, aged care facilities and manufacturing factories, Markey, Harris, Ravenswood,
Simpkin & Williamson (2015) report significant associations between participation, voice, and qualityof work environment (QWE). While complex in nature, both representative and non-representative
mechanisms were associated with QWE, but non-union forms of representation undermined unionism.
Although Markey et al., (2015) reported an association between non-union joint consultative
committees (JCC) representation and direct participation with good QWE in the hotel industry, theiranalysis suggests that there has been no improvement in the hotel industry where union representation
tends to be weak. They argue that the hotel workers’ high assessment of QWE “… may reflect low
expectations for QWE as well as non-union forms of participation” (ibid: 61). Researchers have offeredsimilar explanations for surprising levels of worker satisfaction in SEs (Considine & Callus, 2002;
Waldergrave et al., 2003).
The importance of voice is evident in the International Labour Organisation prioritisation of voice in
the Socially Decent Work Index (Bonnet et al., 2003) and literature consistently distinguishing a ‘good
employer’ by quality employment relationships built on mutual trust and respect (Anderson & Nuttall,44

New Zealand Journal of Employment Relations, 41(1): 41-64
2014; Arrowsmith & Parker, 2010; 2012; Bacon & Hoque, 2005; DoL, 2003; Hull & Read, 2003;
Nadin & Cassell, 2007; NZHRC, 2006; Tipples, Hill, Wilson & Greenhalgh, 2013). This literature
supports the Employment Relations Act (2000) objective (s. 3) “to build productive employment
relationships through the promotion of ‘good faith’ in all aspects of the employment environment andthe employment relationship” based on mutual trust, confidence and fair employment behaviours.
An increasing interest in employee voice is evident in the recent debate (Anderson & Nuttall, 2014;
Budd, 2014; Donaghey, Cullinane, Dundon & Wilkinson, 2011; Gollan, Lewin, Marchington &Wilkinson, 2010; Markey et al., 2015: Morrison & Milliken, 2003; Sameer & Özbilgin, 2014;
Wilkinson, Townsend & Burgess, 2013; Wilkinson, Donaghey, Dundon, & Freeman, 2014), as wellas in complimentary research on the changing nature of work (Future of Work Commission, 2016;
Lamm, 2014; Standing, 2011; 2014; Weil, 2014). In fact, it was the rise in non-standard forms of work
(Beck, 1992; McGovern, Smeaton & Hill, 2004) and the decline in collectivism (Undy, 1999; Sisson,
Arrowsmith & Marginson, 2003) that renewed academic and policy debate on the conditions of work.
Beck (1992) argued that the non-standard, individualised employment would erode conditions that had
been won by trade unions and result in a decline in job quality. The recent debate shows that workers
in non-standard employment are more likely to work in jobs with more bad characteristics. While thegrowing body of work provides valuable insights into the nature and extent of employee voice, albeit
lack of voice in some workplaces, researchers may be talking over each other.
As there are no universal definitions, Marchington and Wilkinson (2005) devised a useful tool to guidecomparative analysis. They propose that employee participation (employee voice) can be examinedaccording to four dimensions. The first defines the degree or extent to which employees are able toinfluence management decisions (informed of change, consulted, make decisions). Also see Lukes’
analysis of the research debate concerning power (Lukes, 2005; Lukes & Haglund, 2005). The second
identifies the levels at which employees participate within organisational hierarchies (i.e. at the task,
departmental, establishment, or corporate level). Third is the range of subject matter (from relatively
trivial matters to strategic management decisions). The fourth dimension explores the form ofparticipation (indirect through representation; financial schemes such as profit sharing or gains
sharing; face-to-face or written communication between managers and subordinate individuals
concerning daily job activities, and formal worker suggestion schemes). These dimensions capture thedepth and breadth of voice mechanisms. Another way to explore the impact or level of genuineness ofvoice is by determining whether employee voice is limited to involvement through largely downward
communications (Holliday, 1995; Rainnie, 1989; Haynes, 2005), or reflects a higher level ofinfluencing decisions (Coetzee, 2011; Markey et al., 2015). At the highest level, employees will have
responsibility for decisions (Marchington, 2015). “Employee involvement, voice, is genuine whenemployee concerns are taken seriously and their input affects outcomes” (Coetzee, 2011: 27).

Employee Voice in the Determination of Pay and Other Terms and Conditions ofWork, and Operational Decision-Making
The literature provides confounding evidence showing high levels of employee satisfaction which is
at odds with that showing a high incidence of employment relations problems (ERPs) in the smallest
enterprises. On the one hand, employee satisfaction surveys suggest employees in SEs are moresatisfied with their experience at work on average than employees in large and medium enterprises(Boxall, Haynes & Macky, 2007; Kersley et al., 2006; Storey et al., 2010). Fifty-seven per cent of UK
managers involved employees in introducing and implementing change in SMEs. As a result,
employees were more satisfied with their role in decision-making than employees in LEs, and rated
managers with greater responsiveness to their needs (Forth et al., 2006). Similarly, despite low
45New Zealand Journal of Employment Relations, 41(1): 41-64
participation and collectivism in Australian SMEs – measured in a low percentage of collective
agreements (Weisner & McDonald, 2001; Weisner et al., 2007), employees were more satisfied withrecognition for their efforts than those in LEs (Considine & Callus, 2002).
When compared with the US and the UK, New Zealand employees appeared to have higher rates ofinfluence in all areas of decision making (Boxall et al., 2007; Haynes et al., 2005; Macky & Boxall,
2008a;b). Nevertheless, Haynes et al., (2005) found a significant conflict between the level ofinfluence employees had and desired influence over pay, perks and bonuses. Their argument, however,that compromise is ‘normal’ and, consequently, the influence gap is insignificant does not
acknowledge the mediating affect that power imbalance has on conflicting interests of employers andemployees. There is also research showing that employees in full-time, permanent employment, in
professional occupations, or who earn middle to high incomes have greater influence than employees
in part-time or casual employment, in low skilled occupations and on low incomes who often have no
input in decisions concerning bargaining structures and employment conditions (Boxall et al., 2007;
Scott, Roberts, Holroyd & Sawbridge, 1989). Significantly, workers in the secondary labour market
reported their income level inadequate (Boxall et al., 2007; NZHRC, 2010).
The literature also suggests that employees working in SEs are generally offered less tangible terms
and conditions of work than employees in LEs and yet are generally satisfied (Nadin & Cassell, 2007).
In fact, one explanation for higher levels of employee satisfaction may be attributed to the absence ofstructures for employee representation. A contrasting argument is that informality and closeness of thefamily style environment accounts for the higher level of employee satisfaction. Waldergrave et al.,(2003) argued employees working in SEs were most satisfied with their terms and conditions of
employment because in the absence of union presence “... employees were more likely to have lessfamiliarity with bargaining dynamics or understanding of how their terms and conditions could be
improved” (ibid: 30). A third explanation is that SE employees have lower expectations with theircareer prospects, etc. (Considine & Callus, 2002). However, expectations are not static; as therelationship develops over time and the employer and employee become more committed to each otherexpectations may change from the initial transactional exchange of labour for pay (Arrowsmith &Parker, 2010; Nadin & Cassell, 1999).
Bolton (1971) argues that, while working conditions may sometimes be inferior in SEs and employees
often prefer to work in small communicative groups and ipso facto experience, greater employee
satisfaction and reduced enterprise resource planning (ERP). The argument that informal employment
relations were harmonious rested on the rarity of strikes in SEs. Rainnie (1989) criticised this study
for barely making a connection between the level of unionism and the level of strike activity. Forth etal.,’s (2006) research justified this criticism. They found that 82 per cent of employees in the UK had
pay unilaterally determined by managers; 12 per cent of employers negotiated with individual
employees; only five per cent had pay negotiated by collective bargaining, two per cent of those withfewer than 20 employees; and 12 per cent of SEs had arrangements for employee representatives.
A national study showed a similar situation in the New Zealand private sector, with 15 per cent of SEs(employing between 10-20 employees) involved in collective bargaining (Foster, Murrie, & Laird,
2009; Foster & Rasmussen, 2010). However, this reflects a general low level of unionism in the private
sector, accounting for only nine per cent of the total number of New Zealand employees covered bycollective agreements in 2009 (Blumenfeld, 2010). An explanation for this is the fact that substantial
employee gains have come from government intervention rather than collective bargaining which has
firmly entrenched the decentralised bargaining and individualised employment relationships that were
established under the Employment Contracts Act 1991(ECA) (Blumenfeld, 2010; Rasmussen &Lamm, 2005).
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New Zealand Journal of Employment Relations, 41(1): 41-64

Other explanations for low unionism in SEs are that the employers’ close involvement with the daily
running of the enterprise removes the need for the formal organisation of employee representation.
This may be the case in some SEs as research shows the low demand for unionism and representationis generally related to worker ambivalence, which may be partly due to job satisfaction and good
employment relationships (Boxall et al., 2007; Considine & Callus, 2002; Kersley et al., 2006; Storey
et al., 2010). On the other hand, it could be related to the high incidence of temporary workers andshift workers, and structural factors that inhibit union organisation in SEs (Anderson & Nuttall, 2014;
Forth et al., 2006; 2009; Foster & Rasmussen, 2010; Waldergrave et al., 2003) or employer resistanceto unions (Tipples, 2015). Unions appeared to be organised in SMEs with an established union
presence (Foster & Rasmussen, 2010; Waldergrave et al., 2003) with anecdotal evidence suggestingsome unions are only prepared to negotiate collective agreements for 25 or more employees (Foster &Rasmussen, 2010). However, Tipples (2015) found some dairy employers resolutely refused to haveto have anything to do with unions. With employers having greater flexibility in the workplace during
the ECA (repealed) and under the present National Government’s raft of changes to the ERA,
managerial prerogative has been strengthened. This has become more so in SMEs with the growth ofindividualised employment relationships embedded in the workplace (Foster, Rasmussen, Murrie &Laird 2011; Rasmussen, Foster & Farr, in press).
The New Zealand research is consistent with international research showing that the most common
mechanisms for involving employees are health and safety representatives and workplace committees.
These are more likely in larger and highly unionised enterprises (Bohle & Quinlan, 2003; Kersley etal., 2006; Butcher, & Stewart-Loughnan, 2005; Walters, 2010). The fact that only 28.4 per cent ofHaynes et al.,’s (2005) employees working in SEs (1-20 employees) reported regular consultation
meetings concerning workplace issues which suggests that the ERA, and the Health and Safety in
Employment Amendment Act 2002 have had little influence on employee involvement in SEs. The
Taskforce on Workplace Health and Safety (2013) concluded that the Health and Safety in
Employment Act 1992 was not being implemented properly. The Taskforce reported that levels ofworker engagement in workplace H&S issues were inconsistent across businesses.
To address the inconsistency of worker engagement in New Zealand, one of the most significant
changes to the reformed health and safety legislation is the employer’s duty to facilitate genuine worker
engagement, participation and representation in the management of workplace health and safety risks(see Health and Safety at Work Act 2015 and specifically Worker Engagement, Participation and
Representation Regulations 2016). Sustained improvements to working conditions have often occurred
as a result of improvements in the regulation of health and safety. Therefore, the recent legislativechange may have significant implications for worker involvement in operational decision-making anddetermining terms and conditions of work.

Methodology
In order to investigate the concept of the ‘good employer’ in SMEs, a survey was carried out by Massey
University (Foster, Farr & Laird, 2015). Data collection was undertaken using both quantitative andqualitative methodologies. Surveys were mailed to a representative sample of 2500 organisations
employing between 1 and 50 employees (though some employers with more than 50 staff also
answered the questionnaire) using the standard industry classifications, as used by previous researchers(Blackwood et al., 2007; Foster et al., 2011). The surveyed regions were in the Central North Islandof New Zealand (Taranaki, Manawatu, Whanganui, Horowhenua, and Hawkes Bay). Data from theself-administered questionnaire was analysed descriptively in relation to responses. Although the47

New Zealand Journal of Employment Relations, 41(1): 41-64
survey sought information on the employment relations and occupational health and safety practices
within SEs, for the purpose of this paper only ‘employment relations practices’ and ‘employee voice’
were examined, drawing out the relevant items such as the structure and terms and condition of theorganisations employment agreements, working arrangements, consultation with staff and attitudes
towards unions. A definition was supplied with particular questions so that the respondent was familiar
with the terms, for example:-

Negotiate (allowing some form of bargaining before reaching a settlement)
Consult (discuss with employees before making a decision)
Inform (let employees know of your decision, no discussion)
Not inform (e.g. employees may just get a pay increase).

Participants were also invited to partake in semi-structured interviews so as to extract any underlying
issues that could not be gleaned from a questionnaire. We received 70 acceptances and a selected
portion (25 interviews) was used to ensure that the participants covered the various regions industry
and firm sizes in the survey. The interviews were conducted by telephone and taped. Subsequently,
the interview information was compared with responses obtained through the questionnaire’s openended questions. While only a few insights and quotes can be included in this article the interviewsgave additional depth and detail to our understanding of employer attitudes and behaviour.

Results
The response rate from the cross-sectional survey was 14.2 per cent (N = 332) which is comparable toother similar studies. Notwithstanding, this is a relatively low figure and the results must, therefore,
be interpreted with caution. While these results are purely descriptive, there are differences across thevarious questions and employer groups. It is important to stress the overall message of the survey:
employers across industry and size demonstrated some willingness to engage in certain forms ofparticipation but less so in other forms. There were some employers who were prepared to negotiatewith individuals on their terms and conditions of work, but the majority of employers either consulted
or just informed employees of their decision. On non-pay issues the vast majority of employers
provided only the statutory minimum conditions required.
Industry Classification of Firms by Size
Table 1 provides a detailed representation of the distribution of the sample across standard industry
classification by size. The largest number of respondents 40.4 per cent was employed in firms withless than 9 employees; 26.6 per cent of respondents were employed in firms with 10-20 employees,
and 25.7 per cent of respondents were employed in firms with 20-49 employees. As reported in themethodology section, some employers with more than 50 staff also answered the questionnaire (7.3
per cent) and it was decided to include them in the survey. Please note that the industry classificationof ‘Others’ is approximately 20 per cent of the total.

48

New Zealand Journal of Employment Relations, 41(1): 41-64

Table 1: Industry Classification of Participating Employers
Enterprise Size

<9

10-19

20-49

50+

Total
Responses

Accommodation and Food Services
Administrative and Support Services
Agriculture, Forestry and Fishing
Arts and Recreation
Construction

6 (1.8%)3 (0.9%)3(0.9%)
2(0.6%)
7(2.1%)

9(2.8%)
0 (0%)
4(1.2%)
1(0.3%)
8(2.4%)

3(0.9%)
1 (0%)
3(0.9%)0(0%)
9(2.8%)

1(0.3%)
2 (0%)
0(0%)
0(0%)
0(0%)

19(5.8%)3(0.9%)
10(3.1%)3(0.9%)
24(7.3%)

Education and Training
Electricity, Gas, Water and Waste
Services
Financial and Insurance Services

1(0.3%)

2(0.6%)

1(0.3%)0(0%)

4(1.2%)

5(1.5%)
4(1.2%)

4(1.2%)
5(1.5%)

4(1.2%)
3(0.9%)

1(0.3%)0(0%)

14(4.3%)12(3.7%)

Health Care and Social Assistance
Information
Media
and
Telecommunications

9(2.8%)

4(1.2%)

7(2.1%)

2(0.6%)

22(6.7%)3(0.9%)

1(0.3%)

1(0.3%)0(0%)

5(1.5%)

Manufacturing
MiningProfessional, Scientific and Technical
Services
Rental, Hiring and Real Estate
Services11(3.3%)0(0%)

9(2.8%)
1(0.3%)

19(5.8%)1(0.3%)

4(1.2%)0(0%)

43(13.1%)
2(0.6%)

13(4.0%)5(1.5%)

12(3.7%)1(0.3%)

31(9.5%)2(0.6%)

1(0.3%)

0(0%)

0(0%)

3(0.9%)

Retail TradeeTransport, Postal and Warehousing30(9.2%)2(0.6%)

9(2.8%)
4(1.2%)

1(0.3%)
6(1.8%)

1(0.3%)
3(0.9%)

41(12.5%)15(4.6%)Wholesale Trade5(1.5%)

3(0.9%)

2(0.6%)0(0%)

10(3.1%)Other Services

26(7.9%)17(5.2%)12(3.7%)11(3.4%)66(20.2%)

Total

132 (40.4%)87(26.6%)

84(25.7%)24(7.3%)327(100%)

Note: Five participants did not indicate the size of the enterprise. Total responses, N = 332.

Employment Agreements
We asked the participants what type of Individual Employment Agreements (IEA) arrangements they
have with their employees. Table 2 shows employers in all enterprise sizes indicated that they have avariety of arrangements. However, the standardised agreement is the predominant type (63.6 per cent),
followed by standardised with some negotiated conditions (46.1 per cent). What is surprising is that
21.6 per cent of the sample individually negotiates conditions of work with some or all of theiremployees.
Table 2: Types of Employment Arrangements in Individual Employment Agreements
Enterprise Size
Standardized IEAStandardized IEA with somenegotiated individual conditions
Individuallynegotiatedemployment agreements<982 (24.7%)

10 - 1958(17.5%)

20 - 49
55(16.6%)50+
16 (4.8%)

N = 332211 (63.6%)47(14.1%)

43(13.0%)52(15.7%)

11(3.3%)

153(46.1%)27(8.1%)16 (4.8%)21(6.3%)8(2.4%)

72(21.6%)

Note: The employers were asked to indicate all the types of arrangements they have with their employees. Some employers havemore than one type of employment agreement.

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New Zealand Journal of Employment Relations, 41(1): 41-64
The Frequency SME Employers Reviewed Employment Agreements
Table 3 shows the majority of employers reviewed their employment agreements, but the regularity
varied. Annual review (37.8 per cent) and two years or more (20.4 per cent) are the common means.
6.7 per cent never reviewed their agreements. More frequent reviews occurred in enterprises
employing more than 20 employees, 50 per cent of the largest enterprises reviewed their agreements
annually. Conversely, the proportion of employers who never review agreements increases in smaller
enterprises. While these enterprises are not keeping up with legislative changes, 35.1 per cent of all
employers only reviewed their employment agreements to comply with legislative changes.
Table 3: The Frequency SME Employers Reviewed Employment Agreements
Enterprise SizeAnnually
Two years or more
Only to meetchanges
Never
Total

<9
10-19
20 - 4950+
N=328
46 (34.8%) 30(34.1%) 36(42.9%) 12(50.0%) 124(37.8%)25(19.0%) 20(22.7%) 19(22.6%) 3(12.5%) 67(20.4%)
legislative
45(34.1%) 34(38.6%) 27(32.1%) 9(37.5%)
16(12.1%) 4(4.6%)2(2.4%)
0(0.0%)
132(100%) 88(100%) 84(100%) 24(100%)

115(35.1%)22(6.7%)328(100%)

Employees Entitlements to Non-Pay Terms and Conditions
Table 4 reveals that the majority of employers only provided the statutory minimum requirements totheir staff on KiwiSaver (62.5 per cent), annual leave entitlement (67.9 per cent) and sick leave (71per cent). However, a small number of employers exceeded the minimum provisions for some or allof their staff. When it comes to voluntary provisions, 25 per cent provide health insurance, butalternative pension schemes are rarely provided (8.2 per cent). These results suggest that some SME
employers are willing and able to exceed the minimum statutory terms and conditions of work.
Table 4: Employees Entitlements to Non-Pay Terms and Conditions
Enterprise Size
Employer contributes in excess of the statutory
minimum requirement for KiwiSaver
Employer contributes to a pension scheme other than
KiwiSaverPrivate health insurance (e.g. Southern Cross)More than 20 days paid annual leave
Paid sick leave in excess of the statutory minimum
requirements<9 - 50+
All

Some

None

N=

60(18.8%) 60(18.8%)200(62.5%) 32010(3.3%) 15(4.9%)34(11.0%) 43(14.0%)34(10.8%) 67(21.3%)

282(91.9%) 307
231(75.0%) 308
214(67.9%) 315

33(10.5%) 58(18.5%)

223(71.0%) 314

Pay Review and Settlement Process
Table 5 presents the pay review or settlement process by industry. It is interesting to note that
Accommodation and Food Services (AFS) (26.3 per cent), Agriculture, Forestry and Fishing (37.5 percent), and Retail Trade (23.7 per cent) demonstrated a higher than normal rate of negotiating with theiremployees. However, some AFS employers did not communicate with employees in any way (21.1%
per cent). Of those industries that do not inform their staff of a review, Construction (29.2 per cent)and Electricity, Gas, Water and Waste Services (39.5 per cent) are the most lacking in communicatingwith employees. Most employers in this sample either consulted (39.4 per cent) or informed (31.9 percent) their employees over the last pay review and settlement. However, it is noted that overall 15.5
50

New Zealand Journal of Employment Relations, 41(1): 41-64
per cent of employers adopted good practice negotiating with their employees and 12.9 per centadopted bad practice, in not informing their employees of their decision concerning pay review.
Table 5: Best Describes the Last Pay Review or Settlement Process With Employees by Industry
Do
not
Industry
Negotiate Consult
Informinform
N=
Accommodation and Food Services

5(26.3%)7(36.8%)3(15.8%)4(21.0%)19

Administration and Support Services

0(0%)

1(33.3%)2(66.7%)0(0%)

3Agriculture, Forestry and Fishing3(37.5%)2(25%)

3(37.5%)0(0%)

8Arts and Recreation Services

0(0%)

2(100%)

0(0%)

0(0%)

2

Construction

3(12.5%)7(29.2%)7(29.2%)7(29.2%)

24

Education and Training

0(0%)

1(25%)

2(50%)

1(25%)

4

Electricity, Gas, Water and Waste Services

0(0%)

6(46.2%)2(15.4%)5(38.5%)

13

Financial and Insurance Services

0(0%)

8(66.7%)4(33.3%)

0(0%)

12

Health Services and Social Assistance4(20%)

7(35%)

7(35%)

2(10%)

20

Information, Media and Telecommunication

0(0%)

2(40%)

2(40%)

1(20%)

5

Manufacturing

8(19.5%)15(36.6%)

13(31.7%)5(12.2%)

41

Mining0(0%)

01(50%)

1(50%)

2

Professional, Scientific and Technical Services

3(10%)

16(53.3%)

11(36.7%)

0(0%)

30

Rental, Hiring and Real Estates Services01(50%)

01(50%)

2

Retail Trade9(23.7%)12(31.6%)

15(39.5%)2(5.3%)

38

Transport, Postal and Warehousing

3(23.1%)7(53.8%)3(23.1%)

0(0%)

13

Wholesale Trade2(20%)

4(40%)

4(40%)0(0%)

10Other services
Overall8(12.7%)24(38.1%)

20(31.7%)

11(17.5)

63

48(15.5%)

122(39.4%)

99(31.9%)40(12.9%)309

Flexible Working Arrangements
Table 6 clearly indicates that employers either do not provide or employees are not requesting flexible
working arrangements, even though most employers (77.4 per cent) reported having a flexible working
arrangement policy. For those employers who do provide some form of flexible working arrangements,
the common provisions are: flexi-time (35.3 per cent), ability to reduce working hours (38.3 per cent)and ability to change set working hours (44.4 per cent). Working only during school term arrangements
are the least commonly provided (8.5 per cent).
Table 6: Types of Flexible Working Arrangements Provided in the Past 12 Months<9 - 50+
Working at home in normal hours
Flexitime
Job sharing
Ability to reduce working hours
Compressed hours
Ability to change set working hours
Working only during school termYes
82(25%)
116(35.3%)
39(11.9%)
126(38.3%)
38(11.6%)
146(44.4%)28(8.5%)No
246(75%)
213(64.7%)
290(88.1%)
203(61.7%)289(88.4%
183(55.6%)300(91.5%)

N=
328
329
329
329
327
329
328

51

New Zealand Journal of Employment Relations, 41(1): 41-64
Consultation
1. Consultation With Employees and Unions
The responses in Table 7 show employers’ distinct preference to deal directly with employees (84.3
per cent) rather than with unions (0.6 per cent). Even size shows a predominant resistance towards
unions as a third party, with employers preferring to consult directly with employees: less than 9
employees (34.6 per cent) and 10-19 and 20-49 around each (21 per cent).

Table 7: Employers Attitudes Towards Consulting Directly With Employees Rather Than Witha Trade UnionEnterprise
Size
Agree
NeutralDisagreeTotal<9112(34.6%)18(5.5%)0 (0.0%)130

10 - 1970(21.6%)17(5.5%)0 (0.0%)87

20 - 49
71(21.9%)11(3.4%)1(0.3%)
83

50+
20(6.2%)3(0.9%)
1(0.3%)
24

N = 324
273(84.3%)49(15.1%)
2(0.6%)
324(100%)

2. Meetings With Staff
The majority of employers conducted a range of regular staff meetings (92.0 per cent). The frequency
and range of these meetings varied: 74.1 per cent conducted a range of daily, weekly, fortnightly andmonthly meetings; and 17.9 per cent only conducted quarterly and/or annual meetings. Overall,monthly (39.2 per cent) and weekly (31.2 per cent) intervals are most common. Table 8 reveals what
topics are most discussed at these meetings. Note that operational matters such as production issues(71.7 per cent) work organisation (58.4 per cent) future plans (50.3 per cent) and health and safety(49.4 per cent) are the most prominent.

Table 8: Topics Most Often Discussed at Meetings

Production issues
Work organisation
Future plans
Health and Safety
Training
Financial issues
Employment issues
Government Regulations
Leave and flexible work arrangements
Pay issues<9 - 50+
Discussed
238(71.9%)
194(58.4%)
167(50.3%)
164(49.4%)
100(30.1%)74(22.3%)
39(11.7%)
36(10.8%)25(7.5%)13(3.9%)Not Discussed
93(28.1%)
138(41.6%)
165(49.7%)
168(50.6%)232(69.9%)258(77.7%)
293(88.3%)296(88.2%)
307(92.5%)319(96.1%)

N=
331
332
332
332
332
332
332
332
332
332

Note: The participants were asked to choose the three topics most often discussed at meetings.

52

New Zealand Journal of Employment Relations, 41(1): 41-64
These typical responses show input in operational matters is encouraged:
We have a good working relationship with our staff. We encourage open discussion andinvolve all employees in decision making (Other, Car dealership).
Lots of formal and informal meetings and discussions (Arts and Recreation).
Matters pertaining to the employment relations practices, such as leave and flexible working
arrangements (7.5 per cent) and pay issues (3.9 per cent), are also discussed in some enterprises.
However, these are less common. Typical responses suggest that personal matters are managed at theindividual level:
We have a good rapport with our staff and have an open door policy (Electricity, Gas andWater).
Maintain close relationship with employees and deal with any problems as and when theyarise (Health care).
Consultation with Employees Concerning Redundancy
Some of our surveyed employers had to make roles redundant (N=47). Table 9 indicates that while
the majority of affected employers provide notice for redundancy (72.3 per cent), some engage in
genuine consultation. Overall, the evidence shows that some SME employers are willing to consult
about redundancy payments (46.8 per cent) and options for reducing the number of redundancies. The
area where the most consultation occurs concerns the criteria for selecting the pool of employees
affected by the role redundancy (55.3 per cent).
Table 9: What Issues Did the Redundancy Consultation Cover?
Enterprise Size
Options for reducing the number of
redundancies
Criteria for selection
Redundancy payments
Notice of redundancy
Total

<9

10 - 19

20 - 49

50+

N = 474 (25.0%)5(31.3%)4 (25.0%)8(50.0%)16 (100%)

2(28.6%)2(28.6%)3(42.9%)6(85.7%)7(100%)

13(68.4%)
16(84.2%)
12(63.2%)
16(84.2%)
19(100%)2(40.0%)3(60.0%)3(60.0%)4 (80.0%)5(100%)

21(44.7%)
26(55.3%)22(46.8%)34(72.3%)
47(100%)Discussion
While SEs tend to favour informal communication mechanisms, adopting some formal employment
policies and practices are helpful for reducing the SE vulnerability to litigation (Harris, 2000, Kotey& Slade, 2005) and as the number of employees increases, ensuring consistent and fair treatment of all
employees (Knuckey et al., 2002; Kotey & Slade, 2005, Kotey & Sheridan, 2004; Legg et al., 2009;
Storey, 1994; Wilkinson, 1999). The concept of fairness is also a fundamental aim of statutory
minimum requirements guiding employment relationships.
There are three phases in the employment relationship that provide opportunities for employers andemployees to negotiate and consult on the terms and conditions of work. The first phase occurs during
the establishment of employment relationship, i.e. when the employer and employee agree to the terms
and conditions of work and formalise the arrangements in the employment agreement. The second
phase encompasses negations and consultation concerning changes to terms and conditions of work
53

New Zealand Journal of Employment Relations, 41(1): 41-64
arising during the employee’s tenure. The third phase arises if the employer is considering
redundancies. Statutory duties require all employees to have a signed employment agreement and for
employers to consult with employees concerning redundancies.
The results here show that there is a moderate occurrence of employee involvement across all themeasures which is divergent from previous studies that show SME employees have low input in
determining their pay and other terms and conditions of work (Forth et al., 2006; Gilbert & Jones,
2000). The results reflect a more complex scenario of employee involvement in SMEs. The variationin the amount of employee involvement within and between enterprises and industries indicate thatindustry and size influence willingness to negotiate and consult with employees. However, thepreference to deal directly with employees converges with research showing SME employers are more
reticent to commit themselves to consultative and partnership practices (Boxall et al., 2007; McDonald,
2005; Ram, Edwards, Gilman & Arrowsmith,, 2001; Waldergrave et al., 2003) resulting in minimal
union activity and weak employee bargaining power (McGovern et al., Rasmussen, 2009c).
Despite the predominantly individualist context and beliefs, the proportion of employers providing
individually negotiated terms and conditions of work is encouraging for two reasons (51.6 per cent).
Firstly, opportunities for employee involvement appear to be better in New Zealand compared with
the UK where 82 per cent of employees had pay unilaterally determined by managers (Forth et al.,2006). Secondly, it partially supports research suggesting employees in New Zealand appear to havehigher rates of influence in all areas of decision making compared with the US and UK (Coetzee, 2011;
Rasmussen, McLaughlin & Boxall, 2000; Boxall et al., 2007; Haynes et al., 2005; Macky & Boxall,
2008a;b). While the remainder of the employees on standardised employment agreements have no
input in determining their terms and conditions of work at the establishment phase, the majority of
employers provide the statutory minimum requirements for KiwiSaver, annual leave and sick leave
entitlements. There is a clear preference to deal directly with employees rather than with unions. What
this study clearly shows is that without the use of a third party, the employer has total discretion on
how they negotiate, consult or inform with their employees. This supports the work by Foster et al.,(2011), Rasmussen, Foster & Farr (in press) and Tipples (2015), showing that employers, especiallyin SMEs, are given greater flexibility in dealing with their employees. Thus, flexibility andindividualism is now firmly embedded in the workplace.
Work-life balance arrangements are also usually negotiated in this phase. The majority of employers
also exceeded expectations reporting they had formal work-life balance policies, rather than informal
arrangements (Yasbek, 2004). Furthermore, the working arrangement results show that some
employers are willing and able to consider and negotiate flexible working arrangements. These resultscompare favourably with MBIE (2016) findings on the following working arrangements: flexible
working hours, reduced hours or job share, work from home or other sites. Two of the additional
provisions included in our findings are least commonly provided, (i.e. compressed hours and working
only during school terms). This suggests that employees requesting less familiar working
arrangements appear to have encountered resistance from employers, especially working only during
school terms. Industries that work outside of normal working times or employing part-time or casual
workers appeared to be more flexible and this also similar to the MBIE (2016) results.
There are many opportunities to involve employees, formally and informally, during the employee’s
tenure. However, the literature suggests that SME employers are less likely to provide regular formal
and systematic information or inform employees about financial matters (Forth et al., 2006). Formal
practices include the review of employment agreements, the pay review and settlement process, andmeetings. Although this survey did not ask the employers if they sought employee input whenreviewing the employment agreements, the strong preference for regular review of employment
54

New Zealand Journal of Employment Relations, 41(1): 41-64
agreements (93.3 per cent), albeit some are compliance driven (35.1 per cent), may provide
opportunities for employee involvement in SMEs. When it comes to negotiating or consulting with
employees concerning pay review, the pattern is similar to opportunities to negotiate at theestablishment phase, 54.9 per cent of the SME employers adopted good practices.
The regularity of consultation meetings is one of the measures used to examine joint consultation in
the NZWRPS showing employees generally have a high influence in all areas of decision-making(Boxall et al., 2007; Haynes et al., 2005). The employers perform well on this measure. Moreover, thestrong preference for regular meetings 92 per cent appears to be an improvement compared with the
low incidence (28.4 per cent in enterprises employing 1-20 employees) of consultation meetings
concerning workplace issues reported by Haynes et al., (2005). While this study does not examine thelevel of employees influence or control in decision making, it captures the breadth of issues the SME
employers are willing to discuss. The majority of employers discussed production issues, workorganisation, and health and safety. This is consistent with SMEs in the UK (Forth et al., 2006).
However, some of the employers went beyond work organisation and discussed future plans, training,financial issues, government regulations, leave and flexible working arrangements and pay issues atmeetings. The patterns show the majority of employers are making efforts to provide some
opportunities for employee involvement when establishing and maintaining employment relationships,
however some employers were involved in making roles redundant.
The proportion (55.3 per cent) of employers adopting good practices, i.e. consulting on the criteria for
selecting the pool of employees affected by the role redundancy, is consistent with the practices
adopted in the first two phases of the employment relationship. The high incidence of affected
employers providing notice for redundancy may be compliance driven and/or perceived as aninevitable post-decision administrative task. However, when size is taken in consideration, enterprises
larger than 19 employees appear to show a greater propensity to consult with their employees
compared to the smaller organisations. While the employers in the smallest enterprises lag in all theseareas, some attempts are made to consult with employees.

Conclusions
The findings indicate that some employers, across industry and size, demonstrate a willingness toengage in some forms of participation, but less so in other forms. There are some employers who areprepared to negotiate with individuals on their terms and conditions of work. Nevertheless, themajority of employers either consult but make the final decision or just inform employees ofmanagement decisions, suggesting that managerial prerogative still prevails. The fact that the majorityof employers provide only the minimum conditions required on KiwiSaver, annual leave and sick leave
entitlements, suggests that for many SME employees the minimum statutory requirements become themaximum.
The regularity of meetings and reviewing employment agreements and pay, as well as the formality
emerging in the flexibility policies and employment relations practices, also shows some surveyed
employers are willing and able to adopt sustainable good practices exceeding their statutory duties.
However, there is room for improvement especially in consulting with employees when dealing withredundancy. Overall, it is unclear whether employment practices and employee voice will improve
even though there is supportive legislation in the new Health and Safety at Work Act.

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New Zealand Journal of Employment Relations, 41(1): 41-64

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Merging politics with economics: Non-industrial and politicalwork stoppage statistics in New Zealand during the long 1970s
TOBY BORAMAN*
Abstract
During the 1970s, the number of ‘non-industrial’ (including ‘political’) work stoppages
dramatically increased in New Zealand. In that decade, hundreds of thousands of workers
participated in such stoppages, making up 30 per cent of the total number of workers involved
in all recorded stoppage activity, and 15 per cent of the total number of days not worked due
to all recorded stoppages. Hitherto, these stoppages have largely been overlooked in previous
statistical analyses of the period, thus, giving the impression that the extent of workplace
conflict was considerably lower than it actually was. Further, many, if not most, of thesignificant and controversial strikes of the period could be considered non-industrial. Because
the vast majority of these stoppages were struggles over wages and working conditions, yet
directed against the government, the traditional division between economics and politics intrade union activity is difficult to sustain for the 1970s.
Key words: strikes, political strikes, work stoppage statistics, incomes policies

Introduction
Today, it may seem trifling to evaluate the accuracy of work stoppage statistics, given that,by any measure, New Zealand is currently experiencing an extraordinary long-term lull in
strike activity. Yet, it is not inconsequential to do so for the period from the late 1960s to theearly 1980s – the ‘long 1970s’ – when New Zealand experienced widespread strike activity.
A fairly unique characteristic of this upsurge, relative to other periods of New Zealandhistory, was that a substantial minority of stoppages were considered ‘non-industrial’(including ‘political’) in nature. The Department of Labour (DOL) initially defined “nonindustrial stoppages” as those that made no demand on the employer (DOL, 1979a: 2).
While the DOL excluded such stoppages from its official stoppage statistics until 1980, it
kept a separate record of them. Yet, most analyses of the period have neglected these separate
statistics (for instance, see Deeks & Boxall, 1989; Brosnan, Smith & Walsh, 1990). This
article employs this data to help furnish a more historically accurate picture of the extent of
workplace conflict – as measured by recorded work stoppages – during the long 1970s.
Indeed, excluding non-industrial stoppages, many of which were significant and contentious
national or regional disputes, has led to a substantial underestimation of strike activity. An
extraordinary 46 per cent of the workforce took part in stoppages during 1979, largely due tothe general strike of that year. This figure of nearly half the workforce participating in
stoppages represents a vastly higher percentage than what was thought to be the previous
peak for that measure in New Zealand history: 19 per cent in 1976 (although if non-industrial*

Dr. Toby Boraman, Lecturer, School of People, Environment and Planning, Massey University, Manawatu
campus, New Zealand. The author would like to thank staff at the old Department of Labour library for accessto their library and their assistance, and also to thank staff at the Department of Statistics.

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New Zealand Journal of Employment Relations, 41(1): 64-82
stoppages are included for 1976, that figure climbs to 25 per cent). Accordingly, many
commentators – including myself – have mistakenly claimed that workplace dissidence interms of workers involved peaked during the mid-1970s (see for example Boraman, 2007;
Bramble & Heal, 1997; Roper, 2011; Trotter, 2007).
Commentators from varied perspectives have argued that trade union activity was
economistic in the long 1970s, and, thus, largely unconcerned with political issues beyond
the workplace (Awatere, 1984; Deeks, 1977; Jesson, 1981). Hence, this article also examines
the extent of ‘political’ strikes during the long 1970s. As Hay (1978) observes, politicalstrikes are often considered to be synonymous with non-industrial stoppages. Initially, the
DOL concurred – it defined political stoppages as those that made no demand on theemployer (DOL, 1976). Yet, later it re-defined such stoppages as those that not only placed
no demand on employers, but also “did not relate to the workers’ conditions of employment”(DOL, 1981b: 2). Consequently, political strikes were an “expression of dissatisfaction withparticular aspects of the broader society in which workers live” (DOL, 1981b: 3). In otherwords, they were strikes in support of social and political causes that were unrelated to wages
and working conditions.
This article proceeds by, firstly, examining the broader issue of the accuracy of official
stoppage statistics during the long 1970s, especially in regards to the under-reporting of
strikes. It, then, analyses the data on non-industrial stoppages, and briefly considers the major
disputes that can be categorised as non-industrial. Then, it assesses how many of these nonindustrial stoppages could be deemed strictly political to help evaluate whether unions were
economistic. The focus of this article is the statistical analysis. Apart from some brief
analysis in the conclusion, it does not offer explanations as to why so many non-industrial
disputes took place, and why they eventually declined (including the effectiveness ofattempts to outlaw them), and the heated political debate that occurred about politicalstoppages during the period (for some discussion, see Deeks, 1977; Boston, 1984).

Stoppage statistics and under-reporting
It is extraordinarily difficult to capture statistically the frequency and extent of work
stoppages. There is substantial global discussion on the accuracy of official stoppage statistics(see for example Gall, 1999; Lyddon, 2007; Shalev, 1978). Most scholars argue that suchstatistics tend to underestimate the extent and intensity of stoppages. Lyddon (2007), forinstance, notes that brief localised strikes, and small unofficial stoppages, are often
unrecorded. Every day or informal forms of collective work refusal are also difficult, or
almost impossible, to measure.
Several scholars have made similar claims in New Zealand (Deeks & Boxall, 1989: 246;
Harbridge, 1987; Roper, 2011). The major case study of the accuracy of stoppage statistics
found that, in 1984, the DOL underestimated the number of workers involved in theFederation of Labour’s (FOL) right to bargain campaign by 42 per cent and the number ofdays not worked by 47 per cent (Harbridge, 1987). That campaign was an unsuccessfulattempt to break the National government’s two-year long wage-freeze. Ironically, the DOL
would have deemed those strikes as non-industrial if they had occurred before 1980 and, thus,
would have omitted them from their main statistical series.
However, as far as is known, no general overview of the accuracy of New Zealand stoppage
statistics has been written. This section endeavours to do so for the long 1970s, drawing upon65

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internal discussions held within the DOL, the body then responsible for collecting stoppage
statistics, in regards to their own concerns about the under-reporting of disputes. Indeed, the
DOL acknowledged a general tendency towards under-reporting (DOL, 1976; DOL, 1981a;
DOL, 1982).
They noted several reasons why this occurred. Employers were not under any statutory duty
to report stoppages (and thus when employers failed to report stoppages, DOL Offices wererelied on to “collect information” about such disputes). Additionally, employers often did notreport restrictive practices at work, such as go-slows, work-to-rules, and various bans. The
DOL noted these were difficult to measure (DOL, 1982).
Moreover, stoppages in the public sector were generally excluded (DOL, 1982). Stoppages
involving state sector unions that were not registered under the Industrial Relations Act, suchas the Public Service Association (PSA), were omitted until the passage of the State Sector
Act in 1988. Additionally, disputes involving several private sector unions who wereunregistered under the Industrial Relations Act were also presumably discounted. These
unregistered unions had a combined membership of 200,000 in 1982 (Boston, 1984).
However, several unions that covered the state sector were registered under the Industrial
Relations Act, such as various railway unions and the New Zealand Workers’ Union (DOL,
1976). While registered unions carried out the majority of strikes in the 1970s and 1980s,
white-collar workers and unions experienced a degree of ‘radicalisation’ during those
decades, and hence took far more strike action than they had previously (see for example
Derby, 2013; Roth & Hammond, 1981: 164; Roth, 1990).
However, in comparison with Britain, New Zealand stoppage statistics were more accurate
in one facet: they included strikes that lasted less than a day. During the 1970s, many New
Zealand stoppages were of such duration, as Roth (1977: 7) noted: “In 1975…out of 426
recorded stoppages, 157 – more than a third – lasted less than one day, which means that in
Britain they wouldn’t even have been counted as strikes”.
Nevertheless, these brief stoppages themselves were subject to considerable under-reporting.
Indeed, the DOL noted that employers frequently did not report unauthorised stoppages,
which often lasted less than a day (DOL, 1982). For example, the Meat Industry Employers’
Association provided remarkable data that about 2,500 stoppages of brief duration (often only
lasting an hour or two) occurred across the meat industry during 1970-72 for a Commissionof Inquiry into the meat industry. These stoppages involved nearly 470,000 workers. Yet,they were unrecorded in the DOL’s official tally (DOL, 1976). Even if the Association’s
figures were inflated, they are still highly significant. Indeed, they far exceeded the official
national totals for all industries of about 1,000 stoppages that involved around 300,000
workers during 1970-72 (both figures include non-industrial stoppages; see table 1 below).
Additionally, stoppages of less than four hours duration, which commonly occurred on large,
highly unionised worksites, were unrecorded in some large industrial districts such as
Auckland due to an informal departmental convention (DOL, 1973; 1974).

What is more, unlike the bulk of other high-income countries, employers were relied upon as
the primary source of data (Perry & Wilson, 2004). While “employers are perhaps typicallyin a better position to measure absences” (Perry & Wilson, 2004: 8), sometimes they may
66New Zealand Journal of Employment Relations, 41(1): 64-82
have an interest in downplaying the size and, thus, effectiveness of a dispute, or not reportingthem altogether; indeed, trade unions often disputed the figures provided by employers as
severe underestimates, as will be detailed below (see also Harris, 1997). Subsequently, many
countries request or require trade unions to also provide data.
Lastly – the main subject of this article – the DOL omitted stoppages that it deemed ‘nonindustrial’ until 1980. As Silver (2003: 189) and Walsh (1983) contend, excluding politicaland wider non-industrial strikes could lead to a substantial under-estimation of the level ofconflict. Walsh (1983) argues that:
Though most protest actions on a large scale (for example, national strikes) may
ostensibly seem politically motivated, in most cases there will be underlying causes
fundamentally concerned with terms and conditions of work. A national protest
stoppage over, say, a wage freeze is primarily concerned with the pay of individual
strikers and its appearance as a political strike will arise out of the direction of theprotest towards the instigators of the measure, namely the government (p.22).
The DOL had earlier voiced remarkably similar concerns to Walsh. For instance, it remarked
that many ‘non-industrial’ disputes in which “no demand is made on the employer” were
protests against government actions and policies (DOL, 1979a: 2). It also noted:
Although non-industrial stoppages have occurred outside the control of theenterprise, which is still directly affected by the stoppage, the motivation for many
non-industrial strikes stems primarily from the work situation…For the Trade
Union Movement non-industrial stoppages are looked upon as expressions forbetter welfare and working conditions (DOL, 1979a: 3).
Hence, in order to “gain a better perspective of stoppage activity”, non-industrial stoppages
needed to be taken into account (DOL, 1979a: 3). This resulted in the DOL eventually
including non-industrial stoppages in its official count from 1980 onwards. This also could
explain why the DOL amassed separate statistics on non-industrial stoppages from 1960 to1982 (they still noted the occurrence of such stoppages in 1981 and 1982, but included thesein later official statistical series – in other words, the statistics for 1981-2 were backdated
until 1980). Two annual publications – the Industrial Statistics Handbooks and especially theIndustrial Stoppages Reports – published the discrete data about non-industrial stoppages.
As far as is known, only Roth (1970) has utilised the above mentioned little-known reports
to highlight the data about non-industrial stoppages. Yet he did not aggregate such data withthat for industrial stoppages in his main statistical tables of stoppages. He also only
scrutinised data for non-industrial stoppages for the period 1960-1976, and, thus, neglected
the more tumultuous years of the late 1970s and the early 1980s.

Data analysis

67

New Zealand Journal of Employment Relations, 41(1): 64-82
Before the 1970s, political stoppages over social issues rarely occurred in New Zealand, andseemingly assumed little significance. Many were ephemeral protests against various wars
and fascism by ‘militant’ unions, such as the Miners’, Watersiders’ and Seamen’s Unions(Richardson, 1995; Roth, 1978). Yet, from about the late 1960s, with a general upturn instrike activity following the Arbitration Court’s infamous nil wage order of 1968, stoppages
deemed ‘non-industrial’ by the DOL became far more prevalent and substantial.
The number of such stoppages peaked in the mid-1970s, specifically in 1974, when 70 suchstoppages or 15.6 per cent of the total number of stoppages took place. By the late 1970s, thefrequency of non-industrial stoppages fell away (see figure 1 and also table 1 below). Overall
the number of non-industrial stoppages as a percentage of all stoppages was 5.8 per cent forthe 1970s, and slightly less (4.8 per cent) for the period 1960-82. While this represented onlya small fraction of all stoppages, the annual total number of non-industrial stoppages in the
mid-1970s was greater than the sequential annual total number of all stoppages from 1992
until the present day – in other words, since 1992 recorded disputes have totalled less than 70
each year.
If measures other than the number of stoppages are analysed, non-industrial stoppages assume
greater importance. This is particularly the case for participation in non-industrial disputes,
which accounted for 29.8 per cent of the total number of workers involved in all stoppages in
the 1970s. Of the total number of days not worked in the 1970s due to all stoppages, 15 percent were a result of non-industrial stoppages, and 13.8 per cent for the period 1960-82 (seetable 1 below).
As most non-industrial stoppages were short-lived protest stoppages against government
policies and practices, they had more effect on the total number of workers involved in
disputes rather than working days not worked (see figures 1 and 2 below). For example, in
1971, non-industrial disputes averaged 1.37 days not worked per worker involved, comparedto 1.89 for industrial stoppages (Industrial Stoppages 1971, 1972: 20). In 1975, their average
duration was 1.26 compared to 4.27 for industrial stoppages (Industrial Stoppages 1975 Part
Two, 1976: 45). Even in 1979, there were more days not worked due to strikes other than thegeneral strike of that year.

68New Zealand Journal of Employment Relations, 41(1): 64-82

Table 1. Non-Industrial Stoppages 1960–82 (excluding stoppages involving unregistered unions including most state sector unions, and thosethat accrued less than 10 working days not worked)
Year

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982

Number of stoppages
All
Non-industrial
stoppages
stoppages
60
71
97
1
60
97
4
110
5
147
2
89
153
173
4
330
7
323
10
307
41
418
24
450
70
478
50
543
56
564
2
413
2
530
7
362
10
293
4
333
5

Per cent
industrial
1.0
4.1
4.5
1.4
2.3
2.1
3.1
13.4
5.7
15.6
10.5
10.3
0.4
0.5
1.3
2.8
1.4
1.5

Number of working days not worked
Non- All stoppages
NonPer cent Nonindustrial
Industrial
35683
38185
93243
86
0.1
54490
68043
1209
1.8
22743
929
4.1
1031204025
3.91394901302671414532778
2.02822394891
1.721526652703
24.5
1407556250
4.32803908684
3.124257958891
24.3
22492310291
4.655759569154
12.4
437123315
0.1380797192
0.169052330862744.737349613427
3.63880861427403633002812659
3.8

Number of workers involved
All stoppages NonPer centindustrial industrial
14305
16626
39921
N/A
N/A
14911
34779
N/A
N/A
15267
N/A
N/A
33132
N/A
N/A
28490
37458
44041
N/A
N/A
110096
N/A
N/A
124371
38362
30.8
72386
11957
16.5
13080914944
11.4
121490
50586
41.6
88902
14082
15.8
26385562770
23.8
160020613
0.41589551052
0.747145031325566.512765119556
15.3
13500656457
41.8
155987
36397
23.3

69

Non-

New Zealand Journal of Employment Relations, 41(1): 64-82
Sources: Industrial Stoppages Annual reports 1972 (DOL, 1974) and 1975-82 (DOL, n.d.a;
1979a, b; 1981a, b, 1982; 1983). Handbook of Industrial Stoppage Statistics, July 1975
(DOL, n.d.c), and Industrial Stoppages 1971 (1972: 20).
Note: the 1971 figures for non-industrial stoppages are taken from DOL, 1972: 20; DOL,
1974: 11. DOL, 1979b, Appendix Two: 2 and Handbook of Industrial Stoppage Statistics
July 1975 (DOL, n.d.c: 23) noted different data for 1971 (namely only one stoppage which
accrued 295 days not worked). The earlier figures appear to be more accurate as they included
several large-scale stoppages against the Stabilisation of Remuneration Act, the decision of
the Remuneration Authority to reduce negotiated pay rises in 27 industries, and the Shippingand Seamen Amendment Bill. Industrial stoppages 1971, 1972: 21. It is unknown why thesesignificant stoppages were later excluded.
Figure 1. Number of working days not worked, all stoppages, 1970-1982(excluding stoppages involving unregistered unions including most state sector unions, and thosethat accrued less than 10 working days not worked)

Number of working days not worked

800000700000600000500000Nonindustrial

400000Industrial

300000200000100000
0
1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

Year

Source: as for Table 1 above
Figure 2. Number of workers involved in all stoppages 1970-82(excluding stoppages involving unregistered unions including most state sector unions, and those that
accrued less than 10 working days not worked)
500000450000

Number of workers involved

400000350000300000'Nonindustrial'

250000'Industrial'

200000150000100000
50000
0
1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

Year

Source: as for Table 1 above.

70

New Zealand Journal of Employment Relations, 41(1): 64-82
Perhaps the most noteworthy statistic is the jump in the percentage of the workforce involvedin stoppages when participation in non-industrial stoppages is included (see figure 3 and table2 below). As mentioned above, the largest increase was in 1979.
Figure 3. Percentage of workers involved in all stoppages 1971-1982

Percentage of total wage and salary earners(excluding stoppages involving unregistered unions including most state sector unions, and those that
accrued less than 10 working days not worked)
50
45
40
Nonindustrial
stoppages
Industrial
stoppages

35
30
25
20
15
10
5
0
1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

Year

Sources: as for table 1 above.

If stoppages deemed non-industrial are included in a graph illustrating a longer historicalsweep of 1945 to 2014, the late 1970s peak in numbers involved is stark (see figure 4 below).
1970, being the actual pinnacle in terms of numbers involved in stoppages, gels with thememories of prominent trade unionists – for example, Dean Parker remembered that “BillAndersen always talked about ‘79 as being the high point of the union movement” (as citedin Bodman, 2013: 34).
Figure 4. Workers involved in stoppage activity 1945-2014
500000450000400000350000300000250000200000150000100000
50000
0
1945

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

Sources: As for table 2 above; Deeks & Boxall, 1989: 248-49; New Zealand Yearbooks; andvarious quarterly and annual work stoppage reports of Statistics New Zealand and theDepartment of Labour.

71

New Zealand Journal of Employment Relations, 41(1): 64-82
Table 2. Percentage of the workforce involved in all stoppages and working days lost per1000 employees 1960-82 (excludes stoppages involving unregistered unions including moststate sector unions, and those that accrued less than 10 days not worked)
Year

Percentage of wage and salary earners
involved in stoppages
Percentage involved Percentage
in industrial
involved in
stoppages
industrial and nonindustrial
stoppages

Working days not worked due tostoppages per 1000 employees
Working days not
Working days notworked due toworked due toindustrial stoppages industrial andper 1000 employees non-industrial
stoppages per1000 employees
1971
9.13
13.2
172.79
228.4
1972
6.34
7.59
141.02
147.6
1973
11.75
13.27
275.62284.43
1974
6.96
11.92
180.25238.03
1975
7.26
8.62
208.18218.16
1976
19.3
25.32
468.71535.07
1977
15.26
15.31
418.04418.34
1978
15.18
15.28
365.9
366.08
1979
15.5
46.2
374.22676.65
1980
10.59
12.5
352.66365.81
1981
7.7
13.06
237.42375.54
1982
11.57
15.09
307.05
319.3
Sources: Calculated from DOL, Industrial Stoppages Reports, 1972 and 1975-82; DOL,
Handbook of Industrial Stoppage Statistics, July 1975; Industrial Stoppages 1971, 1972: 20,
and Department of Statistics, 1985: 9.
However, to judge the overall statistical peak in workplace dissidence, consideration ought
to be given to measures other than workers involved. If days not worked, including nonindustrial stoppages, are scrutinised for the same historical span (1945 to 2014), the highpoint for that measure remains the mid-1980s. This was primarily due to widespread andmajor industrial confrontations that attempted to regain wages lost during the 1982-4 wage
freeze, and to halt or minimise the effects of restructuring. The 1970s still witnessed a notable
number of days not worked, nevertheless; for instance, the year 1979 experienced the third
highest yearly total of days not worked after 1986 and 1951 respectively (see figure 5 below).

72

New Zealand Journal of Employment Relations, 41(1): 64-82

Figure 5. Working days not worked 1945-2014
1400000
1200000
1000000
800000600000400000200000
0
1945

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

Sources: as for Figure 4.

In terms of the total number of strikes, including non-industrial stoppages, the historic
pinnacle remains 1977, although that peak is less clear-cut than the other measures. The years
1976 and 1979 experienced very similar aggregates to that of 1977. Overall, the entire mid1970s (when the highest number of non-industrial stoppages occurred, as noted above) andthe late 1970s witnessed a relatively high number of disputes (see table 1 above).
Subsequently, an integrative measure of strike activity is needed to ascertain the overall peakin stoppage activity in New Zealand history. If one roughly triangulates the peaks in thenumber of strikes, number of workers involved, and working days not worked since official
statistics have been collected in 1906, the historic apex of recorded stoppage activity was theperiod from the mid-1970s to the mid-1980s. Given this triangulation is imprecise, however,further research is needed. Perhaps the ‘strike shapes’ methodology of authors, such as
Shorter and Tilly, (1971) and Franzosi (1989) could be employed to calculate in a more exact
and holistic fashion strike peaks and troughs over time. That method shows, in threedimensional shapes, the annual size (the number of workers involved per strike), duration(working days not worked per worker involved) and frequency (the number of strikes per
thousand wage- and salary-workers) of strikes.
As noted beforehand, the 1979 spike in the number of workers involved was primarily due tothe general strike of that year. It was organised to protest against the government’s
enforcement of the provisions of the Remuneration Act 1979 (see Roper, 1982; Walsh &McMaster, 1980a, b; Williams, 1984). The DOL estimated that 297,418 workers took part.
Yet, it noted that it was “extremely difficult” to estimate those involved, given that the disputeinvolved a multitude of industries and workplaces – especially workplaces where employers
did not report strikers. Instead, the DOL garnered information about the strike’s extent frommedia reports, employers and unions, and noted cautiously that the estimate “could be subject
to a reasonable degree of error either upwards or downwards” (DOL, 1981a: 2-3).
Seeking such balance was exemplary; as the Auckland Herald (21 Sep. 1979) noted,
employers tend to downplay the effect of strikes, while unions overplay them. While it will
never be known for certain the accuracy of the DOL’s estimate, if state sector workers aretaken into account – the Combined State Unions endorsed the FOL’s call for a general strike– then the tally would need to be boosted by tens of thousands, even though the turnout from73

New Zealand Journal of Employment Relations, 41(1): 64-82
these unions was much lower and patchier than those from the FOL (see for example Roth,
1990). The State Services Commission estimated that 28 per cent of public servants (or18,500 workers) participated in the general strike; the PSA contended that this figure wassubstantially higher (PSA Journal, Dec. 1979: 3; Sep. 1980: 4). Further, the FOL estimated aturnout of 75-80 per cent of its 457,000 members, rather than the 65 per cent estimated by the
DOL (PSA Journal, Sep. 1980: 16).
Were the overall stoppage statistics inflated by a one-day and one-off symbolic general strikethat was seemingly ineffective? Arguably, regulations issued under the Remuneration Act
were only revoked after the Kinleith strike of 1980, a bitter dispute which lasted nearly threemonths (Roth & Hammond, 1981). Nevertheless, the general strike was a landmark event in
New Zealand employment relations (see Walsh & McMaster, 1980b). It was the largest strikeand the only genuinely national general strike in New Zealand history so far; it represented
the first time that blue-collar and white-collar unions joined together in a national strike; andit possibly paved the way for the defeat of the Remuneration Act at Kinleith the next year.
Many, if not most, of the largest and pivotal industrial confrontations of the long 1970s weredeemed non-industrial. They can be divided into two main types. The first and most numerous
type mentioned in the Industrial Stoppage Reports were protests against government
intervention to limit or reduce wage increases, either through legislation or direct intervention
to cap or to partially or completely freeze wage increases – in other words, various incomes
and wage restraint policies designed to combat the high inflation of the time (Deeks, 1977;
Boston, 1984). Examples included the aforementioned general strike, but also national strikes
in 1971 against the introduction of the Stabilisation of Remuneration Act, nationwide strikes
against the wage freeze in 1976, the Kinleith strike (when it became a strike against the
government), and the right to bargain campaign in 1982-4.
The secondly major type was protests against various branches of the state curbing theeffectiveness of strike activity and union militancy through the use of injunctions, the use of
the police to arrest picketers, or by introducing new legislation. As with strikes against
incomes policies, many of these stoppages were nationwide and involved a cross-section ofunions, thus accounting for their large size and controversy. These strikes were, however,seemingly ultimately concerned with wages and working conditions in the sense that they
aimed to retain the effectiveness of stoppages’ ability to maintain or improve wages andconditions. Examples included national strikes held against the Shipping and Seamen
Amendment Bill in 1971, national strikes in protest against the imprisonment of Bill
Andersen for ignoring a court injunction in 1974 over the Waiheke Island ferry dispute (whichbecame a strike against the use of court injunctions to curtail industrial action), and two
separate strikes over the arrests of picketers at Ravensdown in Dunedin and Auckland Airport
in 1981 (see Roth & Hammond, 1981, for an overview of most of the above strikes).
To illustrate the importance and contentious nature of these disputes, when the 1974 antiinjunction strikes threatened briefly to become a nationwide, spontaneous general strike theLabour Government considered declaring a national emergency and possibly using the army
(Bassett, 1976). The DOL estimated these strikes involved over 35,000 workers who ceased
work for 40,000 days (DOL, Industrial Stoppages Report 1974, n.d.b: 13), while the
Auckland Star (4 July 1974) estimated a much higher figure of 90,000 workers involved who
did not work for the same number of days. The Commerce Amendment Act 1976 outlawed
political strikes (they had earlier been made an offence via the National Government’s
Industrial Relations Bill 1972, but Labour’s Industrial Relations Act 1973 deleted this offence
74

New Zealand Journal of Employment Relations, 41(1): 64-82(Roth, 1977) in response to a week-long strike by port and maritime workers in Wellington
that cancelled many ferry sailings during the school holidays. The stoppage was held toprotest against the visit of a US nuclear vessel, the USS Truxtun. And in 1981, as a reaction
to the solidarity strikes held to protest against the picketers arrested at Auckland Airport(involving, it was estimated, 41,193 workers who ceased work for 128,436 days (DOL, 1982),
Tania Harris helped organise – with the support of others – an anti-strike ‘Kiwis care’ marchin Auckland in which about 30,000 people participated, although estimates ranged from10,000 to 50,000 (NZ Herald, 4 July 1981; Dominion, 4 July 1981).
Notwithstanding, several important disputes were arguably absent from the DOL’s tally of
non-industrial stoppages. For example, under the DOL’s original definition, the nationwide
strikes and load-out export bans undertaken to oppose the Arbitration Court’s nil wage orderof 1968 could be categorised as non-industrial because they were directed against a court
decision rather than employers. In 1977, two major strikes that could be categorised as nonindustrial were omitted from the DOL’s calculation of a mere 613 workers who participatedin non-industrial stoppages that year (DOL, 1979b: 3). Firstly, an estimated 25,000 retailworkers ceased work to protest the proposed Shop Hours Trading Bill of 1977 (Hince, Taylor,
Pearce & Biggs, 1990), a strike that was directed against the government rather thanemployers. The Retailers’ Federation condemned it as an illegal political protest under theCommerce Amendment Act 1976 (Socialist Action, 10 June 1977). However, the DOL may
have considered this an industrial stoppage, as it was primarily concerned with working
conditions (namely, extended working hours). Secondly, the Wellington Trades Council of
the FOL organised a three-hour strike to protest against the government enlarging the powersof the Security Intelligence Service (SIS) in 1977. Estimates of protest participants ranged
from 10,000 to 20,000, and it was reported that many industries, including factories, ferries,
trains, hotels and shops, shut down during the rally (Evening Post, 14 and15 Oct. 1977;
Dominion, 15 Oct. 1977).

Political Stoppages
A clear-cut division between non-industrial and political stoppages is difficult to maintain,
given that numerous strikes were held over wages and conditions but directed against the
government. Yet, how many of these non-industrial strikes could be considered strictly‘political’ under the DOL’s later definition of political strikes – that is, they not only madeno demand on employers, but also were unrelated with wages and conditions of employment?
From examining the Industrial Stoppages Reports, the least frequent type of non-industrial
stoppages, and those that involved the fewest workers and days not worked, were such
political stoppages. Even strikes held over excessive temperatures in workplaces were morecommonly recorded than strictly political stoppages. Like the vast majority of non-industrial
disputes, these walkouts were concerned with wages or working conditions (in this case thelatter), yet were classified as non-industrial because they did not place any demand on
employers (DOL, Industrial Stoppages Report 1973, n.d.a: 9).
Firm data about the exact numbers and extent of political strikes is lacking. The most common
type mentioned in the Industrial Stoppages Reports were protests against the visits of US andBritish nuclear armed and/or powered vessels into New Zealand ports. These also accounted
for the largest recorded political stoppages (the aforementioned strike against the SIS bill in
1977 was probably larger than any anti-nuclear stoppage, but it was unrecorded). Other
75

New Zealand Journal of Employment Relations, 41(1): 64-82
political stoppages were held to show opposition to the Vietnam War and apartheid, but they
were tiny and infrequent.
However, some data is available for the early to mid-1980s. After the DOL included nonindustrial stoppages in its main series from 1980, it created a new category in its record on
the causes of disputes: political disputes. This category gives some indication of the actuallevel of political stoppages as a percentage of all causes of disputes from 1980 to 1985 (seetable 3). As table 3 shows, they generally accounted for less than two per cent of the total
number of stoppages, workers involved and working days not worked. The small increase in
the number of political stoppages in 1984 was largely due to strikes organised to protest
against the introduction of voluntary unionism (although such a stoppage was non-industrial
rather than strictly political under the DOL’s definition) and the fatal bombing of Wellington
Trades Hall.
Table 3. Political Stoppages (with percentage of all stoppages in brackets) 1980-85
Year
Number of political Workers involved
Working days not
stoppages
worked1980
1 (0.3%)640 (0.5%)790 (0.2%)
1981
2 (0.7%)986 (0.7%)
1,282 (0.3%)
1982
2 (0.6%)734 (0.5%)497 (0.2%)
1983
2 (0.6%)
1,364 (1%)
589 (0.2%)
1984
8 (2.2%)
3,593 (2.2%)
2,164 (0.5%)
1985
4 (1%)
4,708 (2.6%)
8,601 (1.1%)
Source: Department of Statistics (1987): 14.

From this table, a direct comparison can be made during 1980 to 1982 between stoppages
considered to be non-industrial under the old definition, and stoppages considered to bepolitical under the tighter definition (see table 4).
Table 4. Non-industrial and Political Stoppages (with percentage of all stoppages inbrackets) 1980-82
Year Number of stoppages Workers involved
Working days not worked
NonPolitical Non-industrial Political
Non-industrial
Political
industrial(excluding(excluding(excluding
political)
political)
political)
1980
9 (2.5%)1 (0.3%) 18,916 (14.8%) 640 (0.5%) 12,637 (3.4%)
790 (0.2%)
1981
2 (0.7%)2 (0.7%) 54,465 (40.3%) 986 (0.7%) 141,458 (36.5%) 1,282 (0.3%)
1982
3 (0.9%)2 (0.6%) 35,663 (22.9%) 734 (0.5%) 12,162 (3.7%)
497 (0.2%)
Sources: Calculated from Department of Statistics, 1987: 14 and DOL, Industrial
Stoppage Reports 1980-82 (DOL, 1981a, b; 1982; 1983)
Table 4 illustrates that, while overall non-industrial (including strictly political) stoppages
were a tiny minority of stoppages, non-industrial (excluding strictly political) stoppages still
made up a significant percentage of numbers of workers involved and working days notworked due to all stoppages in 1980-2. Indeed, in 1981, 36-40 per cent of all workers involved
and working days not worked were due to such stoppages (mainly due to the aforementioned
strikes held against the arrest of picketers in Dunedin and Auckland).

76

New Zealand Journal of Employment Relations, 41(1): 64-82
These statistics seem to validate the assertion that most disputes were economistic, and thus
by inference that most unions were economistic. However, this neglects the wide scope of
extra-parliamentary political activities undertaken by unions during the long 1970s that were
unrecorded in the stoppage statistics because they were simply impossible to measure. These
unrecorded activities, including several instances of union support for Maori causes largelyin the form of bans on the development of Maori land, such as the Auckland Trades Council’s
green ban on Takaparawha/Bastion Point in 1977-8, the green ban placed by the Whangareiand Auckland Trades Councils on the Ngatihine block in Northland in 1977-8, and the banplaced by the Wellington Drivers’ Union in 1976 on delivering construction materials for a
proposed sewerage plant at Kaumanga Point near Porirua (and beside traditional fishinggrounds). The green ban at Takaparawha/Bastion Point was effective in stoppingdevelopment on that land and, thus, assisted considerably Ngati Whatua’s seminal land
occupation (Bodman, 2013). A green ban was also placed on a proposed gas pipeline throughthe Hakarimata Scenic Reserve near Ngaruawahia in 1977 (Industrial Relations Chronicle,
1977).
Further, the statistics do not indicate the breadth of various other bans that unions placed on
trade in order to support political causes. In 1972, the FOL banned servicing French ships
and aircraft in New Zealand during the period when the French were testing nuclear weapons
in the Pacific (FOL, 1973), and in 1974 banned trade with metropolitan France to protest
against their nuclear testing in the Pacific (FOL, 1975). It also prohibited trade with Chile toshow opposition to Pinochet’s neoliberal military dictatorship (Trotter, 2007). Watersiders’and Seamen’s Unions boycotted South African shipping and goods following a call by theInternational Federation of Free Trade Unions (New Zealand Monthly Review, 180 (Aug.
1976), p. 12.).
These varied actions indicate that many social movements and broad political currents of thelong 1970s influenced, and were influential within, many trade unions. Yet, many politicalstands taken by unions were often confined to the level of FOL policy rather than practice.
This is well-illustrated by the FOL’s long-standing opposition, on the level of formal policy,
to racial discrimination and apartheid in South Africa. Before the 1981 Springbok Tour, theFOL pledged its “total support to unions giving effect to this policy by withdrawal ofservices” to the Springbok rugby team (FOL, 1981). Yet, only two stoppages were recorded
against that tour involving merely 986 workers, resulting in 1282 days not worked (DOL,
1982). This seems incongruent with the intense level of street protest against, and widespread
public opposition to, that tour. The FOL and most unions were reluctant to mobilise union
opposition to the tour because they perceived that the issue was divisive – they feared theywould alienate the numerous rugby supporters amongst their members (Bodman, 2013).

Conclusions
While it is highly difficult to capture the extent of work stoppages statistically, as largely
acknowledged by the DOL, significant under-reporting of stoppages occurred during the long
1970s. Incorporating the numerous non-industrial stoppages of that period into the statistical
tally helps to rectify the historical record somewhat. As Hyman (1977: 171) observed “theincreasing intervention of the state on the side of employers in industrial relations” in the
1970s meant that the traditional division between industrial and political activities became“largely meaningless.” The vast majority of non-industrial stoppages were political andeconomic – they were directed against the state, but were mainly concerned with wages andworking conditions. However, stoppages (or partial stoppages) that could be considered77New Zealand Journal of Employment Relations, 41(1): 64-82
strictly political – namely in support of political causes – were seemingly infrequent.
Nevertheless, the breadth of causes supported by such political stoppages and bans – from
nuclear free New Zealand to the environment and Maori land rights – was noteworthy. Someof these actions had significant impact, such as the green ban on Takaparawha/Bastion Point.
A few brief – and preliminary – points can be made about why these disputes occurred.
Undoubtedly, they were caused by a complex combination of factors, especially the overall
economic and political context. The long 1970s were characterised by the end of the postWWII long economic boom due to various dynamics, including the oil shock of 1973-4. The
state tended to assume that wage increases were the primary cause of the high inflation of theperiod (Deeks & Boxall, 1989). Consequently, successive governments attempted to curb
strike activity, and introduced an extensive series of wage controls from the early 1970s.
Indeed, Boston (1984) notes that New Zealand was subject to a higher degree ofgovernmental wage restraints from the early 1970s to mid-1980s than any other country in
the Organisation for Economic Development. He also points out that these incomes policies
were imposed by successive governments rather than introduced through voluntaryagreements between the government and unions, as they were in many other countries.
Indeed, unlike many of its European counterparts, the peak union bodies – the FOL andCombined State Unions – opposed wage controls and often encouraged their affiliated unions
to take action against them (Boston, 1984). It was this often bitter clash between the state andunions that helps explain to a large extent the high level of non-industrial stoppages
In contrast, unions denied that high inflation was largely caused by wage demands, andasserted they were mainly the product of businesses increasing prices in order to overcome
their declining profitability in the context of a major and lengthy recession. Hence from thisperspective, workers undertook what Silver (2003) calls a defensive strike wave in the 1970s– although this was not just in response to government attempts to limit wage increases anddampen strike activity, but also a response to the actions of employers. Van der Velden (2007)
notes that major strike waves often occur in the transitional period from economic upswing
to downswing, as most workers expect their standard of living to continue to rise.
At the same time as the Keynesian compromise broke down between unions, the state andemployers, the broader political, cultural and social context was one of ferment from below,
the long 1970s was New Zealand’s 1960s, meaning it was a decade of widespread dissent(Boraman, 2016). Numerous mass grassroots political movements arose from the late 1960s,
including the anti-war, anti-nuclear, anti-apartheid and environmental movements, and amajor renewal in Maori protest and the feminist movement also occurred. While only aminority of the population participated in these protests, they did have extensive effect. For
example, a degree of cross-fertilisation took place between these movements and unions(Locke, 2012; 2015). Simply put, the breadth of dissent in society contributed to the breadthof union action undertaken in the long 1970s.
During the long 1970s, the state’s attempts to limit or prohibit the occurrence of nonindustrial (and other) stoppages arguably led to increasing confrontations, at least until thelate 1970s and early 1980s. Today, while non-industrial (including political) stoppages
continue to be prohibited, such stoppages are seemingly virtually non-existent. This reflects
many factors: the wholesale lurch away from governments employing what Deeks andRasmussen (2002: 320) call the “power model” of setting wages to a “laissez-faire model” in
1984, accompanied with a decrease in direct state intervention in disputes. Yet, it also reflects
two long-term trends: firstly, the general lull in strike and broader protest activity since about78

New Zealand Journal of Employment Relations, 41(1): 64-82
the early 1990s (Boraman, 2016), and secondly – and more significantly – the sharp decline
in workers’ bargaining power and associational (or organisational) power under globalisationand neoliberalism (Silver, 2003; Van der Velden, 2007). Far from being laissez-faire,Duménil and Lévy (2005) argue that this represents a “new discipline of labour” by capitaland the state. It has not only contributed to a decline in stoppages, but also to a narrowing of
the political and social priorities of the labour movement.

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82New Zealand Journal of Employment Relations, 41(1): 83-97

Research Note: Pay Gaps Between Management and NonManagement Employees
MICHAEL SHARP*
Abstract
This article examines the development over recent decades of growing ‘pay gaps’ between thepay received by management and non-management employees in firms. It is observed that pay
gaps have been driven by non- management employee pay increasing at a greater rate than firm
productivity gains and non- management pay falling below the rate of productivity gains.
Examining this trend from the perspective of an institutional analysis of how firms set pay, it
is concluded that pay gaps have developed mainly because of a dropping away of social norms
supporting the passing on of productivity increases to all employees through industry widebargaining. This has allowed management a free hand to take the bulk of productivity gains forthemselves. It is argued that this pattern of pay distribution is less efficient than earlier practices
in reflecting employee contributions to firm productivity. It is suggested that, to address thissituation, social norms need to shift back to the earlier more efficient practices of ensuring amore even sharing of productivity gains through industry wide bargaining.
Key Words: pay gaps, management, employees, institutional analysis, social norms, collective
bargaining

Introduction
The last few decades have seen a pattern of increasing income inequality in developed
economies. In the later part of this period, the main driver of income inequality has been
identified as being a widening pay gap between the top 10 per cent of income earners and therest.
Recently, there has developed a growing acceptance among commentators that orthodox
economic theories do not adequately explain why top end income shares continue to grow. As
an alternative, commentators are increasingly turning to exploring whether these trends can be
explained by institutional factors effecting income determination. Amongst other things, suchanalysis has noted a correlation between increasing income inequality between top income
earners and the rest and decreasing union membership/collective bargaining rates.
This article will examine a particular aspect of increasing top end income shares – being
widening ‘pay gaps’ between the respective earnings of management and non-management
employees in firms. It will attempt to explain this trend through an institutional analysis of how
pay is determined within modern firm structures, and in particular the effect of social norms on
how management set pay and on levels of collective bargaining.

*

Michael Sharp is a Barrister based at Mount Maunganui, New Zealand83

New Zealand Journal of Employment Relations, 41(1): 83-97

The Pay Gap Issue
It is well documented that across OECD economies since the 1980s, there has been growing
inequality amongst income earners. From the mid-1990s, this has been largely driven by a
growing gap between the income of the top 10 per cent of income earners and remaining 90
per cent (Jaumotte & Buitron, 2015).
A major influence in the increasing top income shares has been a widening difference between
what firms pay their top earners and the rest. Further, this trend appears to have been largely
driven by management in firms receiving much larger pay increases than non-management
employees.
For example, in the US over the last 30 years, the bottom 90 per cent of wage earners had areal wage increase of around 15 per cent as compared with 150 per cent for the top one per centand 300 per cent for the top 0.1 per cent. In the US during the same period, pay ratios between
CEOs and typical workers in firms increased from around 30:1 to 200:1(Stiglitz, 2013). In the
UK during 1985-2011, the one per cent of wages earners had pay increases of 117 per cent, thetop 10 per cent had an 81 per cent increase, while the pay of the bottom 10 per cent improvedby 47 per cent (United Kingdom Office for National Statistics, 2012). During this period in theUK, there have been very significant pay increases for executive employees (Rashbrooke,2013). In New Zealand, since the mid-1980s, income for lower and middle income earners has
hardly moved in real terms. During the same period, the pay of the top 10 per cent of wage
earners has risen by 80 per cent in real terms. The pay of CEOs has risen by this same amountsince the mid-2000s (ibid.).
‘Pay gaps’ between management and non-management employees have been particularly
prevalent in liberal market/Anglo-Saxon economies. An assessment of a basket of AngloSaxon against European/Japanese economy data revealed that up until the late 1970s, executive
pay took up a similar share of firm income (five to eight per cent), but recent data shows thatwhile, the share in European/Japanese economies have not significantly shifted, the share in
Anglo-Saxon economies has jumped to around 15 per cent (Stiglitz, 2013). However, since themid-1990s co-ordinated market economies are increasingly catching the pay gap disease. For
example, in Germany, the gap between lower and higher income earners has been increasing
since the mid-1990s, with real wages of union members hardly moving during this period(Bamber, Lansbury & Wailes, 2011).
While pay gaps tended to narrow coming out of the Global Financial Crisis (GFC), as the
economic recovery took place they apparently widened again. In the US, the share of executive
pay took a slight dip post GFC but since 2010 has risen back to pre GFC levels, (Stiglitz, 2013).

Distribution of Productivity Gains Driving Pay Gaps
Data seems to indicate that the pay gaps between management and non-management
employees has been largely driven by an uneven distribution of distribution of productivity
gains between the two groups (Laliberte, 2011).
In the US, there was a general correlation between pay and productivity in the decades before
the 1980s. However, in the period from 1980 to 2005, US nonfarm business productivity rose84

New Zealand Journal of Employment Relations, 41(1): 83-97
67.4 per cent but median weekly earnings of full time employees rose only 14 per cent (Levy& Tenin, 2007). In New Zealand since the 1980s, if the pay of lower and middle income earners
had moved in line with productivity improvements their current pay should be about 25 percent higher than it is at present (Rashbrooke, 2013). By contrast, increases in executive pay
during the same periods, as noted in the previous section, have tended to be well above
productivity improvements.
Of relevance to these trends is US pay research which indicates that there is a positive
correlation between the profitability of a firm and the ratio of management to non-managementpay. The data also shows that the greater profitability of the firm, then it is more likely that
executives will have direct profit sharing aspects of their remuneration, such as bonuses andstock options. By contrast, the same data suggests that non-management pay tends not tocorrelate with firm profit but is determined at rates determined across a country wide labour
market (Ma, 2014).
This all suggests that growing pay gaps are driven by non-management pay being determinedby rates applying across the economy which fall below with improvements in firm productivity,
while management pay takes the remaining surplus available for pay increases. The overall
effect of these trends is that management has been largely taking firm productivity
improvements available to be passed on as pay increases (Stiglitz, 2013).
Why is this happening?

Neoclassical Explanations for Pay Gaps
Neoclassical economic theories suggest that pay is determined by the marginal productivity of
the last employee hired (Sloane, Latreille & O’Leary, 2013). As such, under optimum
conditions the wage paid to an employee equates to the net benefit they bring to the firm
(Stiglitz, 2013).
In recent decades in western economies, there has been a degree of structural change whereby
skilled work has been lost out to overseas competitors and technology leaving a greater
proportion of unskilled employees (Stiglitz, 2013). As such, the resulting drop in marginal
productivity could potentially explain why the pay of some employees at the lower end of thepay scale has been stagnating.
However, this thesis is not supported by fact that there is no indication that the pay of skilled
non-management employees is keeping pace with increases in productivity. Further, it does notappear that productive skills of management staff have improved anywhere near the significant
degree that their pay has increased (Stiglitz, 2013). Overall, trends in increases in income
inequality have been observed to not match the relative changes in marginal productivity of
top income earners and the rest. Also, economies that have undergone similar levels oftechnological change have experienced different levels of pay inequality (Jaumotte & Buitron,2015).
These incongruities may be explained by the fact that the marginal productivity wage theory isbased upon a model that tends not to reflect what happens in the real world. It only truly
operates in the rarefied atmosphere of perfect markets with homogeneous firms and labour who
cannot individually influence the market. In these conditions, any firm paying less than85

New Zealand Journal of Employment Relations, 41(1): 83-97
marginal productivity would lose all their workers to other firms who do pay marginal
productivity rates. In reality, one would only tend to find these conditions occasionally, suchas with teams of competing agricultural contractors operating within close geographicalproximity to each other (Sloane et al., 2013).
Marginal productivity theory does, however, also provide modelling to take into account thatfirms do not operate in perfect markets. In imperfect markets, with an upward sloping labour
supply curve (against which a firm can reduce wages and still retain employees), firms willattempt to employ at a wage and a number which will maximise their surpluses over labourcosts. Labour (who can collectively bargain through unions) will attempt to bargain to a point
where there is no surplus. In these circumstances, the exact wage and employment rate depends
upon the bargaining power of firms and workers respectively (ibid.).
Within this scenario, sub-optimal pay rates to employees can be rationalised as being the resultof firms exercising a disproportionate degree of bargaining power and suppressing wages(Stiglitz, 2013). This thesis is consistent with the fact that in the societies in which there has
been significant increases in the income gap between the top income earners and the rest has
also had contemporaneous declining union membership and collective bargaining coverage.
For instance, from 1980 until 2010 across advanced economies average union density rates fell
from 47 per cent to 32 per cent and collective bargaining coverage rates from 71 per cent to 63
per cent (Jaumotte & Buitron, 2015). The decreases have been more significant in thoseeconomies experiencing the biggest increases in pay gaps between management and nonmanagement employees. During 1980-2007, union membership in the United States dropped
from 20.1 per cent to 11.9 per cent (Stiglitz, 2013). In the UK, collective bargaining coverageduring the same period had dropped from 70 per cent to 27 per cent (14 per cent for the private
sector) (Bamber et al., 2011). In New Zealand since the 1990s, collective bargaining coverage
decreased from around 60% to its present level of about 17 per cent (Creighton & Forsyth,2012).
Another explanation for pay becoming disconnected with employee productivity
improvements in imperfect market conditions is that firms collude with each other in paying
similar sub-optimal pay rates (pay matching). In doing so, firms hope to reduce the risk that
their employees will find and move to another firm paying optimal pay rates (Sloane et al.,2013). This thesis is consistent with the pattern observed above of non-management employees
being paid at economy wide rates.
While marginal productivity theory does offer potential explanations for some of thecharacteristics of pay gaps developing between management and non-management employees,
there are some inherent limitations in using this approach.
Most significantly, in imperfect markets firms will generally be unable to ascertain themarginal productivity of employees (Sloane et al., 2013), and as a result it will not be possible
to align marginal productivity with pay. Attempts to do so generally get it wrong and provide
distorted incentives (Stiglitz, 2013). As such, even if the functioning of pay setting in imperfectmarkets could be improved, such as by measures to strengthen employee collective bargaining,
it will be difficult to identify and adjust pay to optimal marginal productivity levels for
management and non-management employees.

86New Zealand Journal of Employment Relations, 41(1): 83-97

Recently, there has been increasing acceptance that, given the inability of neoclassicaleconomic analysis to explain widening income inequality, explanations should instead besought within the institutional background against which the developments have been taking
place (Jaumotte & Buitron, 2015). In general, ‘institutional analysis’ focusses on social
institutions that facilitate individuals achieving desired ends given the reality of bounded
rationality and transaction costs. In the particular context of labour markets, Osterman defines“employment institutions” as a “coherent set of practices and rules of thumb that shape our
expectations and guides the behaviour of both firms and workers” (Osterman, 1999: 54).

Institutional Analysis of Firms
In carrying out an institutional analysis of growing pay gaps between management and nonmanagement employees within firms, a useful starting point will be to look at how institutional
analysis explains ‘firms’ as they have evolved in modern society as productive organisations.
Of relevance is this regard is the relational contract theories of Ian Macneil. Macneil notes thatin order to avoid the transaction costs involved with individual labour contracts mostindividuals agree to co-operate together by pooling their various specialities to produce
products. These types of agreements are considered by Macneil to be “relational contracts” asthey involve ongoing relationships between individuals. Macneil notes that relational contracts
can take place within a variety of forms of co-operative organisations – the most common inmodern times being employment within firms (Macneil, 1985).
The reason a particular firm structure is or is not successful as a co-operative framework at any
particular point of time is not something that can generally be rationalised or articulated. As
suggested by Hayek (1982), in all but the simplest organisation, the task of designing rules thatwill lead a number of individuals to work co-operatively and productively together will bebeyond the capabilities of management.
Instead, Hayek suggests that a successful organisation will evolve over time ‘norms’ of
behaviour that are adopted, not because they can be rationalised as achieving certain results,
but because they have operated successfully in the past. The role of management will be limited
to monitoring compliance with such norms, setting the goals to be achieved by the organisation,
and assigning individuals particular roles within the organisational structure (Hayek 1982).
In the same context, Macneil refers to understandings, habits, customs, status positions, withinorganisational structures such as firms, as operating as “non-promissory exchange projectors”,
which give rise to “prescriptive norms”, setting standards of “proper conduct” of the parties torelational contracts (Macneil, 1980).
Typically, norms operating within firms can be broken down as deriving from a hierarchy ofsources. At the highest level, there will be broad “social norms” of behaviour that have theirroots in the individual relationships in wider society. For example, minimum employment
conditions, rules against unfair dismissals and prohibited grounds of discrimination.
Below this, there will be “industry norms” that tend to operate across firms generally. History
shows that at any particular time the same types of firm structures predominate throughout asociety. In this way management can adopt uniform successful practices rather than evolving
87

New Zealand Journal of Employment Relations, 41(1): 83-97
their own. This also cuts down on the information that a prospective employee will need toseek about a particular firm they are considering joining. Each firm will also develop its own“firm-specific norms”. In this regard, firms will develop their own practices around their
particular production processes and synergies between the individuals involved (Mundlak,1999).
Below these levels lie the individual arrangements between management and the individual
employee. This will include the contractual promises bargained at the outset of theemployment. It will also in time cover expectations developed, but not committed to apromissory format, during the relationship (Macneil, 1980). (Contractually binding promises
may also be bargained at higher than individual level by collective bargaining between
employee and management representatives at a firm or industry level.)
In Macneil’s view, it is essential in any firm that there be norms operating for the preservationof the employment relationships – or “contractual solidarity” – by maintaining “mutuality”
between the parties. Macneil explains that such norms are involved in maintaining theminimum conditions that each party will require for it to remain worthwhile for them tocontinue in the relationship (Macneil, 1980).
When the parties do commit to contracting specific terms, such as pay, Macneil suggests that
adjustments will in these circumstances be made under the norm of mutuality, involving themaintenance of a ‘fair share’ of the surpluses from the relationship. By this the parties willrecognise that the relationship will not survive if “one side constantly gets too good a deal” andso they make necessary adjustments to existing divisions of proceeds, (Macneil, 1980), (for amore detailed analysis of the operation of mutuality type norms with firm structures see Sharp,2012).

Determination of Pay Within Firms
Given this institutional view of firms, what can be said about how modern firm structures havedeveloped to deal with the distribution of firm pay between management and non-management
employees?
In this regard, of relevance is the firm modelling carried out by Alchain & Demetz (1972).
Building upon the earlier insights of Ronald Coase (1937), this model describes employment
within the “firm” organisation as containing monitors (“management”) of the input of theremainder of co-operating specialists working within the firm (“employees”). Employment
contracts are entered into between management and individual employees, under which
rewards to employees are linked to input units (“wages”) rather than the productive returns.
Pay and conditions is contracted with the manager. Management are incentivised to carry out
their monitoring tasks by being provided with a right to the surplus of the productive output of
the firm after wages have been paid to other employees (Alchain & Demetz, 1972).
As such, under this model non-management employees would be paid a fixed rate dependingon their work inputs and management would retain the remaining surplus as in incentive tomonitor the firm’s operation so that it operates efficiently. The model does not specificallyrefer to distributions to ‘owners’/providers of capital, however even if this is taken into accountthen arguably it still offers a broadly realistic depiction of the current operation of firms.

88New Zealand Journal of Employment Relations, 41(1): 83-97
Generally, non- management employee pay is usually largely determined as suggested by themodel, in accordance with agreed rates based on the labour input that they provide, rather thantheir productive output. With regard to remaining surplus, small owner operated firms operateon the straightforward basis that owner managers take all of the surplus profit for themselves.
With intermediate sized firms, where the owners are involved in management but also employ
managers, the owner manager recognises that to keep employee managers sufficiently
incentivised they need to receive a distribution of the surplus together with the owner. Thismay be by a set salary, together with profit sharing bonuses. With large/listed companies there
tends to a more complete separation between management and capital ‘ownership’ – withdispersed and numerous shareholders often having little effective influence on firmmanagement- and managerial domination of company affairs (Bainbridge, 2010). With such
little influence shareholder’s expectations typically may be not that all surpluses are returnedto them but that they receive a dividend return that is competitive with other investments
available on the market for similar levels of risk. This leaves the management group to retain
the remaining firm surplus.
However, even if management do retain post non-management employee pay firm surpluses,
they may still have to continue to revise non-management pay, in line with mutuality norms,
so as to provide non-management employees with a sufficiently fair share of firm surplus tokeep them from leaving the firm for better returns elsewhere. Although this may be an easiertask than calculating the marginal productivity of each employee, in the real world it may still
be very difficult and costly for management to continually review the pay of non-management
employees to ascertain the appropriate ‘fair shares’ of firm surpluses required to retain them.

Industry Pay Norms
In practice, such ‘market failure’ issues preventing the setting pay at optimum levels between
management and non-management employees, can be dealt with by management adopting‘industry pay norms’ that employees will be paid in accordance with standard rates of pay forthe generalised category of job they are placed into. As such, an employee may be employed
as and paid the going rate for an “accounts clerk” even though the actual work and productivity
that is involved with employees employed in this category between firms and particular
employees may vary greatly.
Paying industry pay rates provides the advantage of certainty to management and employees.
Management can adopt the rates relying on the fact that in the past firms have been able toemploy at those rates and successfully continue to make a profit. Employees are saved thetrouble of checking pay rates across firms.
However, the disadvantage of industry pay norms for non-management employees, ascompared with being paid in accordance with firm specific norms, is that it detracts from pay
competition between firms. Management no longer have the incentive to provide them with afair distribution of firm surpluses to prevent them leaving to another firm. In order to balance
this there will need to be alternative norms providing for revisions of pay operating at anindustry level.
In this regard, industry pay rates for particular work categories may tend to move over time as
demand for employees carrying out a type of job fluctuates. For example, if relative
productivity of a certain category of worker rises, which in turn increases demand from firms,
89New Zealand Journal of Employment Relations, 41(1): 83-97
firms facing a shortage will increase industry pay rates in order to attract other workers carryingout other types of jobs to change their careers and increase the pool of workers in demand. In
this context, it has been observed that supply and demand factors can be useful in in explaining
wage dispersion between skill categories of workers- but not as useful for explaining wage
dispersions within those categories (Dinardo, Fortin & Lemieux,1996).
To the extent that economy wide productivity increases cannot be isolated to certain job types,
there may also need to be wider norms dictating how the increased returns to firms are to be
distributed. In this regard, analysis from the US suggesting that non- management wages are
determined by the efficiency of a labour unit equalised across the whole of the economy (Ma,2014), supports the thesis that there are industry wide mutuality type norms spreading economy
wide productivity increases across employees of all firms.
Whether and how such ‘industry pay mutuality norms’ are followed will depend on theinstitutional nature of the particular economy. In particular, there will need to be high levelsocial norms operating to guide cross firm cooperation by management to follow the pay norms
and pass on a fair proportion of the general productivity improvements in non-management
pay increases. The same social norms may also support industry wide bargaining power
exercised by non-management employee unions, so that negotiations over the exact nature ofindustry wide pay movements can be settled. For practical purposes, this may also involve
support for government intervention to establish centralised or extended bargaining, where pay
movements negotiated by unions are passed on to non- union employees.
Such industry pay norms can be distinguished from opportunistic ‘pay matching’ underneoclassical economic theories, in that the norms are a legitimate response to information andtransaction costs in determining optimal pay rates. However, as noted above, if management
across industry opportunistically decide to not follow industry pay mutuality norms and fail toraise pay across the board for general productivity increases, then non-management employees
are left in a similar situation with ‘pay matching, where they cannot move to another firm in
response.
If management do act in this type of opportunistic manner in not passing on productivity
increase to non-management employees, and take the resulting increased firm surplus as pay
increases for themselves, this provides a potential explanation for pay gaps developing between
management and non- management employees.
It can be seen from the analysis above, that the key to this type of situation developing iswhether or not there are operating high level social norms that guide management to co-operate
in following industry mutuality pay norms to distribute general productivity increases fairly
across all employees.

Changes in Social Norms Driving Pay Gaps
If one looks at the historical context against which pay gaps between management and nonmanagement employees developed, there does seem to be a consistent pattern of changes insocial attitudes towards pay setting within firms that were ultimately drivers in pay gaps
developing.

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For example, in the US in the post great depression period, the government promoted the viewthat the fruits of economic recovery should be fairly shared with employees as means ofstrengthening the underlying economy. These egalitarian values were carried on in the post
WWII period of social and economic adjustment (Levy & Tenin, 2007). Unions, bolstered by
the Federal Government providing them with rights to organise and strike, bargained industry
wide collective agreements with employer groups. This, and union negotiated automatic wage
adjustments across major industries, had the effect of spreading the post WWII prosperity
across all wage groups (Bamber et al., 2011). However, with the business and government
reacting to the economic downturn in the late 1970s’ by withdrawing support for unions andindustry bargaining (Levy & Tenin, 2007), there begun a devolution to enterprise andindividual level bargaining that is recognised as resulting in widening pay differentials withinfirms (Bamber et al., 2011).
Similarly, in the UK up until the 1980s, there was support from government, unions andemployer groups to the system of ‘collective laissez faire’. This resulted in what were in effectindustry wide collective agreements involving unions and employer groups. Changes of policyin the 1980s by the Thatcher Government and employer groups lead to a far greater degree of
workplace bargaining (Bamber et al., 2011), and the development of widening top end pay
inequality.
While this pattern of shifting of values away from industry pay norms occurred in other AngloSaxon ‘liberal market societies’ by the early 1980s, by contrast, in many of the more ‘coordinated market economies’, such as in Northern Europe, the government and social reaction
to the end of the ‘long boom’ was initially not to abandon but to adapt their historical policies
of non-market mechanisms such as industry wide bargaining between employee and employer
groups. In this environment, there was initially not the same development of pay gaps as in
Anglo-Saxon/ liberal market economies. However, following a further slowing down of
economic growth, demands for more flexibility has led to increased pay bargaining in theworkplace, reduced collective bargaining coverage, and widening top end pay inequality in coordinated market economies such as Germany (Bamber et al., 2011).
These historical patterns amongst advanced economies where pay gaps have developed show
a general pattern of how changes in social values drove the development of pay gaps. Prior to
the 1980s, the approach adopted by management to setting pay reflected the post great
depression and WWII ethos of an egalitarian society resulting in management and nonmanagement pay raises both keeping track with the significant productivity increases
associated with the ‘long boom’ following WWII.
However, the end of the ‘long boom’ by the late 1970s changed this scenario. There came to
be a widely accepted social view that the economic slowdown was the result of interferencewith the free operation of markets – especially the labour market (Bamber et al., 2011). As aresult, government policy switched away from encouraging industry wide bargaining between
employee groups and unions to promoting direct contractual bargaining at firm and individuallevels.
Freed of legal and social expectations, management stopped co-operating in providing industry
wide pay increases to non-management employees – and generally passed on as little of thedeclining firm productivity increases as they could get away with and still retain theirworkforce – which was made possible by management in other firms doing the same.
Following the new ethos management also arranged their own contractual pay terms so as to91

New Zealand Journal of Employment Relations, 41(1): 83-97
maximise their own short term self-interests, passing on much of any productivity increases tothemselves.
The reason why following the changes in social norms there was initially a general increase in
pay inequality (and not just in increase in top income shares) can perhaps be explained that
middle income non-management employees not covered by collective bargaining were able tomaintain their bargaining position to continue to obtain productivity based pay increases.
However, in time as the new management ethos of not sharing productivity increases took holdand became widely accepted, the bargaining position of middle pay earners also came to beeroded and their productivity pay increases deteriorated.

Supporting Analysis
The thesis that pay gaps between management and non-management employees is ultimately
driven by social norms as to the distribution of firm profits, and facilitated through industry
wide bargaining, is certainly not one that has as yet broad academic support, but there has been
an increasing amount of analysis and commentary along these lines.
Jaumotte and Bruitron, in their 2015 IMF report, identified across advanced nations a negative
relationship between union density and levels of inequality between the top 10 per cent ofincome earners and the rest. Given that, overall, collective bargaining coverage rates havetended to vary proportionately with union density rates over the relevant periods (Pontusson,2013), it would appear that these findings also suggest a negative relationship exists between
collective bargaining rates and top end income inequality. Denk (2015) specifically reachedthis conclusion in finding that there is a strong negative correlation between collective
bargaining coverage rates and the share of the top one per cent of wage earners across Europe
by 2010 figures.
Evidence of any correlation between industry wide collective bargaining and pay gaps is lessclear. Jaumotte and Bruitron (2015) suggest that centralised collective bargaining may in factincrease top end pay inequality through the exclusion of those falling outside the collective
bargaining system (although with a caveat that further analysis was required). Scheve andStasavage (2009) note that, although centralised bargaining can act to reduce top end pay
inequality by compressing pay differentials, historically levels of centralised collective
bargaining have followed movements in inequality rather than driving the trends, with changes
ultimately being driven by underlying shifts in social/political norms as to the distribution offirm productivity. In the same context, they note that changes in norms and inequality do notalways drive changes in centralised collective bargaining levels. For instance, they note thatpost WWII comparable reductions in income inequality were achieved in the United States,
which did not have government imposed centralised bargaining, as in Western Europe, which
did.
From the broader context of any correlation between income inequality and industry widebargaining, these last observations need to be seen in context that, in the United States during
this period, there was a significant degree of industry wide bargaining by the alternative routeof co-operation of business, unions and government. But, on the other hand New Zealand in
the 1980s provides an example of general pay inequality increasing despite the continuation ofindustry wide bargaining through a centralised/extended wage bargaining system, against abackground of a socio-economic environment becoming dominated by free market
92New Zealand Journal of Employment Relations, 41(1): 83-97
philosophies. Although, it was not until the 1990s after the centralised bargaining system wasdismantled in New Zealand that there was a significant increase in top end pay inequality.
(Rashbrook, 2013).
Overall, it would seem that some historical trends do support Scheve and Stasavage’s argumentthat social norms may be able to drive pay inequality without commensurate changes to thedegree of industry wide collective bargaining. But equally, broad historical trends, as referred
to above, do show that eventually there is a correlation between levels of top end pay inequality
and industry wide bargaining levels. However, in the end Scheve and Stasavage’s analysis isconsistent with the thesis of this paper that it is social norms that ultimately drive pay gaps
between management and non- management employees.

Measures to Address Pay Gaps
If the conditions that allow pay gaps between managerial and non-managerial staff to develop
are essentially driven by changes in broad social norms, then the issue of what should or canbe done address this becomes a complex question.
Levy and Tenin (2007) argue that what is required is a general shift in government policies
back to those that provided a more equitable distribution of productivity gains prior to the
1980s. Similarly, Jaumotte and Bruitron (2015) suggest that governments could move to adopt
policies that would improve union membership as well as minimum wages. Laliberte (2011)
argues for a need to relink pay and productivity through the facilitation of collective bargaining
and improvement of minimum wages.
However, it must be kept in mind that government policy tends largely to be driven by social
values rather than the other way around. As such, it may more be an issue of changing wider
public views on how firm productivity should be distributed which will in turn lead tocommensurate adjustments to government policy. In this respect, Storm and Naastepad (2011)
suggest the need for ‘social pacts’ developing which involves a fair sharing of labour
productivity growth and technological progress between business and labour.
In the past, the shifts in societal norms that influenced changes in pay gaps between managerial
and non-managerial staff appear to have been triggered by socio/economic shocks. The Great
Depression and WWII lead to norms of fair distribution, and the economic problems in the
1970s leading to the weakening of these norms (Levy & Tenin, 2007). It may be that it willtake future shocks permeating throughout society that will lead to the changing of social values
back to those which will allow a fairer distribution of firm productivity. The GFC was asignificant global economic shock but, as noted above, it appears that this only momentarily
stalled the growth in pay gaps, and further shocks may be needed to make a lasting impact.
Whether any such future social shocks occur may come down to the long term efficiency ofgrowing pay gaps between management and non-management employees. If, as it appears, thisdoes not reflect respective contributions towards productivity then this trend represents
inefficient ‘rent extraction’ by management which will ultimately harm social welfare(Jaumotte & Buitron, 2015). Stiglitz (2013) refers to the current pay setting conduct ofmanagement as an example of game theory involving collusive behaviour by management
exploiting market imperfections to their own benefit by controlling norms within firms to theiradvantage.
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The consequences of inefficient distribution of pay within firms may already becoming
apparent with advanced economies struggling to achieve sustained improvements in GDP post
the GFC. In contrast with the recovery from the Great Depression, general wage growth has
stayed stubbornly low and consumers are not leading economic recovery. Storm and Naastepad(2011) view the roots of this malaise lying in the delinking of the pay of the bulk of wage
earners from productivity improvements. Jaumotte and Bruiton (2015) note that the current
levels of inequality can lead to another crisis as those less well-off over borrow from the rich.
If these economic trends continue and another economic crisis develops, then this may as aresult be a shift in social norms, and as consequence government policy. There have been someindications of such shifts in social values beginning to develop.
Public pressure has resulted in ‘say on pay’ legislation, allowing shareholders input on
executive pay, being passed in a number of countries. These include the Dodd – Frank WallStreet Reform and Consumer Protection Act 2010 in the US providing for a non-binding voteon executive pay for listed companies together with disclosure about relativity to performanceand other pay levels within the corporation. A number of countries have also introduced similar
restrictions on executive pay, especially in the financial sectors.
However, with such ‘say on pay’ reforms focussing on putting more power in the hands ofshareholders, it may only result in redistribution between executive pay and shareholder
dividends. To make inroads in closing the pay gap with non-management, employee reforms
will need to give employees, as stakeholders, a say on setting pay levels. This may involve
giving employees a secure ongoing basis for consulting with management over pay
arrangements – such as Work Councils in Germany. There could also be provision for direct
representation for employees on firm governance bodies – once again using the German
example of statutory requirements upon larger corporates for employee representation on
Supervisory Boards, which amongst other things set remuneration policies for management tofollow (Bamber et al., 2011).
There have also been indications of public support for proposals to put direct restrictions on
the maximum ratios of executive to lowest paid employees in public corporations, such as the
proposal rejected by a 2013 referendum in Switzerland (when a ratio of 12:1 was rejected). If
such measures were put in place for management to improve their own pay, they would needto drag other employee pay with them to maintain the ratios.
There has also has been in advanced economies increased levels of minimum wage as
percentage of medium wages since the mid-2000s. Jaumotte and Bruitron (2015) have foundthat minimum wage levels set by governments has in some instances borne an inverse
relationship to levels of top income shares. Similarly, the establishment of the national
minimum wage in the UK in 1998 is attributed with significantly reducing the ratio between
management and average non-management pay (UK Office for National Statistics, 2012).
However, experiences such as in Australia illustrate that if minimum wages are only indexed
to take into account cost of living increases they may not be effective in reducing top end
income inequality (Bamber et al., 2011). To do so they will also need to increase with national
improvements in productivity.
There does not, however, appear to be as yet any significant public support for a return to thelevels of industry wide bargaining that existed up until the 1980s. This will be an important
step for any real inroads to be made into pay gaps between management and non-management94New Zealand Journal of Employment Relations, 41(1): 83-97
employees to be made. This may involve a return to norms expecting management across firms
to co-operate in passing on movements in industry pay rates, including for increases in
productivity, that marked the ‘collective laissez faire’ in the UK and the US up until the 1980s.
Alternatively, there could be a return to centralised or extended bargaining, as operated in thepast in countries, such as New Zealand.
Can governments do anything to drive these or any other institutional changes that will address
pay gaps? Certainly, governments should not stay passive until another socio/economic crisis
drives changes in social values, but should try to drive support for policy changes to address
the problem.
For example, there has, in the past, been a tendency for governments to benchmark public
service executive pay to private sector rates. Instead, it could be accepted that the private sector
levels are not appropriate benchmarks for setting pay levels. Given that, in many developed
economies, the public service makes up a significant part of the total workforce, this could be
a powerful influence in establishing better norms for appropriate levels of management pay.

Conclusion
In conclusion, an institutional analysis of how firms operate and set pay provides an
explanation for the growing pay gap between management and non-management employees inmany advanced economies. The key insight is that the growth in pay gaps since the 1980s has
been largely driven by changes in social norms as to how pay is to be distributed amongst
employees in firms, and resulting changes in support for industry wide collective bargaining.
Prior to the 1980s, the prevalent social norms were shaped from the time of the Great
Depression and WWII, and provided that management of firms should co-operate in bargaining
with unions industry wide pay rates for all employees that kept pace with general productivity
gains. From a social welfare perspective, this approach to pay setting can be seen as a relatively
efficient way of keeping all employees pay broadly in line with productivity gains, given thepractical issues of attempting to adjust pay to reflect the marginal productivity of individual
employees. During and following ‘long boom’, advanced economies experienced good
productivity gains which were shared in pay for both management and non-management
employees.
However, with economic shocks and slowing productivity gains of the late 1970s, social norms
shifted away from the sharing of productivity increases across all employees and from industry
level to firm or individual bargaining. These shifts in societal norms gave management theencouragement and freedom to depart from previous practices of passing on generalproductivity increases to non-management employees. Instead, management appears to havereverted to ‘pay matching’ with other firms in offering little, if any, firm productivity gains,and passing on the bulk of the gains to themselves. The resulting growing pay gap that hasdeveloped between management and non-management staff can be seen as contrary to social
welfare in that these trends are not reflective of changes in respective productive contributions.
The answer to addressing pay gaps lies in a further change societal norms, which may require
another socio/economic shock to bring this about. There may already be indications of such acrisis developing given the current persistently low rates of productivity and wage growthacross developed economies. Hopefully, however, responsible governments will foresee such
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New Zealand Journal of Employment Relations, 41(1): 83-97
risks and attempt to guide societal and business support back behind a fairer distribution of
productivity gains across all employees.

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