As election campaigns go, paid parental leave is not usually the issue that swings votes. But like infrastructure, it is an investment into the future. Something that New Zealand notoriously underinvests in. Paid parental leave supports the value we place on the first months of a child’s life, and the support society provides to the parents doing the caring.
The National Party’s recent announcement that it would gradually extend paid parental leave from 26 weeks to 30 weeks if re-elected deserves attention, given that the government it leads has reduced employment entitlements during its term in government. Arguably the most detrimental has been the controversial changes to how pay equity claims can be made. Dozens of existing claims have been blocked from female-dominated workforces which are generally considered to be underpaid in comparison to those dominated by men, saving the government “billions of dollars” as the Prime Minister admitted.
National’s policy would see paid parental leave extending to 30 weeks by 2029. The party has also revived its policy to allow parents greater flexibility in how they share leave entitlements, enabling mothers and fathers to take leave together or in overlapping periods rather than constraining families into more rigid arrangements. The Prime Minister describes the policy as giving families more choice and more time with their babies.
The Labour Party has pointed to National’s historical opposition to some parental leave extensions, while National has responded by highlighting Labour’s rejection of previous proposals to make leave-sharing arrangements more flexible. The reality is that New Zealand’s parental leave scheme remains modest by international standards.
Recent OECD comparisons show that mothers across OECD countries receive, on average, just under 19 weeks of paid maternity leave around childbirth. In the OECD many countries replace a substantial proportion of a parent's earnings during maternity leave, with a number of OECD countries effectively providing full-rate compensation for mothers on average earnings.
New Zealand currently provides up to 26 weeks of paid parental leave, which may appear generous. The difficulty is that payments are capped. From 1 July this year the maximum weekly parental leave payment increased to $811.05 before tax. For many middle-income and higher-income households, that represents a substantial reduction in income at precisely the time family expenses are increasing. Arguably, those households have less need for the State’s assistance, but a significant proportion of those households rely on both parents incomes to meet the high cost of living.
That gap has increasingly been filled by some employers. Contact Energy attracted attention when it introduced a parental leave package that tops up government payments to full salary for the entire 26-week leave period, continues employer KiwiSaver contributions during leave, offers flexible return-to-work arrangements, and provides a childcare contribution. It shows what progressive employers can do to support working families and improve gender equity in the workplace.
Employer generosity should not be the solution though. Statistics cited by the New Zealand Institute of Economic Research indicate that only a small proportion of employers provide salary top-ups or continue KiwiSaver contributions during parental leave. The result is that the financial impact of having children falls unevenly across the workforce. Employees of large corporates may receive more generous support but employees of small businesses often do not. Women are more likely to be significantly impacted in relation to their KiwiSaver plans, and their return to work. The Retirement Commission has highlighted that women retire with significantly less savings than men, reflecting factors such as pay disparities, part-time work, and periods spent caring for children.
While few people decide whether to have children based solely on parental leave entitlements, government support sends an important signal about whether families are valued (and the tamariki are New Zealand’s future workforce). Young families face many increased expenses, doctors appointments, prescriptions, increased housing costs, heating, expensive childcare etc, while often operating on reduced incomes.
Extending paid parental leave is expensive and the country faces fiscal challenges such as growing unemployment, increased inflation and a cost of living crisis. Those concerns are legitimate. But New Zealand is also a nation of small businesses, many of which operate on narrow margins and they cannot realistically afford extensive employer-funded parental leave schemes.
National’s policy will not place New Zealand at the top of the OECD rankings. It does not eliminate the costs many parents still experience when taking leave. It does not solve the long-term impact on women in particular. But it would move New Zealand in the right direction. Read more....
Last week public servants walked off the job at the Department of Internal Affairs for two hours in protest over pay and proposed changes to working conditions. The union, the Public Service Association, said that the largest group affected were Life and Identity Services Officers, most of whom earn about $65,000 a year.
In bargaining for a new collective agreement it is understood that DIA had offered a $700 pay increase to each midpoint of each pay band. The PSA says this equated to an average pay rise of about 0.8% (well below the current inflation rate which effectively means a pay cut given the current cost of living and inflation). The PSA acknowledged that the DIA had offered a one-off lump sum of $1,500 but said this did not increase the workers base salaries. The PSA said it was seeking a $2,000 increase to the mid-point of each pay band which equated to a pay increase of about 2.3%.
Strikes used to be associated with workers walking off the job for days at a time. However, that meant that workers were not entitled to pay for those days. Increasingly the most effective industrial action is not a complete withdrawal of labour, it is employees continuing to do their jobs while refusing to perform parts of them - partial strikes.
Last year, the government amended the law allowing employers to deduct pay from employees engaged in partial strikes without having to suspend or lock them out. Employers may now deduct either 10 per cent of an employee's pay or make a proportionate deduction. The changes were promoted as restoring balance to collective bargaining by ensuring that employees who deliberately withhold part of their labour can no longer expect to receive full pay while doing so.
The first significant case to test the change has now reached the Employment Court. It arose during collective bargaining between NZEI Te Riu Roa and the Secretary for Education. Union members employed as psychologists, speech language therapists, physiotherapists, learning support advisers and kaitakawaenga undertook partial strike action by refusing to work unpaid overtime, refusing to work more than 38 hours per week and refusing to accept new cases, while otherwise continuing to perform their ordinary duties. The Ministry of Education responded by deducting 10 per cent of their pay.
The main legal issue being tested in the Court was deceptively simple: who must be notified before those deductions can lawfully be made? The majority of the Employment Court concluded that the Ministry had complied with its statutory obligations by giving notice through the union. However, Judge Helen Doyle strongly disagreed. In a strong and carefully reasoned dissenting judgment, she concluded that the legislation requires notice to be given individually to each affected employee before deductions are made. In her view, Parliament had deliberately chosen language that contemplated personal notice and employees should not have their wages reduced without being directly informed.
It is difficult to argue that an employee should necessarily receive 100 per cent of their wages while deliberately refusing to perform aspects of their role as part of industrial action. Equally, it would be disproportionate for an employer to deduct all of an employee's pay where the employee continues to perform most of their duties. The difficulty lies in deciding where the balance should be struck.
The government's solution of allowing employers to deduct a flat 10 per cent of wages may appear administratively attractive. However, it inevitably produces arbitrary outcomes. In some cases, employees may be withholding work worth considerably more than 10 per cent of their duties. In others, the deduction may exceed the actual value of the work being withheld. The legislation permits proportionate deductions, but calculating those deductions is often likely to involve difficult assessments of an employee's duties and the value of particular work tasks.
As with many of the government’s recent changes to employment law, what sounds straightforward in theory has proved rather more complicated in practice. What the Secretary of Education found is that what should have been a straightforward deduction of 10% of pay has become a major litigation battle. The union, NZEI Te Riu, has said it is appealing the Employment Court’s split decision to the Court of Appeal.
It is early days since the partial strike was taken last week at the DIA. It is unclear if the Department has given notice that it intends to withhold pay for the workers taking part in that partial strike. If it does so, it might come with a hefty lawyers bill. Read more...
Artificial Intelligence has become surrounded by competing narratives. One side often predicts the wholesale replacement of workers, while the other side dismisses AI as an overhyped technology that will never live up to expectations.
The International Monetary Fund recently delivered what appears to be encouraging news for New Zealand. It concluded that New Zealand is among the countries best placed to benefit from artificial intelligence because of its skilled workforce and capacity to adopt new technology.
That optimism came with a warning though. While AI has the potential to improve productivity and economic growth, a significant proportion of New Zealand jobs may be affected by artificial intelligence, with many workers needing to adapt as technology changes the way work is performed. The IMF estimates that around one third of workers may be effected and it is likely to be particularly acute amongst women and younger workers.
AI is already transforming workplaces. It can analyse vast quantities of information in seconds, review documents, draft reports, automate repetitive administrative work and assist decision-makers in ways that would have seemed impossible only a few years ago. For a country like New Zealand plagued by low productivity AI does offer genuine opportunities to do more with the resources we have. But increased productivity should not be confused with simply reducing head counts in the workplace.
Some of the world's largest employers are discovering that replacing experienced workers with artificial intelligence is proving considerably more difficult than they planned for.
The Ford Motor Company invested heavily in AI-assisted engineering and manufacturing systems but it found that automation lacked something its most experienced engineers possessed in abundance - decades of accumulated practical knowledge, intuition and judgment. Recently Charles Poon, Ford's Vice-President of Vehicle Hardware Engineering, candidly explained "Mistakenly, we thought that by just introducing artificial intelligence ... that would produce a high-quality product." Ford has since brought back more than 300 experienced engineers (internally known as "greybeards") to mentor younger employees and to improve AI systems. Since doing so, Ford has reportedly reduced warranty costs, improved vehicle quality and achieved its highest industry quality ranking for more than a decade.
IBM has reached similar conclusions. While artificial intelligence has successfully automated routine human resources and administrative functions, it has confirmed that it continues to hire software engineers, sales professionals and client-facing staff because automation created demand for different human skills rather than eliminating the need for workers altogether. It has so far concluded that AI proves effective at routine tasks but it has proved much less effective where creativity, judgment and human relationships remain essential.
For 2026 IBM has planned to triple its entry-level hires in the United States. It’s Chief Human Resources Officer, Nickle LaMoreaux, said that investing in entry-level talent is essential to IBM’s long-term agility “if we don’t continue to invest in entry-level hires, what happens in 3-5 years”, and commenting further “there’s no pipeline, the well simply dries up”.
Closer to home, the Commonwealth Bank of Australia has also found that customer service could not simply be handed over to AI. While chatbots dealt efficiently with straightforward enquiries, many interactions ultimately required escalation to experienced employees. Last year CBA laid off 45 customer service staff and replaced them with an AI "voicebot” but it soon found that the AI system was unable to cope, which led to an increase in calls and it led to CBA to reversing the job cuts.
It is hard to object if AI removes repetitive administration, reduces waiting times and allows public servants to concentrate on work requiring higher levels of skill and judgment. But work is seldom a collection of tasks. It often requires exercising judgment, discretion, initiative and accountability. It often is assisted by “institutional knowledge”, either gained by experience or recognising whom to turn to. Those qualities are often impossible to reduce to a written process, let alone an algorithm. Responsibility still rests with a human decision-maker that can be held to account – not with an algorithm.
In this year's Budget, the Government signalled that AI would play an increasing role in cost saving and improving efficiency across the public service while continuing to reduce staffing numbers. It plans to further slash public service jobs by about 14 per cent (around 8,700 jobs) over the next three years, with a planned cost saving of about $2.4 billion.
Unfortunately, this government takes a pretty blunt approach to major ticket items; tiny tax cuts in 2024 which cost billions, tax cuts for landlords, again with billions in costs. We were told to tighten our belts, the government had nothing to meaningfully assist those hardest hit in the continuing cost of living crisis. Cost savings have taken similar blunt approaches; stripping pay equity from thousands and thousands of largely underpaid female workers. Other large investments in the future of New Zealanders faced similar approaches; slashing the quality of school lunches and scrapping large electric ferries for second hand Toyota type fuel guzzling ferries spring to mind.
If huge companies such as Ford, IBM and the Commonwealth Bank have rediscovered the value of experienced employees after attempting greater automation, the government and its agencies should be careful not to repeat the same experiment at the public expense. Read more...
