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Arbitration: A no win game

From Socialist Review Aotearoa New Zealand
Issue 12 (Spring 2002)


Arbitration forces workers to fight on the grounds where employers are strongest and we are weakest – and there’s a long history of attempts at Arbitration in New Zealand.

The Arbitration system, passed into law in 1894, dominated New Zealand industrial relations for the next 80 years.

Arbitration meant that workers and employers had to take disputes before an Arbitration Court whose decisions were binding. In other words workers effectively gave up the right to fight on their own ground and instead had to battle it out in the legal system where the employers were at their strongest.

No wonder then that workers were quickly disappointed by Arbitration. Unfavourable awards, delays and lack of enforcement by the court against employers were all common complaints. In 1906 the first illegal strike took place and was quickly followed by others, eventually leading to the great Waterfront Strike of 1913.


Nil Wage Order
Arbitration was finally defeated in the early 1970s.

In 1968 the Arbitration Court handed down a "Nil" wage order. Despite compelling evidence of declining living standards, the court announced that "economic difficulties" facing the country meant that employers couldn’t be expected to raise wages.

Thousands of workers took part in angry stopwork meetings and protest marches. With the threat of widespread unrest, the Employers’ Federation hastily submitted a new proposal jointly with the FOL union confederation. The judge was outvoted and a five percent general wage rise passed.

The whole Arbitration system was discredited. Even the FOL leadership now recognised that "Trade unionists are becoming increasingly aware that Compulsory Arbitration protects the interests of the employers and restricts the efforts of workers."

After 1968 the Arbitration Court became increasingly irrelevant as direct bargaining between unions and employers became the rule. Of course the bosses didn’t like this, and Acts of Parliament were passed to try and hold down wages. These were largely failures against a background of increasing working class militancy and anger. Despite attempts in the 70s to replace the Arbitration Court with new wage fixing tribunals, the defeat of the 1968 Nil Wage order was Compulsory Arbitration’s death-knell.


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