HELEN WHITE (Labour): I move, That the Employment Relations (Restraint of Trade) Amendment Bill be now read a first time. I nominate the Education and Workforce Committee to consider the bill.
This bill is one of the reasons I came to Parliament; it's my "why". We talk about that quite flippantly sometimes, but this is a bill that came about because of my experience over 25 years of employment law. It was a fairly frustrating experience because what I saw was a parade of low-paid employees coming into my office who couldn't move jobs. They couldn't ask for a pay rise, because they wouldn't get one, because they couldn't move jobs, and they couldn't move to better work.
It's really important for low-paid workers to be able to do that. Most people get a pay rise by moving up in their career, and that's an important freedom that we should have. I've seen kindergarten workers, I've seen all sorts of low-paid workers—milk workers—who are restrained. Those are not the kinds of people that most people in this country think would be restrained from going to another company in competition with the one that they're working in. We need, in this country, to get higher wages. We need, in this country, to build productivity. Restraints of trade, called "non-competition clauses" in America, are getting in the way of doing that and there's good evidence to prove that.
I want to talk about the nature and structure of the bill that I brought to the House. I brought to the House a bill which bans restraints for low and middle income earners, and I did that because they are the workers who need to move the most. They are also the workers who are not earning enough to be able to go to court and challenge the restraints that are in their employment agreements. Usually, the people who came into my office—the kindergarten teacher or the seamstress—hadn't actually read what was in their contract and they signed it.
Often, the restraints that I saw were probably not enforceable at law, yet most of those people walked away. They didn't actually take their employer on with regard to the restraint, and that's because they simply couldn't afford to. It costs a lot of money and it takes a lot of confidence to go to court. That's why, when you ban these restraints, you see wages go up, and they go up for our most vulnerable.
I can tell you that because there's work in America that proves it. In America, some of the states actually ban these restraints. When they do so, they see an uptick in wages of 6 percent over five years. Now, that's quite a lot of money to most people and they move from job to job—and guess what! It actually helps small and medium sized businesses because they have a stream of workers that they can't otherwise access.
Now, this practice of restraints didn't used to be such a big deal; it didn't happen as much. But, actually, it's a growing practice and we didn't know it was happening in this country because we don't keep individual agreements and it tends to happen there. They've done a study in Australia and it shows that one in five workers there are restrained—one in five. It is just not possible that those restraints are really to do much more than what I am saying they are to do. They are there to stop workers moving into other work and stop them moving to the competition, and those things are very much linked. This suppresses wages and it suppresses innovation.
It's really important that you can go, as a worker, and set up on your own account when you've grown those skills. That's a good thing for our country; that will make us thrive as a nation and it will feed our small businesses. In California, they actually banned all sorts of restraints—so a very much wider group of restraints—and a lot of people say that's why they have Silicon Valley. They have it because the IT companies actually do not restrain their workers and it helps move people. And there is innovation as a consequence—it actually encourages that kind of knowledge nurture, and that is what the evidence says.
It's got so serious in the United States that the Federal Trade Commission will be bringing in a rule banning them. If we don't ban them and they do, they will be ahead of the curve in terms of what they're doing for workers and we will not. So this is a rule that has application across the entire States and that will be happening, and it is on the table right now, because other countries have recognised that this is actually keeping people poor.
Now, I want to talk to you about the other part of this bill, because there's a ban on low-income workers and medium-income earners getting those restraints. It's a simple thing which means that they know and employers know exactly what the story is. But I haven't chosen to do that for workers on three times the minimum wage, so that's workers on about $120,000. They can be restrained, but there are some rules around that.
The first is that everyone thinks about it in terms of what it costs. It costs not only the employer but it also costs the employee. So there must be reasonable consideration for that. Now, consideration's a legal word, but it just means "price", "value". You have to attribute value to that, and that will actually sharpen the mind as to whether you need it. There will be a limit on that restraint. It's actually six months—it's a decent amount of time—and then you can go across.
Now, before I finish, I want to talk about one restraint which really shocked me. Because I have had a lot of individual employees in my office, and they had come in and they had often said to me—often the women—that they would not be actually challenging their restraint because they couldn't afford to, that really worried me. Those were the seamstresses and the kindergarten teachers.
In fact, the research suggests that in those cases where they have banned these restraints—and one of them is Oregon, in a very similar form to this law—women's wages went up double the amount of men's. That is an interesting indication. If we're serious about pay equity, that's where we have to go. We have to fix the mechanisms. There is speculation about why that is. That's the stats. My speculation is that a lot of women lack the confidence and they're the second income earner, etc. They are not the people who take cases to court. So that's the situation.
But the case I want to actually focus your minds on is not that; it was in a collective agreement and I was absolutely shocked to see it. It was the Starbucks agreement. Now, the Starbucks agreement bans its baristas—its workers on $20.50 an hour—from working other places for six months if they work in competition. Can you imagine what that is? I presume that's a McDonald's. I presume it's a little cafe. They are not allowed to move, and it went into a collective agreement. That is absolutely shocking to me because I never thought I'd see it in that context.
I've seen it in the Amazon agreements for the workers in America. I've seen those contracts in America. But I did not know that it had come here, that practice. This law, as it is currently being interpreted in New Zealand, does affect baristas. We have had a case on that. It's called Fuel Cafe and it affects the baristas.
This law is coming to our shores—that kind of practice is coming to our shores—thick and fast. You know who it benefits? It does not benefit medium and small businesses. It does not benefit New Zealanders. It benefits multinationals who cynically stop their workers going to the competition, stop them asking for a pay rise because they can't go anywhere else. For me, that is shocking. I commend this bill to the House.