Wage growth is higher in Australia. Could this regulatory fix help Kiwi workers catch up?

Getty Images If it feels like you’re sliding backwards as the cost of living rises, you’re probably right.

Recent Stats NZ data shows that in the year to June, New Zealand salary and wage rates grew by just 2%, less than half the 4.1% increase in inflation .

The trend has been happening since COVID, and it means incomes are effectively reducing.

In Australia the situation is more favourable, with the difference between wage growth and inflation much narrower, according to the Australian Bureau of Statistics: 3.2% wage growth in the year to June versus 3.8% inflation.

While Australian workers are also feeling the pinch, the pain isn’t as accute as it is in New Zealand.

One explanation for this might lie in Australia’s collective bargaining regulations that seem to offer advantages to workers and employers compared with their Kiwi counterparts.

Since 2022, Australian workplaces have had the benefit of rules that differ significantly from – and are more accessible than – the legal avenues available in Aotearoa New Zealand.

Essentially, if wage negotiations become severely deadlocked – known as an “intractable bargaining” situation – the Australian Fair Work Commission can step in to resolve the impasse.

The legal term for this is “compulsory arbitration”, and the provisions were introduced by amendments to the Australian Fair Work Act 2009 .

Where it applies, the Fair Work Commission can set the terms of the collective employment agreement between the parties.

Breaking a deadlock New Zealand has a very restricted form of this in section 50J of the Employment Relations Act 2000 .

But this requires proof of a breach of good faith by at least one party, serious and sustained enough to significantly undermine the bargaining.

It’s also necessary to prove all other reasonable options have been used and compulsory arbitration is the only effective remedy.

In practice, the requirement to establish a breach of good faith has proved so restrictive there have been only two successful cases in the nearly 26 years the Employment Relations Act has been in force.