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No easy swim across the Tasman Sea for food processors

By Ankush Chibber , 23-Aug-2012
Last updated on 23-Aug-2012 at 19:49 GMT

Food manufacturers shifting their operations from Australia to New Zealand across the Tasman Sea have come under the scanner in the region with workers alleging the practice is being used as a threat.

James Ritchie, head of the International Union of Food (IUF), said this week that the organisation been told companies in Australia are using the threat of relocating their operations as a bargaining weapon with workers.

As a response, IUF unions in the two countries have said they would work together to defend permanent decent jobs in the food processing sector.

Heinz will not happen again

This came after the two met in Sydney last week to develop an early alert mechanism to inform each other of plans by multinational companies to relocate from State to State or Country to Country in their attempts to reduce wages and outsource jobs.

The two unions said that they are determined there be no repetition of the Heinz relocation in 2011 when 350 permanent jobs were destroyed in Victoria, Australia, and were replaced by 60 -70 minimum wage casual jobs in NZ.

“Unions will fight any attempts to destroy permanent jobs and will champion stronger employment law that promotes access to collective bargaining for all workers,” the statement said.

 “Australian and NZ IUF food affiliates have agreed to regularly share information and to meet twice yearly to further their joint work,” it added.

Katherine Rich, chief executive of the New Zealand Food and Grocery Council (NZFGC), told FoodNavigator-Asia that there could be many more such relocations as New Zealand wages are significantly lower than Australian wages.

“This is disappointing, but in this instance is an advantage for the New Zealand economy. In some cases the gap can be as significant as 30%. This is why many New Zealanders move to Australia,” she said.

Advantages are many

Rich said that although some firms have made the decision to shift manufacturing to New Zealand, she has, “not heard of any company using this as a threat either stated or implied in Australian employment negotiations.”

Rich said that New Zealand would be a favoured destination for food companies with its lower costs. “Also, the workforce is largely stable and educated. New Zealand has an excellent reputation as being a source of high quality safe food.”  

Rich also pointed to the ease of doing business in New Zealand because the country’s regulators have pragmatic approach to regulation and engage with industry unlike across the Tasman Sea.

“Regulators have a good relationship with industry in New Zealand, which means there is greater constructive engagement. Feedback we get from our trans-Tasman members is that Australian decision-makers don’t work as closely with industry and don’t appreciate how important the food industry is to their economy,” she added.

Rich said that in Australia, there is the tendency to regulate first and ask questions later. “That’s not the case in New Zealand where our government and opposition parties appreciate that the food industry is a driving force in the New Zealand economy.”

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