Evaluating the Impact of a New Pay Agreement on New Zealand Nursing

Abstract

Aim: This paper examines the labour market impact of a new national pay award for nurses implemented in New Zealand in 2004/5 – the Multi-Employer Collective Agreement (MECA). Background: The health system in New Zealand is unusual in that, while retaining a public sector system, the focus of pay determination for nurses over the last 20 years has shifted first from national to local pay determination, and then more recently reversed this trend, moving back to a national level pay determination. The shift back to a national pay determination approach in 2004/5 is therefore worthy of examination, both in terms of its labour market impact, and as a case study in the use of national level pay determination. Methods: The research was conducted in 2007–8. A rapid appraisal method was used, based on key stakeholder interviews, a document and literature review and a review and analysis of available data on the New Zealand nurse labour market, and trends in application rates to schools of nursing were assessed. In addition, interviews with managers of two District Health Boards, and interviews with five non-government employers of nurses, were conducted. Results: Indicators pointing to improvements included: steady (though not rapid) growth in staff numbers; reduced difficulty in recruiting; reduced vacancy rates; and increased application rates to schools of nursing. Managers interviewed in the study supported these positive indications, but some health-care employers not covered by the pay award reported negative knock-on effects (e.g. needing to match DHB rates, increased retention and recruitment difficulties). Conclusions: Available nurse labour market data provide an incomplete but compelling picture of the positive impacts of the MECA in a period of a very tight labour market. While much of the content of the 2004/5 agreement could be characterized as a ‘normal’ pay bargaining contract, there were also issues that differentiated it from the norm. In particular, it included an agreement to establish a safe staffing commission to assess the impact and implications of low staffing levels, nursing workload, and to establish guidelines on safe staffing and healthy workplaces.