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Background: the story of performance pay The establishment of a system of performance pay for general staff at the University of Auckland was just one part of the story of the impact of neo-liberalism on New Zealand in the late 1980s and 1990s.

Neo-liberalism comes to New Zealand Neo-liberalism is a doctrine which argues that humans are motivated by individual selfinterest, and that society works best when individuals are left to compete with each other in a free market environment, without the protection of collective entities like trade unions or the state.

In 1984, the newly-elected Labour government began to import neo-liberal ideas and practices into New Zealand. Labour deregulated and privatised large parts of the economy, removing subsidies that protected companies from overseas competition and selling off state assets like the railways, Air New Zealand, and Telecom. Tens of thousands of workers lost their jobs due to Labour’s neo-liberal policies, and in 1990 the party lost power. The new National government, though, continued with neo-liberal policies.

Not until National was replaced by a Labour-Alliance government in 1999 was a brake put on the implementation of new neo-liberal policies. By that date, neo-liberalism had fundamentally changed the face of Kiwi society. An economy which had been heavily protected was one of the least regulated in the world. Trade unions which had once enjoyed many legal protections had few rights left. The real average wage had declined, and inequality had soared. Towns and suburbs had been devastated as the closure of factories and government institutions like post offices and hospitals caused job losses and forced families to move to new communities.

Neo-liberalism comes to the university Up until the second half of the 1980s, both academic and general staff at New Zealand’s universities had their pay set by central bodies based in Wellington. Academic pay scales and rates were set by the Higher Salaries Commission, while general staff had their salary range and rates determined by a body that based its deliberations on the State Services Conditions of Employment Act of 1977. Both academics and general staff received automatic pay increases as their length of service at universities lengthened.

The States Services Conditions of Employment Act had established blanket conditions for both academic and general staff, which individual universities could not modify.

In 1988, though, Labour passed the State Services Act, which modified the pay arrangements of both academic and general staff. Influenced by the neo-liberal emphasis on difference and competition over common interest, the State Services Act divided general staff into a number of different occupation groups within the university. Each group had its own national agreement which needed to be negotiated separately.

Up until the passing of the State Services Act, the Association of University Teachers (AUT) had been more like a professional association of academics than a union. After the passing of the State Services Act, though, the AUT hired an Industrial Officer for the first time, and began to recruit significant numbers of general staff. The AUT realised that the rules that governed the university workplace were changing, and that bargaining was going to become a part of life for both academics and general staff.

The push for performance pay At the same time that it was pushing the State Services Act through parliament, the Labour government was changing the culture of management in public sector institutions like universities. Managers were being encouraged to think in terms of individualism and competition, and to try to introduce market forces into their worksites wherever they could. University managers realised that they could use the changing environment created by the State Services Act to undermine the collectivism and strength of employees.

The replacement of the system of automatic pay increases tied to length of service with a system of ‘performance pay’ became a key goal of management. Under a system of performance pay workers would compete with each other for pay increases that were given at the discretion of management. The concept of performance pay fitted well with neo-liberalism, because performance pay treats workers as individuals and made them compete with each other.

In 1989, librarians represented by AUT held negotiations with management for a national contract. Management proposed that a performance pay system be a part of the new contract; librarians responded by passing a national resolution opposing performance pay.

Although it didn’t get its way in 1989, management remained committed to introducing performance pay into universities. The neo-liberal industrial relations policies of the National government elected in 1990 helped to strengthen the hand of management. In 1991 National passed the Employment Contracts Act, which removed unions’ status as recognised legal entities, banned many forms of strikes, and made multi-employer negotiations almost impossible. At the same time that it passed this anti-union legislation, National began to cut real funding to universities. Staff found their negotiating position weakened by these developments.

During negotiations in 1993 managers made a concerted effort to introduce pay performance systems into universities. The general staff at Otago University came close to accepting the system, but eventually rejected it. At The University of Auckland, though, general staff members agreed to accept a system of performance pay, in return for certain concessions, including an extension of the number of workers who were covered by their contract. Academic staff at Auckland retained a system of automatic pay

increases. Today, Auckland remains the only university in New Zealand with a performance pay system for general staff. At other universities, the pay of general staff is set according to hybrid systems that combine automatic progression with some meritbased calculations.

The failure of performance pay The acceptance of performance pay was made more palatable for some general staff by the rhetoric of university managers, who promised that the new system would lead to more frequent and bigger pay increases for most workers. But staff soon found that the reality of performance pay did not match the rhetoric of management.

As the 1990s went on, union organisers and delegates heard frequently about the failings of the performance pay system. Some workers felt that their managers assessed their performance wrongly because of prejudices; others believed that they were denied good ‘marks’ for their performance because the managers who assessed them wanted to avoid the cost of the pay increase that a good ‘mark’ might bring. Many workers discovered that the questionnaires and face-to-face ‘evaluation’ that were part of the pay performance process were a drain on their valuable time. Many others felt that the competition between staff that the new system encouraged was detracting from the cooperative atmosphere necessary in the university.

In 2007 the union surveyed its general staff members to find out what workplace-related issues most concerned them. More than three quarters of the general staff involved in the survey said that they were unhappy with the performance pay system.

Research in the public sector in New Zealand and overseas backs up the feelings of staff about performance pay. In New Zealand and overseas, performance pay has failed to lift either productivity or salaries as well as the sort of automatic pay system it replaced at the University of Auckland. Because of the failure of performance pay, the Tertiary Education Union is initiating a campaign to change the system and bring the University of Auckland into line with other universities around the country.

At both the 2007 and 2008 collective agreement negotiations unions tabled claims for a fairer salary progression process for general staff.

At the 2008 negotiations management and unions could not agree on the type of remuneration model general staff should receive. It was decided to put the issue aside temporarily and create a 'performance and development' framework which would provide a fairer way of evaluating the work of general staff (it was agreed that this framework would not be linked to pay).

The Tertiary Education Union and other unions on campus remain committed to replacing the system of performance pay with a fairer method of remuneration. In preparation for these discussions the combined unions have developed a preferred model and will be building membership awareness and support leading up to collective agreement negotiations in 2010.