Regression Results of the Union Impact on Pay Levels in New Zealand Public Service

International studies almost uniformly conclude that union members receive higher wages than their non-union counterparts. This study investigates differences between collective and individual salaries using the New Zealand State Services Commission's Human Resources Capability Survey 2005. It explores the impact of collective bargaining on pay by controlling for a large number of employee and employer characteristics. As very little research has been carried out on the subject in New Zealand, I focused on the international literature in order to identify the major factors that explain the magnitude of union/non-union wage differential. Major industrial changes, which have shaped the NZ public service bargaining structure and its outcomes are identified. A range of statistical tests are used to examine the pay differences between collective and individual agreements in New Zealand public service. I, first, carry out basic comparisons of the average collective and individual wages across gender, employment type, occupations, ethnicity, age, employer size and tenure, followed by numerous multivariate regressions to work out the true contributing factors to the union/non-union wage differential. Finally, I analyze the results in the unique NZ context to allow new ideas and theory to emerge and compare it to international trends. Looking at the basic comparisons, I found that, in the New Zealand public service, employees on individual agreements earn significantly higher wages then those who are covered by collective agreements. However, multivariate analyses have revealed a different picture. The study found that occupational composition is the largest contributor to the variability in collective/individual pay in NZPS. With the exception of the senior, high skilled and specialised employees, no pay differential was found between collective or individual agreements in the New Zealand public service.