The election of a Labour government in 1935 offered the union movement a new beginning. Peter Fraser, a former leader of the first Federation of Labour (FoL) and now deputy prime minister, pressured the squabbling factions of the union movement to bury their differences and achieve unity. In 1937 delegates of almost every blue-collar labour organisation in the country met to form the second New Zealand Federation of Labour.
The FoL soon grew to play a major role in a government-backed system for setting wages for specific industries at a national level. This system dominated employment relations from the 1940s until the late 1960s. The FoL also negotiated directly with successive governments and took cases to the Arbitration Court for universal wage increases. It helped to establish a basic living wage for all, which became a vital part of the welfare state.
First Labour government and unions
In 1936 the Labour government introduced compulsory unionism. Within two years the FoL more than tripled in membership, to 233,000 members in 500 unions. It organised in industries where no unions had previously existed, especially farm workers, clerical workers and shop assistants. The government introduced the world’s first non-income-tested pension, available to everybody at retirement age. It was a demonstration of the close partnership between the union movement and a government with similar social objectives.
Peter Fraser, who became prime minister in 1940, and F. P. Walsh, who dominated the FoL, worked closely together throughout the 1940s. During the Second World War, although women and Māori entered the workforce in growing numbers, the FoL and its affiliated unions mostly represented the white, male, manual-working class. In 1944 FoL leaders backed demands by engineering workers in the Hutt Valley for two weeks’ paid leave at Christmas. The Labour government opposed the campaign at first, but then agreed to introduce the first legislation guaranteeing holiday pay for all workers.