A youtube film critic Lindsay Ellis has been doing a three part video essay on the Hobbit triology. The third and final part is focussed largely on the labour disputes that took place in the autumn of 2010 early on the film projects production. The dispute was sparked over long term grievances by workers in the New Zealand film industry over disparities in pay and conditions that were available to workers in the same fields in other nations, including those working on the same film. The dispute was lead by the New Zealand Actors Equity (NZAE) the Union for New Zealand actors which has close ties to the Australian actors union.
The response by the films financial backers, mainly Warner Brothers was to threaten to pull out and make the films and other future film deals elsewhere. Ultimately the events would end with the government of New Zealand meeting with Warner Brothers executives and agreeing to pass a new law covering the film and television industries restricting the legal rights and protections of workers within them. The Employment Relations (Film Production Work) Amendment, commonly known as the Hobbit Law, reclassified many workers in the film industry as independant contractors. The government also gave Warner Brothers a 15 million dollar (USD) subsidy and use an Urgency mechanism to make the Amendment binding as soon as it was possible.
The first and second parts of the series are mostly concerned with accuracy to the book and decisions made when filming, but do cover the rather complex issue of which studio owned what, and how much influence they have via control of funding. So its worth watching for more background.
In addition I found a report on the labour law - Voiceless Actors? The Hobbit Affair and the Future of Unions- and its effects on the New Zealand film industry, and have attached it as a PDF. It was written in the aftermath of the dispute and the passing of the amendment, which is why it refers to the Hobbit as a two film deal rather than three.
" When the production of The Hobbit was being developed the local actors’ union, New Zealand Actors Equity (NZAE), expressed dissatisfaction with the terms offered and so approached international actors’ unions for support. This led to the International Federation of Actors (FIA) instructing its members and affiliate unions not to work on the project until collective negotiation of terms and conditions had occurred with Media Entertainment and Arts Alliance (MEAA), which incorporated NZAE. These tactics were rejected by Jackson, who claimed they would ruin the New Zealand film industry. Jackson argued that the Commerce Act prevented his company from negotiating collectively with potential staff since they were contractors and not employees. This view was later supported by the New Zealand Government but disputed by the unions"