The labour market is red hot — so why are hundreds of thousands of workers poor, insecure and stressed?
By Rebecca Macfie
Illustrations by Daron Parton
Every night between 8.30 and 10, seven days a week, Ian Smart would get an email from his employer telling him whether he had work the next day. The 64-year-old was employed to collect kiwifruit samples from Bay of Plenty orchards and deliver them for testing to determine if the crop was ready for harvest the next day — an essential task in the export supply chain. If the email from his employer, Hill Laboratories, said there was work, he’d be up at 5.30am for a day of unknown duration — it might be six hours, or nine hours, or 11. If the email said there was no work for him it was too late to arrange anything else. Some weeks he got one day, sometimes two, occasionally seven. And when there was no work, there was also no pay.
You could tell that Penina* was a temporary worker at The Warehouse distribution centre in Auckland only by her orange vest. People in orange vests did exactly the same work as the permanent employees, who wore green vests. But Penina, 24, was employed by a labour hire firm called Kelly Services, which paid her the-then minimum wage of $18.90 an hour and on-sold her to The Warehouse. The permanents, who were on a union contract, got $24 an hour. Penina hoped for the better pay and security of a permanent job too. Instead, after nine months of unbroken service, working from two in the afternoon until 10.30 at night, she was put off without notice, explanation or compensation.
Asneil Kumar was technically a “self-employed contractor” but he only had one client, New Zealand Post. He had to buy and wear its uniform and pay to have its logo painted on his own van. He also had to pay for the GPS-enabled scanner that monitored his movements during eleven-and-a-half-hour days delivering parcels around the Auckland suburb of Beachlands. Including frequent Saturday work, it was a 60-hour week. With upwards of 350 packages a day to deliver, there was no time for breaks. He got $389 a day, from which he paid all his costs — replacement drivers if he or his kids got sick, fuel, insurance, repairs, maintenance, depreciation, ACC. He never took a holiday.
Angus* has a Master of Arts and a $75,000 student loan, and worked as a University of Canterbury tutor. Each semester, he taught six tutorial groups of around 20 undergraduate students. For a year, his life was a jigsaw of five-month fixed-term part-time contracts on $23 an hour. A quarter of tutors, lab demonstrators and teaching assistants at the university have been stuck on short-term contracts like these for three years or more. Because tutorials were spread out across the week, it was impossible for Angus to take other part-time work to top up his income. If he got sick, he usually worked anyway because he wasn’t entitled to sick leave. To do the job properly — marking essays with proper care, giving feedback, supporting stressed students — he routinely worked for nothing.
At the Takapuna branch of the Inland Revenue Department, Rebecca Langford was a Madisonian. That was the name around the office for a contingent of workers from labour hire company Madison Recruitment. They performed core functions such as customer service and claims processing, but were paid significantly less than permanent employees doing the same tasks. Langford, who processed Working for Families tax credits, estimates she would have made $13,000 more per year as a permanent staffer. The Madisonians ate in the same lunch rooms as the permanents, belonged to IRD work teams and followed the same codes of dress and conduct. But they didn’t share the same security or pay. The message was clear, says Langford: “We were bottom of the barrel.”
* “It’s a precarious enough position as it is, without being named in an article,” said one worker when I asked if they were willing to be identified. This was a common response, and so where requested we have given some workers false names (marked with an asterisk), and in other cases used only their first names.
Not enough hours. Too many hours. Hours changed without notice. No idea whether there will be work tomorrow, or how many days or weeks or months the job will last. Low and fluctuating pay. Endless temporary contracts. No protection from the sack. No ability to negotiate. Little chance of joining a union. Increased risk of injury, but too scared to speak up about dangerous conditions.
In scholarly parlance, it’s called “non-standard work” — as distinct from standard work, in which a worker has annual leave, sick pay, bereavement and parental leave rights, predictable hours, protection from unjust dismissal, and reasonable expectations of training and progression.
Ten years ago British economist Guy Standing gave these workers a sharper, angrier name: “the precariat”, a new class created by decades of government policies designed to increase the flexibility of labour. New Zealand was at the global forefront of those policies with its extreme deregulation of the labour market in 1991, which caused trade union membership and collective wage bargaining to go off a cliff. The flexibility it delivered was all one way: flexibility to turn the workforce on and off like a tap; flexibility to deploy workers for long, unpredictable and unsociable hours without penalty pay.
The experiences of Ian, Penina, Asneil, Rebecca and Angus are not extreme or abnormal, as I found after speaking to two dozen workers for this article. Their stories match those of hundreds of thousands of New Zealand workers. And the organisations that benefit from their labour are not scoundrels engaged in modern slavery or human trafficking. They’re just doing what everyone else is doing — minimising costs, maximising profits, managing within tight budgets.
Many of the things you consume or touch today have been brought to you, at least in part, by the precariat: the kiwifruit on your cereal, the supermarket groceries in your fridge, the kitchen appliances from Briscoes, the kids’ Christmas presents from The Warehouse, the online shopping you ordered yesterday, the meal kit curated by My Food Bag and delivered to your doorstep. The teacher aide in your child’s classroom probably spent the last few months of 2021 in her annual season of anxiety about whether her fixed-term contract would be replaced with another this year.
Entire industries have thrived on the basis of just-in-time work arrangements that allow organisations to have it both ways — maintaining tight control of the work, while pushing more of the risks of their business on to workers. Nearly 40 per cent of New Zealand businesses employ from 11 to 50 per cent of their workers as temps, casuals, fixed-termers or contractors, according to a 2021 study by AUT researchers. Two out of five workers can have their hours changed at the whim of the boss. In the past five years, there’s been a 20 per cent increase in the number of people holding down two jobs. Over 190,000 people are in temporary contracts earning on average 20 per cent less than permanents.
Many of the things you consume or touch today have been brought to you, at least in part, by the precariat.
The trend towards precarious work is international, fuelled by the power of global supply chains, the trend to outsourcing, and a long-term decline in trade union strength. Insecure, unpredictable work arrangements are deepening the disadvantages faced by migrants, women, young people and minorities.
In New Zealand, the defences for those caught in the downdraught of precarity are weak. Labour law has been tweaked and softened since the radical deregulation of 1991, but even for workers in standard jobs our employment protections are the 11th weakest in the OECD. For temporary workers they are the fourth weakest. Only 10 per cent of private sector workers belong to a union, and New Zealand’s rate of collective bargaining — which lifts wages — is the eighth lowest in the OECD. New Zealanders work some of the longest hours in the developed world. The idea of the eight-hour day, 40-hour week is an historical artefact, with no meaningful reference in the statute books.
And yet we keep hearing it’s a sellers’ market for labour. “It’s a good time to be a worker in New Zealand,” reckon the top economists from our biggest bank, the ANZ. With unemployment down to 3.4 per cent, they see a shift in the balance of power between employers and employees. “Time for a raise,” they announced in November.
But there is no power for those employed under systems of work that, by design, provide no security and few prospects. While the employment rate is high, for many the quality of that work is low. Wages and salaries are failing to keep pace with the cost of living — most acutely for lower-paid workers, who have been getting far smaller raises than the highest paid for two decades. And there are signs the pandemic has fuelled the use of precarious jobs. From warehouses to construction sites to academia and the offices of government departments, insecurity is baked into our economy. Even as many people are working harder, a job is simply worth less than it used to be.
THE INVISIBLE LABYRINTH
OF LABOUR HIRE
It was a Sunday afternoon when Sione* got the text telling him not to go to work the next day. Sione came to New Zealand from Samoa with his wife and children four years ago. He had been doing regular 10-hour days at a Countdown distribution centre in South Auckland, “picking” cases of goods to be trucked out to supermarkets. He wasn’t technically employed by Countdown. The text came from an outfit called Coverstaff — one of the labour hire companies that the supermarket chain uses to supply up to a third of its distribution centre workforce.
Neither Coverstaff nor Countdown had any ongoing duty to Sione. Once he was on Coverstaff’s books, his contract stipulated that he would be offered “assignments” on a “casual as required basis”. He would be paid only when on assignment, working whatever hours the host company required, at whatever pay was dictated (in this case, just over the minimum wage).
“The assignment length may be varied, shortened or terminated without notice and/or reasons being given to the employee,” the Coverstaff contract stated. But if he chose to quit the assignment, Sione was obliged to give Coverstaff five days’ notice or have his wages deducted accordingly.
Sione knew the drill. He’d previously been a labour hire worker at a metal recycling company, and some of his kids had been sent by Coverstaff to work at Countdown and graduated up the pecking order to become permanent employees. Countdown has a collective agreement with First Union requiring it to offer labour hire workers permanent jobs after six months, and capping their numbers at 30 per cent of its distribution centre staff. (Its competitor, Foodstuffs, has a similar agreement.) Sione therefore assumed he would soon be joining the permanent payroll. Instead, five weeks before he hit the six-month mark, his “assignment” was over.
I heard versions of this story time and again. There was Annika*, who left school to help her family and enable her mother to drop one of her two jobs. As a 17-year-old she went to Coverstaff, which on-sold her to The Warehouse distribution centre, where she shifted stock at night for 10 months. When the first Covid lockdown hit there was no work and no pay for a week. Coverstaff then sent her to Countdown, where she did 10-hour days picking until midnight. Just short of her six-month anniversary, she was put off without notice. After the union took up her case she was put back on the job — but towards the end of her second six months, she was given the flick. The union intervened again and she ended up with a permanent job.
Penina, whom we met at the start of this story, signed up with another labour hire company, Agoge, after her assignment at The Warehouse ended. Agoge sent her to Countdown, where she spent months earning $18.90 an hour alongside permanents on $26.42. There were strict time targets for picking cases of goods, and the lure of permanent work if her performance was “100 per cent”. “You see everyone competing. They will always race to see who picks the orders fastest,” she says. She had a few days off sick without pay, and when she returned she declined a request to work extra hours. The next day she was told the job was over.
Penina desperately needed the income to support her younger siblings. She was angry and confused. “I felt very bad,” she told me. “I’d put in so much effort.” Eventually, she managed to get a permanent job. “The temps have no rights. They are really second-class citizens,” she says. “They just let you go like you’ve never been useful to them.”
And yet if you don’t have specialist skills — and especially if you’re brown — labour hire is the gateway to work. “It’s normal for us young people,” says Penina. “If we are going to look for a job, the only option is to go to an agency . . . Agencies hire a lot of Pasifika people, Maori people. It’s creating a division.”
In the past five years, there’s been a 20 per cent increase in the number of people holding down two jobs.
All around the world, the labour hire industry is “reshaping every aspect of the labour market”, says Jason Ward, an analyst at the Centre for International Corporate Tax Accountability and Research (CICTAR) in Australia.
According to an Australian Senate select committee inquiry on insecure work, 400 million people globally work on labour hire contracts every day. Estimates for New Zealand range widely. When faced with the prospect of new regulations, the industry here has insisted that it is a mere 0.66 per cent of the workforce. But a 2019 report for WorkSafe by consultancy MartinJenkins shows massive growth in the last two decades. The number of labour hire firms more than doubled to almost 600 during the 2000s. The number of workers employed by these firms for at least one month a year trebled between 2000 and 2018 to reach 115,000. The consultants described labour hire as a “particularly vulnerable form of precarious employment”, with workers often unwilling to speak up about problems because of “well founded” fears of losing future work and a lack of awareness of their rights. Problems are compounded for migrant workers where language is a barrier.
In 2019, the world’s 10 largest labour hire firms generated US$224 billion in revenue. Most of these companies are entrenched in New Zealand, including Randstad (US$22 billion), Manpower (US$20 billion) and Hays (US$7.8 billion). “These multinationals are profiting from fundamental shifts to more temporary and casual work, where the responsibility for wages and working conditions is subcontracted and pushed further down the supply chain,” Ward wrote in a submission to the Australian Senate.
Countdown and Foodstuffs claim that labour hire allows them to manage seasonal and high-volume peaks. (Other major users of labour hire, including Briscoes, Fisher & Paykel and The Warehouse, didn’t respond to questions.) And the labour hire industry itself says it enables businesses to “flex” up quickly and navigate complex industrial relations rules. Brooke Lord of the RCSA, the lobby group for the labour hire and recruitment industry in Australasia, says the sector has been invaluable during Covid in quickly mobilising businesses out of lockdowns. She calls it the “connective tissue” in a time of huge demand for skills that are in short supply because of closed borders.
Such claims are self-serving puffery when set against the reality of labour hire work in New Zealand’s deregulated labour market. I spoke to workers who had been on-sold to companies like Tip Top Bakery, Briscoes and the supermarkets for months at a time, doing regular rostered hours, all the while living with the risk that they could be dumped without notice.
As for that “connective tissue” that Lord speaks of, consider the Auckland worker who signed up with Skout Solutions (half-owned by Randstad, half by Australian infrastructure company Ventia, a major contractor to Auckland Council). His 11-page contract was brazenly one-sided. Shifts could be cancelled at one hour’s notice; an assignment could end any time; he would be deployed “as and when required”. He was also barred from taking up a job directly with a Skout client for at least 12 months after an assignment without first notifying Skout. And the job? Collecting rubbish and cleaning in Auckland city parks for $20 an hour.
So what’s really going on here? Why are employers paying a profit margin to third parties for workers they could just hire directly? How can workers be reduced to mere “saleable chattels”, as the Employment Court was told in one prominent case?
Businesses that use labour hire, the Employment Court has observed, are “not troubled by the usual responsibilities and liabilities associated with an employment relationship”. All the bother of recruitment, termination and payroll is outsourced. The model also enables employers to keep workers on indefinite trial and sidestep normal dismissal laws, says Jared Abbott, until recently a leader of First Union, who has driven efforts to organise and represent labour hire workers.
All it takes is one call back to the labour hire office for an underperformer to be culled and a new worker dispatched. In court documents, one labour hire employer referred to workers as “live product”.
Back in the 2000s, Abbott worked as a temp. He and others would assemble in a yard in the mornings. If his name was called out he’d climb into a van and get dropped off at whichever site needed some extra muscle for a few hours or days. “It was genuinely temporary work,” he says. But over the past decade he has come across workers stuck in precarious labour hire jobs at the same company for 10 years or more. Labour hire is “imprinted” into the economy, he says, with the construction, transport, logistics and manufacturing sectors the biggest users.
A labour hire contingent also reduces a company’s exposure to industrial action (albeit a rare event these days). Agency workers on individual contracts are barred from joining permanent workers striking for a better collective agreement.
Penina, Annika and Sione are unusual in that they had the benefit of union intervention when they were dumped. Most don’t. It is exceptionally difficult for labour hire workers to organise because their contracts give them so few protections. In the sites where First has been able to organise, it signs up workers as confidential members and doesn’t charge union dues. It has raised hundreds of personal grievances cases, usually arguing that workers were in effect permanent and therefore entitled to proper notice and protection from unjust dismissal. Cases almost always settle well before reaching the courthouse steps. It’s difficult, costly work that doesn’t fundamentally budge the system of employment that keeps these workers insecure.
Four years ago, the Employment Court dealt the labour hire industry what seemed like a major blow. Two migrant workers were on-sold by a labour hire firm to airline catering company LSG. Both spent years on the LSG roster for up to 63 hours a week on the minimum wage or just above. The court concluded that the workers were effectively LSG’s employees, and therefore entitled to the full range of employment rights and protections.
The decision was hailed as a landmark — yet it doesn’t appear to have made a dent in the system. Nor has a 2019 law change allowing labour hire workers to bring personal grievance claims against their host employer.
Labour hire has even pervaded what used to be the very definition of a stable job: the public service. The Ministry of Social Development, Internal Affairs and Ministry of Business, Innovation and Employment (MBIE) all use agencies for tasks like security and customer service.
The most far-reaching incursion has been at Inland Revenue, which has used more than 1200 Madison labour hire workers since 2018, at the same time as it was making deep cuts to its permanent workforce. Inland Revenue says these “contingent workers” were necessary to support “additional work activities”. In fact they were employed for periods of up to 15 months — not brief stints of high demand — performed essential functions, and were liable to be dismissed without notice and promptly replaced if they weren’t up to scratch. Inland Revenue paid Madison $29.25 an hour for workers who received a maximum of $22.50.
Rebecca Langford, the Madisonian mentioned earlier, was one of eight claimants who went to the Employment Court in 2020, arguing their employer was really Inland Revenue. They lost, emphatically. After the Court of Appeal declined to hear the case, the Public Service Association sought leave to appeal to the Supreme Court.
THE MYTH OF THE ‘SELF- EMPLOYED’ CONTRACTOR
Mea‘ole Keil is his own boss. The outgoing 64-year-old, whose accomplishments include a microbiology degree from Massey University, is free to manage his costs and his time, to bring his own entrepreneurial flair to his business. That’s the theory, anyway.
Keil shows me the reality on his smart phone. The screen displays his earnings from a relatively lucrative week as a driver for Uber: Monday, $60 for five hours of work; Tuesday, $126 for six hours; Wednesday, $203 for eight-and-a-half hours; Thursday, $286 for 12 hours. And so on. It comes to $1500 for a 54-hour week.
Not bad money, but “all that glitters is not gold”, Keil explains ruefully. Those earnings were puffed up by random ‘promotions’ — $6 here, $15 there — paid entirely at Uber’s discretion. Take out the promotions, plus costs like insurance, fuel, maintenance and the loan on his car, and he’s earning less than the minimum wage. Barely enough to live on, let alone reinvest in his ‘business’.
His situation is hardly unusual. According to a 2020 MBIE review, 56 per cent of drivers on rideshare platforms (of which Uber is dominant in New Zealand, with 7700 drivers) don’t make enough to meet their everyday needs. Nor is the problem confined to ridesharing platforms. A survey by First Union found that over half of gig workers earned less than the minimum wage after expenses. Two out of five would struggle to pay a sudden $500 bill.
Uber calls its drivers “partners”. But it’s a partnership in which one side has no negotiating rights. Uber controls how many drivers it allows on the platform, effectively allowing it to push down earnings by increasing the supply of drivers. Most drivers don’t know the destination of a ride until they have accepted it, and if they cancel rides too often (for instance, because they are too short to be economical) they can be deactivated. And even though drivers pay a 28 per cent service fee to the US$71 billion global behemoth, they have trouble getting their “partners” to answer the phone to sort out problems.
Every aspect of their working life is dictated by the Uber app and the all-powerful star rating system. If a client gives a bad review — which might be because they are stressed, or drunk, or running late — “there goes your rating”, says driver Bill Rama. “Anyone can say anything they want, and it may not be true.”
Keil, for instance, has a star rating of 4.95 out of a possible 5 and coveted Diamond status. This gave him no protection one October morning in 2021 when, after several perfectly pleasant rides with agreeable customers, he was blocked from the app without explanation. Uber doesn’t even tell drivers which ride generated a complaint; Keil speculates that his came from a vaccine-hesitant woman whom he urged to get immunised. “You sometimes feel like you are sitting at a pokie machine, with bonus points and bans,” he says of the rating system.
Keil is one of seven drivers listed in a lawsuit filed by E tu and First unions seeking a declaration from the Employment Court that drivers are Uber employees. If the claim is successful, drivers will be entitled to the minimum wage, annual and sick leave, protection from unjust dismissal, and the right to unionise. Such cases are decided on their particular facts, but any ruling could have implications for other gig platforms, including Uber’s smaller competitors, Ola and Zoomy.
In court documents, one labour hire employer referred to workers as “live product”.
The litigation, to be heard in June, will add to a surge of cases taken by drivers around the world fighting the insecurity of gig work. (The most significant resulted in a 2021 ruling by the UK Supreme Court, which found that Uber drivers were “workers”, an intermediate legal classification between employee and contractor that doesn’t exist in New Zealand law.)
Keil’s ban was lifted the following day, but for him the lawsuit is a matter of principle. He likes the flexibility to work the hours that suit his family. That doesn’t mean drivers should have to put up with “crap wages”, he says. “If we don’t make a stand now, it will get worse.”
There are thousands of workers in New Zealand toiling in what MBIE has described as a “grey zone”. They’re ostensibly running their own businesses — but dependent on a single company for income, with no control over their work. They’re workers — but without the legal protections afforded to employees or the power to negotiate a better deal.
MBIE’s 2020 survey captured the experiences of 1200 contractors, including courier drivers, cleaners, builders, telecom installers, forestry and farm workers, and educators. Fifty-nine per cent didn’t make enough money, or made only just enough, to meet their everyday needs, and 55 per cent couldn’t negotiate their contract terms. Some said they’d been “sold a dream”, trapped in an unviable business and unable to get out. Many were migrants, with English as their second language.
Every so often, one of these workers steps out of the grey zone to mount a court challenge against the company that benefits from their labour while hiding from its employment obligations.
Mika Leota was a courier driver for Parcel Express, required to wear its uniform, have its insignia all over his van, lease its scanner, deliver parcels where they told him to, and pay for the insurance it told him to buy. Chief Employment Court Judge Christina Inglis had no difficulty dismissing the company’s claim that Leota was “his own boss”. She ruled that he was entitled to everything that goes with employee status.
Asneil Kumar, whom we met at the start of this story, was one of 15 courier drivers prepared to take NZ Post to court to claim employee status so that they could bargain collectively for a better deal. Over time the number of complainants dwindled until he was the only one left. And then NZ Post offered him a confidential settlement that was reportedly “incredibly hard” for him to turn down, and the case collapsed. He nevertheless takes some moral satisfaction from the battle. After the litigation was filed NZ Post increased its rates and made other improvements: “I did make some changes for my brothers there,” Kumar says.
By the time he settled, another fight was breaking out between self-employed drivers and United Arab Emirates-based courier company Aramex. The Aramex drivers said they’d invested $30,000 in a franchise billed as a “great entry level business opportunity”, but ended up bringing in an average of just $12.78 an hour after costs. They worked relentless 10-to-13-hour days, with penalties for missing delivery targets and no time for proper breaks. Aramex rejects all this, but has started topping up drivers’ incomes by $600 a week.
Despite these one-off skirmishes, more than 80 per cent of courier drivers work over 45 hours a week but don’t earn enough, or barely enough, to make ends meet, the MBIE survey found. Eighty-seven per cent are told what hours and days to work; 79 per cent are barred from turning down work; 63 per cent are not permitted to work for another courier company.
A similar situation exists in the building industry. In 2021, the Employment Court upheld the claim of Auckland builder Ross Barry, ruling that his sole client of three years, CI Builders, had used the self-employment label to avoid its liabilities.
But the contractor model remains standard practice. Auckland builder Paul* says construction workers don’t have a choice: “If they want work, they sign up as contractors.” He works for a large housebuilding company that employs virtually no one apart from administrators and managers. All the carpenters, project managers and hammer-hands who work alongside him are either contractors or labour hire workers. He wears the company’s branded shirt, has a company email address, and works fixed hours. The company even generates his invoices for him. It’s been much the same at every building company he’s worked for.
Theoretically, the hourly rate for contract workers carries a margin for the extra costs that go with self-employment, such as public liability insurance, ACC, tools, time off for illness and injury, unpaid holidays and the risk that their ‘client’ will go bust before they get paid. But Paul says few builders have the knowledge to work out what that margin should be — let alone the bargaining skills to negotiate it.
Building contractors are often exposed to myriad costs beyond their control. If another worker breaks their tools, the cost is on them; if they accidentally drop a hammer and break a window, they pay for the damage. If another worker doesn’t have the right equipment, Paul often lends his — effectively subsidising the company. On the other hand, his contract bars him from dealing with any of the company’s clients or suppliers (including other contractors like him), which puts the kibosh on developing his so-called ‘business’. “It’s a farce,” he says.
In 2019, a BRANZ study pointed to a disturbing link between the contractor model and the sector’s appalling suicide rate. The building research organisation’s report was triggered by a 2016 revelation from the Suicide Mortality Review Committee that 7 per cent of working-age male suicides were in the building industry (and a 2021 study concluded construction workers were twice as likely to die by suicide than the rest of the workforce). The BRANZ study found that job insecurity and work-related stress stood out as factors in coronial reports — particularly for self-employed contractors and business owners.
FISSURED AND FATIGUED
The decades-long drive by companies and organisations to cut costs, increase profit and defray risk has created what American labour economist David Weil calls a “fissured” workplace. Functions like cleaning, security and maintenance, once done inhouse, are now routinely carved off and outsourced to external contractors, who in turn might subcontract to a smaller company. Each party in this fractured system has to extract a profit, and “the further down one goes, the slimmer are the remaining profit margins”, writes Weil, who led the Wage and Hour Division of the US Department of Labor under President Obama. One international study shows pay rates in outsourced jobs have fallen by 10 to 15 per cent since the 1990s, relative to similar jobs that are not outsourced.
Malia works in the fissures of New Zealand’s economy. Until recently, the 40-year-old mother of five held down two jobs for multinational cleaning companies, one at Kenepuru Hospital in Porirua and the other at a government building in downtown Wellington. (She asked me not to name the companies.)
She would be up at 3.30 in the morning to drive from her home in Naenae to Porirua for a shift that started at 5am and finished at 1.30pm, five days a week and sometimes six. Then she would drive home, sleep a little, and drive into Wellington to work from 6 until 10 at night. That meant a total of 12 hours a day buffing floors, cleaning and vacuuming carpets, scrubbing toilets, water blasting and clearing away rubbish. She’d get to bed at midnight — then wake up at 3.30am to do it all again.
For a time Malia was doing 170-hour fortnights, including 16-hour shifts when asked. “In the cleaning industry, when they are desperate, they don’t care about your health,” she says. “If you say ‘no’, you know what will happen — they just won’t give you any extra hours.” Regularly surviving on about four hours’ sleep, she would sometimes feel herself nodding off at the wheel. Once she went off the road.
When contracts are re-tendered and the job goes to another firm, workers find themselves at risk. “The companies undercut each other,” Malia says. Because of a provision in the Employment Relations Act protecting vulnerable workers like cleaners and security staff, they can’t cut wages. Instead, she explains: “They cut the number of workers so the workload increases, or they cut the number of hours to do the same job.”
Until last April, Malia was supporting her children and husband on her $18.90 an hour earnings. She got a lift when the minimum wage went to $20, and in June she got another boost as a result of government policy requiring contractors in the core public sector to increase rates to the living wage of $22.75. The hospital job paid a little more, at $22.98.
And things could be worse: Malia is among the small minority of New Zealand workers — about 17 per cent — covered by a union-negotiated collective employment agreement, which has likely given her better pay than otherwise.
But she’s noticed that rising food prices are eating through most of her hard-won gains. “The meat price has gone right up,” she observes. “One tray of chops, three or four in the tray — it’s over $20. You put four things in your trolley and it’s already over $100.” She’s not wrong: over the past 10 years basic household costs have risen 36 per cent faster for low-paid workers than for the highly paid.
Malia is determined to hold back her high-school-aged children from getting part-time jobs to help out. She wants them focused on their schooling so that they get “better qualifications and a better job”.
Late last year, exhausted and unwell, she decided to drop the morning job. It had no security in any case — the employer had kept her as a casual even though she’d worked there every day for two years. She picked up more hours cleaning in the city, from 5.30 at night until at least 3.30 in the morning. There is no extra pay for working through the night. But it’s a Monday-to- Friday job, with no work on public holidays. That meant in 2021, for the first time in 10 years, she didn’t have to work on Labour Day, our annual commemoration of the eight-hour work day. She spent it with her family.
THE HIGH COST OF BAD JOBS
Still, surely a bad job is better than no job. The pay might be rubbish, but it’s a pathway to something better, right?
Wrong. There’s plenty of evidence to show that bad jobs are just that — dead ends, not stepping stones. A report on insecure work by the Council of Trade Unions cited international and local research showing that extended periods of precarious work can close doors to better jobs and severely limit future choices. “If jobs are not of decent quality, workers can be trapped in a downward cycle of low-paid, poor quality work that embeds social and economic disadvantage.”
The 2013 report estimated that 30 per cent of the New Zealand workforce was insecure, including 190,000 on temporary contracts, over 280,000 at risk of losing their jobs in the next year, and the 160,000 who were unemployed at the time. That estimate didn’t include contractors dependent on a single company, such as courier drivers.
But that was then, in the long shadow of the Global Financial Crisis, when unemployment was at 5.8 per cent. And this is now, in the weird Covid economy of traffic lights, closed borders, peppy GDP, and the lowest unemployment in 14 years. Industries that gorged for years on the uncapped pre-Covid flow of foreign guest workers have struggled without their help.
But the systems of insecure work remain deeply entrenched. The number of workers on labour hire and fixed-term contracts is up by almost a quarter since just before the pandemic, according to Statistics New Zealand data. And for the 93,000 part-time workers who want more hours, “full employment” has yet to materialise.
Forty-two per cent in this red-hot labour market didn’t get a pay rise in the year to September 2021. Twenty-eight per cent got a raise that was at or less than the rate of inflation. Only 18 per cent got enough to stay ahead of the rising cost of living.
In fact, the share of the economy’s earnings that trickles down to workers’ wages has been shrinking for decades. Recent research by economists Geoff Bertram and Bill Rosenberg shows a sharp fall in workers’ share of New Zealand’s national income was triggered by the 1991 labour market deregulation, followed by a “long process of wage suppression that was still continuing as of 2019”. At the same time, company profits have increased far beyond a reasonable rate of return on investment. Bertram and Rosenberg calculate that these surplus profits — “rents” — extracted by business amounted to $50–$60 billion in 2019, equivalent to around $20,000 per employee.
Those of us with disposable incomes benefit from a disposable workforce. Our just-in-time lifestyles of high-end meal kits, cheap rides and eats, open-all-hours supermarkets and overnight deliveries rely on an invisible army of workers at the beck and call of benignly named labour hire outfits, faux “clients” and secondary contractors.
This year, several significant developments will determine whether thousands of bad jobs can be turned into better jobs.
The first is the one-off pathway to residency for 165,000 migrants on work visas. Announced last September, it will turn that large pool of supplicant labour into workers with choices and rights. Over the last two decades, governments of all stripes have opened the tap wider to foreign temporary workers, holding out the tantalising possibility of permanent residency while throttling back access to that prize. On the eve of the pandemic, more than 300,000 people were on work and student visas; temporary migrants made up a quarter of the workforce in hospitality and 20 per cent in the primary sector. It’s a system rife with exploitation and stress as workers are dependent on employers for their immigration status and future prospects. Under the “blank slate” scheme, those who have been here for three years and meet an income threshold are eligible to apply for residency — enabling those who are under-paid, overworked or denied basic rights to leave their employer.
Second, a government-appointed working group has completed the first part of a major investigation into the position of vulnerable contractors. Their deliberations are not yet public. But the group, which includes union, employer and government members, has acknowledged that the Employment Relations Act needs to define more clearly what it means to be an employee and what it means to be genuinely in business as a contractor. More clarity in the legislation would also enable the courts to make precedent-setting rulings that could end the ruse for whole industry groups. In addition, expect to see recommendations for tougher enforcement of the law by labour inspectors.
Third, and most controversially, is the planned introduction of Fair Pay Agreements, a longstanding Labour manifesto promise. A bill is due to be tabled in Parliament in early 2022 that would allow pay and conditions to be negotiated by unions and employer groups for entire sectors. It has similarities to the old national award system, in which employer groups and unions negotiated industry- or occupation-wide wages and conditions until it was wiped out 30 years ago.
For a time Malia was doing 170-hour fortnights, including 16-hour shifts when asked. “In the cleaning industry, when they are desperate, they don’t care about your health,” she says.
The theory is that companies bidding for contracts or fighting for market share won’t be able to win an advantage by driving workers’ pay lower than that of their competitors. If there is a fair pay agreement set for the supermarket industry, for instance, it will cover all workers in that sector — including those employed via labour hire outfits.
Unions will be able to trigger fair pay bargaining if they represent 10 per cent or 1000 workers in the sector or occupation group, or if they meet a public interest test by showing evidence of low pay, lack of bargaining power, or hours and uncertainty that isn’t adequately compensated. Agreements must include base wages, as well as other forms of compensation unknown to most in today’s labour market — such as penal rates for unsociable hours and overtime pay. Workers will be barred from striking for fair pay agreements, while employers who dodge an agreement by mislabelling their workers as contractors will be hit with a penalty. If a deal can’t be reached through bargaining, the dispute can be referred to the Employment Relations Authority to fix the terms.
The Council of Trade Unions expects the first groups to line up for agreements will be bus drivers, cleaners, supermarket and security workers, forestry, hospitality and care workers.
Workplace Relations and Safety Minister Michael Wood says the reforms will force companies to compete on innovation, service and branding, not by suppressing wages and conditions. Our current employment regime has exhibited a “degree of market failure”, he told me.
In many sectors, “employers speak quite legitimately about their inability to get the labour that they need”, he says. In a “functioning market”, workers in those occupations would be able to command higher pay. But despite years of strong growth, that isn’t happening. “What we have had in New Zealand for 30 years has been a largely individualised system of bargaining within the labour market, which fundamentally tips the balance and means that a lot of the power in that relationship sits with the employer.”
The Fair Pay Agreements will be the most far-reaching workplace reform since 1991, and it won’t happen without a titanic battle. Labour market flexibility sits at the heart of how the economy has been run for three decades, and most employers haven’t had to think about unions or collective bargaining or an equitable share of the spoils of enterprise for a very long time. The prospect of being compelled by a deal negotiated by strangers in a distant meeting room is anathema to most.
Business New Zealand, which represents 70,000 firms, fired the first shots before Christmas, announcing it would boycott the system by refusing to act as the default bargaining agent for employers in fair pay negotiations. It has also filed a complaint with the International Labour Organisation asking for a cease and desist order against the government. It argues that the proposal breaks international labour law, is plagued with problems and will return New Zealand to the “failed” national award system of the past.
Wood promises that submitters will be heard as the bill goes through the select committee process, and adjustments will be made to ensure it is practical. But he is determined to move away from a deregulated model that he blames for “significant inequality”. “I’m not prepared to continue seeing the same results in our labour markets for low income and low-bargaining power workers as we have for the last 30 years.”
And so the forces of capital and labour will slug it out through this coming season of discontent. If past battles over employment reforms are any guide, there will be hyperbole and rhetoric and talk of catastrophe; the costs and benefits will be exaggerated by the protagonists, and there will be considerably more heat than light.
In the meantime, the precariat will work where and when required, on the terms dictated. Shops will be stocked by workers in green and orange vests, fruit will be harvested, meals will be served, online orders will be promptly delivered, and toilets and floors will be scrubbed clean in the middle of the night.
Rebecca Macfie is a contributing writer to North & South.
This story appeared in the February 2022 issue of North & South.