By Pete Lusk

It is a long time since New Zealand workers had a rise in real wages. For the last twenty years, wage settlements have lagged behind the rate of inflation. It is only very recently - with the advent of a friendlier government and a stronger economy - that rises in my union (three percent) have crept above the official inflation rate (2.5 percent).

By Pete Lusk

It is a long time since New Zealand workers had a rise in real wages. For the last twenty years, wage settlements have lagged behind the rate of inflation. It is only very recently - with the advent of a friendlier government and a stronger economy - that rises in my union (three percent) have crept above the official inflation rate (2.5 percent).

From the end of World War II to the mid-1970s, New Zealand experienced a long economic boom. It was a period when workers here had one of the highest standards of living in the world. Unemployment was virtually nil. Anyone without a job was quickly found one in a government department. The unions were strong, and workers were protected by a system of National Awards - state-recognised labour contracts covering whole industries.

But all this began to change in the late 1970s, as ‘oil shocks’ heralded a weakening global economy. Among the government’s responses was a wage and price freeze. Wages were certainly frozen - the employers saw to that. But prices crept up regardless, eating into workers’ living standards.

From 1984 to 1999, neo-liberalism devastated NZ. New labour laws restricted the right to strike, and took away the privileges of state workers. Government departments like Railways and the Post Office sacked tens of thousands before being sold off to the private sector. Workers’ pickets were smashed by a new breed of riot cops.

The crowning glory of the ‘reform’ years (for the employers) was the Employment Contracts Act. It destroyed the National Awards and forced a large section of the workforce off collective contracts negotiated through trade unions onto individual contracts. It provided a legal avenue for employers to remove such things as overtime rates from contracts.

All this had a huge impact on wages. For many workers, pay rates fell dramatically. For others, the rates might have remained the same but they were expected to do the work two or three people had done before.

To portray the New Zealand situation, below are three examples - a foreign-owned cement plant, a small-town newspaper, and a family working part-time whose main income is their welfare payment.
Milburn Cement, Westport

On many large industrial sites, workers have managed to maintain reasonable wages. Cement workers at Westport average about $55,000 (US$23,842 - all currency is in US$; US1 = NZ$0.43) per year in a region where the median income is $13,500. At the present time, there is a huge demand for cement, and the workers know the company is making a lot of money. So they keep up the pressure on the boss.

Milburn is owned by Swiss-based Holderbank, the largest cement maker in the world. Over the last 20 years they have introduced a lot of new technology to the plant, so it produces much more cement with the same labour force of around 120. Milburn also uses global consultancy firms in an effort to boost productivity.

A few years ago, Peter Chadwick’s of London introduced the Maintenance and Cement (MAC) scheme to the works. This involved timing each worker’s job, then encouraging them to do two hours’ work in one-and-a-half hours. Union delegates were flown to a USA cement plant to see the MAC scheme in operation. The union subsequently endorsed it. Union militants often get jobs in management. One of the leaders of a big strike at Milburn now manages a Holderbank plant in Vietnam.1

The MAC is a Human Resource Management (HRM) device. It was sold to the workers under the slogan of “Win/Win”. Management said, “We get more production from you, you get more money for the same hours.” But like all HRM schemes there is a hidden agenda - the company got more production but the workers got coerced into salarisation, lost their overtime rates, etc.

Another sleazy device the bosses are using is to employ family and friends of managers. In the three months to April 2002, four new staff fit into this category. These people undermine what little solidarity there is among workers at Milburn and act as spies for management. It also means kids from working class families have virtually no hope of getting a job at the works.

Most cement workers are now on salary rather than wages, though their status remains that of workers. Once ‘salarised’, a worker gets no extra money for doing overtime. It is quite a complicated story. I have a friend at the Milburn works and before ‘salarisation’ came in, he did heaps of overtime. He did not want to be salarised, but as the other workers gradually succumbed, he had to go along with it. But he used his previous years’ income - inflated as it was by overtime - to get a good salary.

His salary (and contract) allows for payment for 3.5 hours extra per week which is paid, but not always worked. When it is not worked, it accumulates, so after 10 weeks say, it totals 35 hours. The boss may then call him in at the weekend for two shifts (12 hours + 12 hours) to do any work that has built up.

It also slots in with the MAC scheme, where the boss deliberately sets a two hour (say) time period for him to do a three hour job. So when he takes three hours to do it, he must work the extra hour for no pay. Each section of the workforce has a Backlog Book that lists jobs that need to be done. In an old plant like Westport there is unlimited scope for extra jobs. For example, just cleaning accumulated cement dust out of guttering provides a few years work. So workers can be brought in at weekends to work off the ‘extra time’, doing the jobs in the Backlog Book.

20 - 30 years ago, many companies had to offer such things as company housing, free transport to work, subsidised cafeteria, and superannuation schemes to keep a stable workforce.

Even though the union at Milburn is pretty weak, workers still have some housing, transport to work, and a cafe. Last year, the superannuation scheme was watered down from a 2:1 employer contribution to 1.5:1. The scheme had been making good money (apparently mainly from shares in Coca Cola!) so the company decided to rip off $10 million from the fund despite it legally being the workers’ property. They did this by offering a cash bribe to workers and telling them there was no point suing the company, because this had been tried overseas and the workers lost. So gradually everyone signed up! But my friend at the works says a lawyer advised them to take Milburn to the Serious Fraud Office for what it did. Of course this costs money, and the workers, though well paid, tend to spend everything they get. Also, there would not be the unity amongst the workers to do it.

Yesterday another worker with over 20 years service was fired; the reason - he did not meet Milburn’s productivity standards. He was offered a choice – resign, have a clean employment record and get full superannuation, or be fired, have a flawed record and lose the bosses contribution to super. This shows what a powerful weapon the superannuation scheme is in the hands of the boss, and illustrates the danger for workers who sign up to HRM productivity ‘partnerships’ with the boss.

When working at a household electrical goods factory, about a dozen of us were sacked at the end of the clothes drier season i.e. spring. The boss invited a couple of union delegates to a little ceremony. The delegates told us how much we were missed, how “tears were cried for us”, but we all had flaws like poor attendance, and the process of working out who got fired and who stayed was “fair”. The boss told us what great workers we were, (we had all lasted the eight month season and been on the line when we passed the company record tally for driers assembled in one day), but unfortunately we had not met the company’s five ‘criteria’.

As the main criterion is productivity, I guess most of us lost our jobs for this reason. It rankled with me at the time, because all on that line were such good workers - the problem was, we were not the ultimate workers!! 20 years ago there were four cement plants in NZ, now there are two. Imports are a big threat to workers’ job security.

The West Coast Messenger

This is easy for me to write about, because it is the story of my own job. Before the reforms, even a small newspaper owner would be bound by the National Awards to employ both a reporter and a photographer – union negotiated demarcations meant one could not do the job of the other. Each would receive a rate of pay specified in the Journalists Award, and each would be legally defined as an employee.

The neo-liberal reforms removed most of these protections, casualising jobs and often turning employees into self-employed contractors doing reportage as well as photography.

I started my job at The Messenger as an employee. I was paid 10 cents per word for copy,2 but was expected to provide photographs for no pay at all, using my own camera. I was promised a company camera, but it never arrived. I had no written contract - the only thing I ever received in writing was my weekly pay slip, which was headed “Wages Schedule”. It showed my gross income and the tax and other deductions made by the employer. I worked from home in Westport, and E-mailed copy to The Messenger office in Greymouth, 100 kilometres away.

After about a year in the job, The Messenger was sold to a larger newspaper company. The first thing the new employer did was change my pay period from weekly to fortnightly. Then the title of my payslip was changed from “Wages Schedule” to “Commission Sheet”. I did not see this as significant at the time. One positive result of the change of ownership, was that they provided me with a camera when my old one broke down.

A few weeks after I got the camera, the advertising manager asked me to take eight photos of tractors for an advert. This was outside my normal area of work, so I said I would take the photos, but must be paid extra. The manager agreed. I also insisted the company give me written confirmation that I would get the extra money, because I knew from experience that the new owner was a poor payer.

I went out and photographed the tractors, and as the deadline approached, the advertising manager asked me to send him the photos. I said I was happy to do this as soon as I received written confirmation I would be paid for them. “Fair enough,” he replied.
But within an hour, the company manager was on the phone, “Send the photos, Peter”.

I explained the agreement I had with the advertising manager, and again stated I would be only too happy to provide the photos when my letter of confirmation arrived.

“Send the photos,” he demanded.

“Not until I get the letter.”

Then he said: “Someone will be around to pick up your camera.” I replied that I would need the camera to do my regular reporting work.

“You won’t need it any longer”.

“Does this mean I’m fired,” I asked.

“You won’t be fired because you are not an employee.”

This had me stumped, so I phoned my union official. He asked what was on the top of my payslip. I told him: “Commission Sheet”.

“Then you’re an independent contractor,” said my official. “And this is how your boss gets rid of you so easily.”

I was shocked to hear this, always assuming I was an employee with full legal labour protection. The new owner had changed my status from employee to contractor without telling me! I had the worst of all worlds - an independent contractor without a contract.

What has this got to do with wages? It shows how a boss can change employment status without workers even being aware of it. Then, when workers ask for a pay rise (or in my case, payment for photos) they can be fired with no questions asked!

I eventually took my employer to the state Labour Authority and received a ‘settlement’. I cannot tell you how much, or even if the settlement was money, because I signed a confidentiality clause. I managed to get free legal help (my union refused to represent me) and I had enough money to pay the Authority’s fee.

Most workers would have no prospect of doing what I did.

Part-time workers dependent on welfare

Unemployment in New Zealand is officially five percent. The actual rate is more like 10 to 15 percent because part-time workers are not counted in the statistics.

Most are low paid and their income is topped-up with the unemployment benefit (dole). This situation is called the Poverty Trap, because most of what they earn is deducted from their dole. It works like this:

Bill and Mary are unemployed. They receive a weekly dole of $280. Then Mary gets eight hours work as a cleaner, bringing in $80 per week. Because an unemployed couple can legally earn an extra $80, their dole is not cut.

Then Bill gets work. It is part-time work with variable hours. Some weeks he makes $60, other weeks $100, even $150. At the end of each week he must phone the Department of Work and Income to declare his earnings. They reduce the next week’s dole payment at the rate of 70 cents for every dollar Bill earned. Because Bill’s boss has already taken tax off his earnings at 20 cents in the dollar, he only gets to keep 10 percent of his pay.

If either Bill or Mary gets more part-time work, their dole will be further reduced. So more work gets them nowhere. Unless they can get well-paid full-time work they will remain on low income forever. Tens of thousands of NZ workers are in this trap. It is common amongst young people without work experience and those over the age of 45.

Pete Lusk is a labour and green activist in Westport, New Zealand

1 Managers have used this policy for many years, effectively promoting what they see as trouble-makers out of rank and file unions. Surprisingly many labour activists take what is essentially the bosses’ bribe to become managers themselves.

2 A journalist’s article for publication

Source: ALU Issue No. 42, January - March 2002