Battle for a living wage: A Kiwi bloke can survive on $19 an hour ... yeah right

By Kate Shuttleworth, Lincoln Tan, Simon Collins

Unions will unveil a calculation this week that Kiwis need a "living wage" of around $18 to $20 an hour. Today, reporters Simon Collins, Lincoln Tan and Kate Shuttleworth investigate who earns below that level.

Actor Grae Burton, depends on contract work rather than regular wages, especially since the "Hobbit law" defined actors as independent contractors. Photo  / Greg Bowker
Actor Grae Burton, depends on contract work rather than regular wages, especially since the "Hobbit law" defined actors as independent contractors. Photo / Greg Bowker

Actor Grae Burton was the classic "Kiwi bloke" in Tui beer commercials last year. His work only just earned him what unions consider a "living wage".

"When I was first in Hercules and Young Hercules back in 1998, my daily rate was 50 per cent better than what I'm currently seeing," he says.

He says actors on a comparable show now being filmed in Auckland, Spartacus, are being asked to do much more for less.

"Actors on any given show day are being asked to do full-frontal nudity, simulated sex and graphically violent, hugely physical roles, and are being paid a comparably lower daily rate," he says.

Yet living costs have gone up.

"Ten years ago I could live on $150 to $160 a week. My living costs break down to more like $500 a week now."

Burton, 35, is one of a growing number of New Zealanders who are no longer paid hourly wages but have to charge for their services as "independent contractors".

"Like most actors, I work several other jobs around trying to be available for screen and acting work," he says.

Last year his total income from all work was $40,000. Assuming, unrealistically, an average 40-hour week, that would be $19.23 an hour - approximately what the union movement estimates to be the cost of a decent living in New Zealand.

A living wage

Unions have been driven to seek a "living wage" because their old methods of negotiating wages no longer work.

"Very often the person with power in the employment relationship is actually not the employer, it's someone at arm's length from the employer," says campaign co-ordinator Annie Newman.

"It could be a labour hire company. It could be a contracting company. It could be the shareholders.

"So we have had to think: how do we go about applying pressure to decision-makers when we don't have a statutory mechanism which will do that for us? We have to see how we can enter into a conversation with significant decision-makers."

The campaign aims to engage the "ultimate employers" in three ways, starting with their moral sense of right and wrong.

"Those who have decided that they want to be an ethical employer will come behind a living wage," Ms Newman says.

Second, public bodies such as councils and universities will be asked to consider how they spend public money.

And third, the campaign quotes a study from Britain, where the Greater London Authority adopted a living wage in 2005, which found that some employers saved money through reduced labour turnover and sickness.

The study actually found that labour turnover fell by an average of 25 per cent across seven contractors, but the financial gains from this were "relatively minor" compared with an average 26 per cent jump in pay rates.

It found that the contractors managed total cost increases down to an average of 11 per cent by cutting workers' hours, and accepted a squeeze in their own profits to cover the remaining cost increase.

Security lost

Actors are not alone in having much less job security than in the days when leading theatres hired a core of actors as fulltime employees. AUT professor of work and employment Erling Rasmussen says there has been a dramatic shift across several sectors since the "Hobbit law" in 2010 made all actors "independent contractors" unless they could negotiate something better.

"For a long time there was not that much growth in contracting. It seems that the floodgate is opening at the moment," he says.

Karl Andersen, transport coordinator for what is now First Union, says a shift from employees to owner-drivers in the transport industry started back in the 1970s as a way to break what was then a militant drivers' union. He estimates that owner-drivers now make up about half the industry.

"It's a recipe to exploit in a lot of cases," he says. "They are usually paid by the kilometre. They could end up sitting at the wharf in a queue or at a distribution centre or a supermarket. There is no waiting time paid."

Peter Gallagher, of the owner-driver group ProDrive, says drivers who have mortgaged their houses to buy trucks that can only be used for a single company end up in a "master-slave relationship" with no bargaining power. They are forced to work long hours at low rates to make ends meet.

Temporary labour has spread across a wide swathe of industries. Allied Workforce chief executive Mike Huddleston said his firm started in 1988 mainly to supply labourers for building sites.

"Over the last 25 years temporary labour has moved much more to providing flexible labour to all and sundry - all the big manufacturers, all the big food processors," he says.

He estimates that 30,000 people now work for labour hire companies - about 1.6 per cent of the country's 1.85 million employees.

"It's not cheaper than employing your own. It's about a flexible option," he says. It lets employers take on workers in seasonal peaks and lay them off again in down times.

He says about 40 per cent of Allied's 3500 workers earn the minimum wage of $13.50 an hour. Others with trades tickets earn up to $30. All earn holiday pay entitlements from day one and rights to paid sick leave after six months, but 95 per cent are casual workers with no guarantee of work the next day.

Unlike most developed countries, New Zealand does not publish regular official figures on casual work. Two Labour Department phone surveys in the 1990s estimated that 11 per cent of workers were casual. A Statistics NZ survey in 2008 put the figure at 9.4 per cent for a slightly different concept of "temporary" workers, including those in seasonal work and fixed-term contracts.

Both estimates are much lower than an official figure in Australia of 23.9 per cent, up from 15.8 per cent in 1984. A 2005 transtasman study suggested this was partly because permanent employees were better protected in Australia so employers had more incentive to use casuals.

How much?

The 2008 Statistics NZ survey found that temporary workers earned a median $15 an hour, 22 per cent below permanent employees who then averaged $19.20.

To calculate a "living wage", the Anglican Family Centre research unit in Lower Hutt looked at the costs of a basic food diet, a lower-quartile three-bedroom rental and selected items from other spending by couples with two children in Statistics NZ's household economic survey.

It arrived at a family budget that may be a bit under $1100 a week, or about $56,000 a year, or near 80 per cent of the $70,300 median after-tax income of all couples with two children in 2011.

The biggest items in the weekly budget may be around $280 for rent, $217 for food and $176 for petrol and other transport costs if the analysts used the 2010 average figure updated for inflation.

Researchers then factored in tax and ACC levies, family tax credits and accommodation supplement, and worked out the gross hourly rate both parents would need to earn to achieve the $56,000 net income target if one parent worked 40 hours a week and the other worked 20 hours.

The net result is believed to be a gross hourly rate of around $19, plus or minus $1.

The new poor

Big chunks of the workforce have median incomes below $19 an hour: 209,000 labourers, 192,000 people in community and personal services, 178,000 sales people and 113,000 machinery operators and drivers.

All minority ethnic groups except Maori men (and of course Europeans) earn medians of $19 or less.

Waikato University labour economist Bill Cochrane estimates that about 40 per cent of all employees earn below $18-$20 an hour, turning two out of every five workers into "the new working poor".

Obviously it's a big ask to lift the wages of such a huge slice of the workforce. "For me, how I interpret the living wage is it's an aspirational figure," he says.

He will point out at the launch that the figure needs to be adjusted for regional differences, especially in housing costs. The Family Centre has left these differences to be reflected in the accommodation supplement, which is under review.

Will it work?

Unlike traditional bargaining, the living wage campaign is aimed ultimately at the conscience of the nation. It's backed by 126 community groups and will target local councils first.

"Our intention is to focus on the [council] elections this year and ensure that every candidate that is standing has the opportunity to say the mandate of my community is for Auckland City to become a living wage city," Ms Newman, the campaign's co-ordinator, says.

British councils that have adopted a living wage have funded it by measures such as cutting managers' bonuses and using fewer consultants.

"I don't believe Auckland Council has to increase rates to pay for this. I believe they have to look at how they distribute money," she says. But the British study suggests contractors forced to pay higher wages will cut workers' hours unless they are compensated for the extra cost.

AUT University economist Gail Pacheco says the effects of an unlegislated living wage campaign would depend on the state of the labour market. Right now, she says, seems unlikely timing. "The labour market isn't at the point where I think unskilled workers could apply a lot of pressure, because there's still a lot of competition for those jobs."

The series

Today: Who earns below $18 to $20 and why
Tomorrow: Exploited migrants
Wednesday: Cleaning wars
Thursday: Living wage unveiled

- NZ Herald

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