Firms cut wages and erode conditions to win contracts.

New Zealand's employment law is not working. It is one-sided and does not support working people to fairly negotiate and protect their conditions at work.

It is becoming increasingly clear that there is an absence of the voices of working people and their representatives participating in the discussions during tendering. These negotiations can hugely affect people's working lives, including their terms and conditions of employment and working arrangements.

Consider the current situation in the awarding of bus contracts for public transport in Auckland. The agency responsible for awarding the contracts, Auckland Transport (AT), has been using the Public Transport Operating Model system, which is a service contracting framework under the Land Transport Management Act 2003, ratified by the New Zealand Transport Agency.

According to AT's website, the model will "incentivise service providers to maximise efficient and effective delivery of public transport", and, "maximising income and minimising subsidies will come from increasing the levels of patronage by improving the experience through convenient, safe, fast, frequent and reliable services in quality vehicles."


In reality, the "maximising of income and minimising subsidies" is derived by cutting the wages of the workforce. In other words, it is the bus drivers who will be subsidising the service. As is typical in New Zealand tendering processes, providers tender on the basis of offering cheaper labour than existing providers. The unions of bus drivers may negotiate with existing companies, but no such negotiation occurs when new entrant contractors submit tender offers at bargain basement rates.

The results are devastating for the lives of bus drivers. Collective agreements for these services and others around Auckland are already the subject of dispute. They currently range from $18.50 to $20.50 an hour, just above the living wage of $19.80, for experienced and skilled staff.

Consider that Ritchies and Go Bus have now just successfully secured most of the bus routes for South Auckland.

Go Bus provides bus services in Hamilton and Tauranga and pays $16.28 an hour, which is not even a dollar more than the minimum wage. We can safely assume their intention is to maintain these very low wages in the South Auckland routes.

The Employment Relations Act contains no effective way of safeguarding against this kind of wage cutting in the competitive tendering model. It does not allow industry rates of pay and unlike most OECD countries, limits coverage of agreements to existing union membership.

But this problem is not limited to bus tendering. It's rife throughout the workforce.

Roading contracts arranged by the Wellington City Council were held by Fulton Hogan, then taken over by Transfield for a couple of years before the most recent tender was won by an Australian company, Leightons. All the way through, workers were transferred from one company to the next and have had little choice but to accept cuts to pay and conditions.

Perhaps worst of all, staff found themselves on 90-day probation periods despite long and loyal service. There are many other examples.

Defenders of the system will always tell you they don't just tender on price alone " quality is important. Obviously one can afford newer buses or even possibly more staff if savings have been gouged out of wages. That doesn't make it right.

Without an employment law that enables the establishment and collective negotiation of industry-wide standards, working people cannot possibly get ahead when the employment law is ill equipped to provide support in the commercial world of tendering. There is a case for establishing a responsible contracting policy, where those conducting the tendering process insist that any new providers maintain the employment agreements of existing staff.

There is a provision in the Employment Relations Act to protect "vulnerable workers" from this kind of exploitation during tendering, but these measures are very limited and do not address the wider problem. New Zealanders deserve a proper and modern employment law that values and protects working people.

Good employers know the importance of valuing those who work for them; they see them as an asset.

Richard Wagstaff is president of the Council of Trade Unions.