An Unholy Alliance?

Why One Union Is Teaming Up With The Face Of Overseas Capital

- Alastair Duncan

As the National-led government prepares for another round of legislative union bashing, a curious alliance between organised labour and some of the country’s largest transnationals is forming. And if it holds the Minister of Labour, Simon Bridges, may have united two traditionally hostile camps. In the wake of the 1991 Employment Contracts Act the notion that entire industries of employers and workers would continue to set pay and conditions across the board virtually disappeared overnight.   National agreements covering retail workers, clerical staff, manufacturing, drivers, and just about every other sector of the once unionised workforce disappeared in a matter of months.

With  union density hovering around 10%, down from more than 50% in 1990, National’s latest attack  is determined to remove both the obligation on employers to settle collective agreements and put an end to the notion that employers either on their own or collectively should be required to bargain with their staff at all. Curiously, one national multi employer collective agreement (MECA) that has survived since 1991 is the one covering the major cleaning companies. And, almost without exception, those cleaning companies are overseas controlled. Cleaning is today dominated by three large operators, ISS: the local arm of a Danish conglomerate, Spotless Services: the Kiwi division of Australian equity firm PEP and OCS, the face of its parent UK owners. Between them these three and another UK company, Compass, effectively control the major cleaning and food services in NZ.

Each has its own dark history. Most recently OCS was in the Court of Appeal over its treatment of staff at Massey University, and in 2005 Spotless locked out thousands of hospital workers in an ultimately failed attempt to drive down wages. Compass and Spotless were also among the contractors bidding for the option the country’s hospital food services from a series of hub kitchens – a move that threatens both hundreds of jobs among both kitchen workers, and local suppliers.

Protecting “Precarious” Workers

But, back to the cleaning sector. For the workforce the MECA has been a mixed blessing. Unlike most other occupational groups the workers, or at least the unionised workers, have continued to have a voice in collective bargaining through their union, the Service and Food Workers Union (SFWU). But with low union density the union has struggled to grow the power it would need to change the face of the sector. At the same time the margins between the wages paid to cleaners and the minimum wage have steadily eroded. Ten years ago cleaners earned around 25% above minimum wages. Today the margin is just 3% with cleaners paid just 35 cents above the minimum wage of $13.75 per hour.

What the MECA did do was to take wage rates largely out of competition. In theory this meant the labour cost was fixed and employers would have to compete on quality. However the employers and contractors have used every tactic to cut back hours in a desperate race of the bottom, cutting margins and hours as they chase the major contracts. For workers this was the sharp point. In many contractual arrangements the cleaning companies have accepted that there can be just a few days notice from the cleaning client. The result for staff, already on low wages, was often sudden and terrifying job loss.

Twenty years ago European unions promoted a concept called “transfer of undertakings” – protecting workers when businesses merged or transferred their interests. Picking up on the European experience the SFWU mounted a successful campaign to change the law. In 2006 the Employment Relations Act (ERA) was changed to reflect a union proposal to create categories of “vulnerable” workers whose employment was as risk when the contracts change. Today the notion of the “precarious” worker is steadily gaining currency but, at the time, many in the union movement failed to appreciate that ultimately all workers are as potentially vulnerable as cleaners and associated food service, laundry and orderly jobs. The fact that most of those staff were and still are women, brown and often migrant was no coincidence. 

An amendment to the ERA known as Part 6A, meant that, when building owners sacked their cleaning company, the workforce, rather than being laid off, were required to be taken on by the incoming contractor with their service and other entitlements protected. In a separate move the SFWU also persuaded the major contractors to sign up to a set of principles promoting better jobs, workplace training and support and, where the client agreed, to pay above the rates in the MECA. Just this winter of 2013 OCS pushed out its rival Spotless from the lucrative contract to clean all NZ’s Police stations. Before Part 6A the staff would have lost their jobs altogether. Now they change uniforms.

Part 6A Under Attack

For capital the deal has its strengths. They get an established workforce that knows the workplace. For the workers, they keep their jobs. But now Part 6A is under attack. Amendments to the Employment Relations Act would exempt those contractors who employ 20 or less staff from being covered by the catch-all provisions. SFWU advocate Jill Ovens negotiates the MECA and sees real risks in the proposal. She points to the growing number of franchise operators coming into the industry, often the latest wave of migrants from SE Asia and China.

“For decades we’ve seen the exploitation of migrant labour in jobs such as fruit picking and restaurants. Workers charged a fortune for sub-standard accommodation and wages withheld. Just this winter (2013) even the National Party was making noises about increasing protection for migrants. But at the same time we have a Government that wants to create a new class of employer, exempt from the industry standards and able to dispose of their staff at will”. And while Ovens has little time for the big three transnationals, she accepts their support for the defence of Part 6A is fundamental.

“Whatever the faults of the transnationals might be they know the value of good staff. The corporates say they are opposed to the new laws and the impact it will have on the smaller operators enabling them to cast staff aside”. As with the GSCB (NZ Government Communications Security Bureau) law changes Ovens points to the divisions within Parliament, noting the corporates are focusing on the vote of pro-Government Independent MP Peter Dunne “What has been positive is the corporates gave the union access to cleaning staff so their voice could be heard”. Ovens and the SFWU have collected more than 1,000 individual submissions on the law change. Simon Bridges may not be moved but in squaring off against some of the largest companies in the country he has managed to unite the boss and the union as never before. Submissions on the Bill closed on 25th July.


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