With the cost of living soaring and huge demand for labour, low-paid workers are resetting their expectations after years of stagnant wages
If there’s a wage-price spiral causing conniptions at the Reserve Bank, Hans van der Laan might just be the face of it.
Yesterday, he and his workmates voted to accept a 10 percent pay settlement with their employer, egg producer Zeagold. It was a hard-fought deal, involving months of on-and-off bargaining, three days of strike action and picketing by workers who have never before revealed any inclination towards industrial militancy.
The outcome for the majority of the 90 or so workers covered by the Zeagold collective employment agreement is an increase in their hourly rate from $21.20 – the minimum wage – to $24 an hour.
For van der Laan, who has been with Zeagold for 14 years and is a senior storeman, the deal will bump him up from what he calls a “pathetic” current rate of $23.90 an hour, to $27.
Coincidentally, the Zeagold workers ratified their pay deal on the same day that StatsNZ released anxiously-awaited labour market data, which revealed unemployment up a notch to 3.3 percent, and the cost of labour across the economy up by 3.4 percent – the biggest increase since 2008.
Bank economists expressed alarm at the wage data. Finn Robinson and Sharon Zollner at the ANZ fear inflation risks becoming “embedded in wage-setting behaviour”, and think the Reserve Bank will have to “hit the labour market quite hard” to bring inflation pressures down. This in turn will push unemployment up higher than previously expected (although it should be noted that, at 3.3 percent, it is already markedly higher than the ANZ pair’s forecast of 2.8 percent).
The Zeagold workers’ deal is too fresh to be included in the latest labour market measures. But in any case, Hans van der Laan has been waiting a long time for a decent pay rise, and he sees the 10 per cent inflation of his pay packet as a long overdue redistribution of his employer’s revenues.
Zeagold is part of an egg and animal feed production group that turned over $176 million in the 2021 financial year, out of which it paid a wage bill of $10.5 million. It recorded a $2.9 million loss that year, although in the previous two years it was profitable. The company was part of Mainland Poultry, which was purchased in 2017 by private equity company Navis Capital.
Every day – seven days a week – a million eggs pass through the hands of van der Laan and his co-workers at Zeagold’s main production site in Waikouaiti, a small coastal township north of Dunedin. Most are for domestic consumption, including under the Farmer Brown and Woodlands brands, and some are exported to Singapore and Hong Kong.
Van der Laan says Zeagold has been investing heavily for several years in new farms and shifting away from caged hens. Pay rises have been minimal – just 1.4 percent last year. Workers have been told that there would be increases for them when company finances improved. “We were told, ‘you’ll get yours later’, and we believed them,” he says.
With wages stagnant and the cost of living soaring, 61-year-old van der Laan and his retired wife have had to go to the bank and ask to have their mortgage extended so that they can make ends meet. He has seen his workmates struggling to get by, with the money running out before the end of the fortnightly pay period. One worker was reportedly having to seek help from foodbanks.
Having kept egg production going throughout the pandemic, the workers’ mood as negotiations with Zeagold got underway in May was: “It’s our turn now”, he says.
They asked for a 10 percent pay rise. Instead, they were told that the minimum wage had gone up in April, “and that was it”, recalls van der Laan.
E tū organiser Gwyn Stevenson says one worker on the bargaining team told the employer negotiators on the other side of the table: “‘We get the feeling you keep us poor so that we can’t afford to take a day off.’”
That bitterness expressed itself in a vote to strike for two days. Van der Laan says it was the first time there had been a strike at the company.
The company adjusted its offer but feelings remained tense. The workers walked off for another day.
Eventually the dispute was settled with the help of external bargaining advocates, and the workers got the 10 percent they’d asked for. It’s backdated to March, which means there’s a much-needed lump sum on its way.
“The staff have learned they can say ‘no, we are not happy with all this’,” says van der Laan, who is a union delegate at the site. “You can’t just keep taking it.” For him, the pay rise means he’ll be able to “pay the bills”, and stay working for a company that he wants to see succeed, doing work he likes. Without it, he’s likely to have had to quit and find a higher-paying job elsewhere. “You can’t just stay and run yourself broke”.
Zeagold CEO John McKay says the negotiations were “based on good faith bargaining from the outset”. With the increased cost of living, he “understood the importance” of the pay settlement for the workers.
It's just one of a number of recent pay deals that have delivered sizable increases to some of the lowest paid workers in the country, some of whom have been willing to go on strike for increases that exceed the galloping rate of inflation.
Workers who make electrical transformers at ETEL, owned by lines company Unison Networks, recently settled on an increase that will elevate workers like Kiran Brar, who were previously on the minimum wage or just above, to $24 an hour by the end of this year.
Brar says that’s a “good pay rise” that will deliver an extra $80 or $90 to workers’ families. She says ETEL workers are doing skilled and satisfying work, and she feels respected and supported by the company – but the pay rise was “essential”. “Otherwise the Government will have had to do something. Everything is increasing. New Zealand is an expensive country.”
As at Zeagold, it took strike action at ETEL to get the shift in pay the workers were after. At Nelson timber company South Pine, 60 workers walked off the job last week in response to what they saw as a “low-ball” offer of 6.25 percent. It turned out to be a short sharp dispute, with the employer settling at a range of 7.2 percent to 14.5 percent – the higher rate of increase going to skilled tradies whose pay had slipped well below the market and who will now be brought up to a minimum of $34 an hour, says First Union organiser Paul Watson.
He says the South Pine strike hit a nerve among workers in the city. “We had donations coming in. It was only a 48 hour strike, but we had people saying ‘good on you, it’s happening to us too’. It was the first strike private sector strike in Nelson for a long time.
“But that’s the mood of workers now. They’ve had a gutsful... They’ve had enough of the low pay. It’s rising up now in the sense that they feel it’s time to address pay that’s been held back over the years...It’s not a matter of payback. It’s just about getting some wage justice.”
That message was rammed home during bargaining at South Pine when one of the delegates for E tū, a skilled tradesman, quit to take a job paying $3 an hour more. He told the company across the negotiating table that they had a problem that needed fixing if they wanted to keep workers, says E tū orgaiser Garth Elliot.
South Pine general manager Romon Spiers didn’t want to comment about the dispute or the pay settlement, other than to say the company had gone through the process of good faith bargaining. “We were disppointed in the strike, but we got a resolution.”
Among the themes becoming apparent in recent collective bargaining is that the living wage has entered the language of negotiations as a minimum rate. The living wage has no legal status – it was concieved a decade ago by union, community and faith groups as a social movement to counteract inequality and poverty. The living wage is calculated annually by the Family Centre Social Policy Research Unit, and is set at a rate deemed adequate to cover basic living costs including food, housing, transport and child care, and to enable enable workers time and resources to participate in the community.
The current living wage is $22.75 an hour, rising to $23.65 from next month. “The living wage is becoming the starting point,” says Watson, a veteran union negotiator based in Christchurch. And he says employers by and large want to settle. In one recent negotiation, workers put a demand on the table for the living wage and the employer topped it by 5 cents an hour.
Unite Union national secretary John Crocker says the living wage has also become cemented into collective pay deals as the minimum rate in the hotel sector, helped by the fact that former MIQ facilities were required under their contracts with the Government to pay at least that rate. Unwinding that as hotels reverted to business as usual would have meant an unpalatable pay cut for the lowest paid workers.
Although strikes like Zeagold, ETEL and South Pine get attention, and are a sign of rising worker frustration and confidence that the market is in their favour, industrial action remains rare. One reason may be that employers know they have to meet expectations if they want to attract and retain staff in the current labour market. Watson says when union negotiators lay their claims on the table they find they are often pushing against a door that, if not wide open, is at least half ajar. “I haven’t experienced this kind of willingness to get to a deal,” he says.
But E tū organiser Jen Natoli speculates that another reason strikes are so infrequent, despite high inflation and low unemployment, is that workers feel under such financial pressure that they can’t afford to lose wages for a day or two to go on strike for a better deal from their employer.
If economists are vexed by the rising cost of labour, they might want to keep an eye on what’s happening in the supermarket sector. Unionised Countdown workers have been bargaining with the company for weeks, having gone into negotiations with a claim for a 16 percent pay rise. Newsroom understands progress is being made towards a settlement, but further days have been scheduled for bargaining.
It’s one of the biggest collective employment agreements in the country, covering 8500 First Union members and inevitably flowing through to the entire Countdown workforce of 17,000. Whatever is settled with the company under its nationwide collective agreement will set the benchmark for a future supermarket industry fair pay agreement, expected to be one of the first to be initiated after the Fair Pay Agreements Bill is passed later this year.
Smaller collective pay deals with supermarkets in the Foodstuffs group have already yielded some significant increases, including a Hastings Pak ‘n’ Save moving to a $24 minimum rate, and a Glen Innes store settling at $23.65.
Ben Peterson, a First union organiser leading the bargaining with Countdown, says getting a good deal is critical. “Retail [overall] employs about 200,000 people and it’s always been seen as a low-paid industry. And there’s been this perception of supermarket work as 17-year-olds earning pocket money after school. But Covid has shown it’s essential work, and an essential part of our logistics chain. The supermarket industry is how we feed New Zealand.
“If we’re going to fix poverty and inequality in New Zealand, we need to deal with that, and it can be done.”
He says workers are well aware that there’s no lack of money to pay decent wages – as the Commerce Commission study revealed, supermarkets are making $1 million a day in excess profits.
Countdown refused to comment on the negotiations while talks are still underway, other than to describe the process as “productive”.
Pressure is also on the Government, as the employer of public sector workers, to respond to the rising cost of living. Following pressure from the Council of Trade Unions, State Services Minister Chris Hipkins agreed in June to set up a process to look at a cost of living adjustment for workers locked into existing collective agreements – which in many cases have a multi-year term – that were settled before the current spike in inflation.
CTU president Richard Wagstaff believes any adjustment needs to cover not just those employed in the core public sector, but those who are employed by contractors to deliver public services such as home care and support, cleaning, catering and security. A deal of that breadth would reach about 200,000 workers.
Talks have been taking place weekly with the Public Service Commission, but it’s far from a done deal and no figures have yet been tabled. But Wagstaff wants to see an adjustment inserted into collective pay agreements that provides on-going relief.
“It’s really important that workers are able to meet the cost of living across the economy. They need to be able to put food on the table, they need to be able to meet rising costs. It’s urgent.”
