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New Zealand: Courier drivers 'virtually slaves'
Sunday Star Times
Rob O'Neill

October 9, 2011
View the Original Article


Many contractors are barely surviving on miserly pay, Rob O'Neill writes.

Courier drivers are struggling to earn a living wage, with incomes stalled at about the same level as they were 20 years ago, while running costs have exploded.

Urgent Couriers' managing director Steve Bonnici said prices had been slashed due to cut-throat competition, which only intensified during the economic downturn of the past few years.

Bonnici said prices have been cut to "ridiculous levels" – and it wasn't just small, fly-by-night operators doing the cutting. As contractors, drivers had few of the benefits of employees, yet they were still obliged to wear a corporate uniform, work certain hours, apply for annual leave, and work exclusively for one company – as well as providing their own vehicles.

In response, Bonnici is advocating a voluntary code to ensure minimum pay levels for drivers. However, others are looking for stronger protections.

Karl Anderson, First Union's representative for transport and logistics in the Northern Region, said contractors had no protection, and an attempt to introduce some by Labour MP Darien Fenton was opposed by the government.

Anderson said legislative protection was coming in Australia and it was the union's desire to see it here too.

"I don't think we have a bolter's show under a Key government, which is ironic, given they say they are the saviours of small businesspeople," he said.

First Union was formed by the merger of the National Distribution Union and Finsec on October 1.

Anderson said the union had created a professional organisation for contract drivers called ProDrive, but most were to afraid to join anything with a "union odour".

He said bodies such as National Road Carriers are supposed to represent contract drivers, but in main were "political lobbyists for the people who issue the contract rather than the owner drivers".

ProDrive is now pursuing a case on behalf of Goodman Fielder bread delivery drivers after they had their payments slashed by up to 42% by the troubled breadmaker.

A High Court affidavit shows nine Goodman Fielder contractors are seeking an interim injunction to stall the cuts until a full dispute resolution process has been completed.

ProDrive, the NZ Professional Drivers Association, says it was set up in 2010 "because of a concern about growing unsafe work practices on our roads, lowering rates of pay, safety standards and the need for all drivers to get a fair go".

Anderson said some drivers were "virtually slaves", having invested in vehicles and equipment, sometimes mortgaging their homes to do so, only to find they can't earn a living.

"Contracts allow companies to do what they like," he said. "There's just no protection whatsoever and people are being exploited."

Bonnici said people are often lured into the industry with the promise of high salaries and employment autonomy. But new couriers then encounter challenges with money management, tax planning and maintaining the efficiency of their business.

People considering signing contracts should get advice, he said, but they often have "Hobson's choice" – sign the contract as is, or go somewhere else.

He says the fast delivery market has struggled to attract sufficient numbers of drivers, even in good times. Higher unemployment has allowed "cut price" operators to buy market share, as there is a ready supply of jobless people.

Anecdotal evidence from couriers looking for work indicates some firms are paying less than the minimum wage of $13 an hour. That's not enough to live on, especially for drivers with families and mortgages, Bonnici said.

Anderson said that means drivers are scrimping on maintenance, using bad tyres and employing others for cash to fill in when they are too tired to drive themselves.

"Most are new immigrants and they don't have a lot of options," he said.

First Union's ambition is to get a legislative change similar to that coming in Australia to ensure "safe rates".

Perhaps surprisingly, Bonnici is not dead against regulation.

There is currently no legislation which protects minimum earnings in the industry, he said.

"Every other industry has the minimum wage. You can't put an ad in the paper offering employment at $7.50 an hour."

Bonnici's voluntary code could lead to an agreement that courier firms must be able to prove people working fulltime are earning at least that. He said he has proposed to other operators such numbers should be published.

"Being out in the open is a starting point," he said.

However, Bonnici acknowledged any industry talk about setting minimum pay levels for drivers could be perceived as cartel behaviour.

If legislation was the answer, he said, that would still require reporting by companies.

"Perhaps legislation would work," he said. "It might be a more straightforward way."

Paul Holdom, who has been a player in New Zealand's courier industry for almost 25 years, says real courier revenue has probably dropped 20-30% since 1990 to around $3000 to $4000 a month. Meanwhile, the costs of operating their own businesses have climbed, and increased congestion has reduced drivers' ability to make multiple journeys in major cities.

"It's sad what's happened to our industry; there are plenty of owner-drivers out there whose revenue before expenses is barely the minimum hourly wage. After they have paid costs out of this revenue they are below the poverty line," said Holdom, who developed CourierPost Urgent for NZ Post and is now sales manager at Inter City Urgent.

Most express courier firms typically operate on a 60:40 revenue split, with owner-drivers taking the 60% and the courier firm keeping the remainder, Holdom said. However, couriers are extremely vulnerable, as courier companies are able to drop their rates by squeezing the courier earnings part of the equation, leaving their own gross margin intact.

Bonnici said Urgent Couriers had a policy of maintaining pricing at a level to provide contractors with the ability to make a living wage in the region of $18-$20 per hour.

He said the financial viability of drivers was "inextricably linked" to the company's performance, as a motivated and productive team of contractors "contributes hugely" to the company's success.

Some progress was made in creating a sustainable industry in the mid-2000s when unemployment was low, he said. However, the recession has created a demand for lower prices by clients and a ready supply of unemployed needing work.

"The amount of damage that's been done to the sustainability of driver earnings during and since the recession will take years to recover from," he said.

WHAT THE DRIVERS SAY

The Sunday Star-Times spoke to two long-term courier drivers who described an industry where cut-throat pricing has reduced returns to unsustainable levels and where new immigrants are lured into making big investments for little return.

One, a 10-year veteran, said his best year ever was as recent as 2008, when he earned $7000 or more a month working long hours. However, income had drifted back ever since and now only rarely nudged above $200 a day.

"You can't live on that," he said. Unexpected costs and upgrades "cripple you" when you are not earning, he said. He was told to upgrade his vehicle in the middle of a recession, despite the fact it looked good and worked well and had the same body shape as a new model. "Those were the company rules."

Company rules only work one way, said a 24-year industry veteran. "We used to say once you've signed a contract you may as well throw it in the bin as you've agreed to whatever they say," he said. "If you don't like it, there's the door."

The driver described young immigrants being recruited with five-year contracts, buying $35,000 vehicles on hire purchase. "But they can terminate the contract at a month's notice," he said. "They did that to a couple of guys because they couldn't speak English and didn't know Auckland."

The driver said he had worked for one company where management were on bonuses based on turnover. To get their bonuses they aimed for volume and it didn't matter whether the jobs were profitable or not. "You're being paid next to nothing. Prices go down and down and they get their commissions."