New labour-hire firms mean low pay, say unions

20:46, Aug 01 2014

A raft of new labour-hire companies have set up in post-quake Christchurch, prompting concerns from unions and audits from the Ministry of Business, Innovation and Employment (MBIE).

The labour-hire business is exploding as the rebuild reaches momentum, with at least 17 new agencies opening in the past three years.

It is good business, but unions warn it means lower pay for workers, especially migrants.

The Recruitment and Consulting Services Association (RCSA) provides a code of ethics and rules around health and safety as an umbrella organisation. However, a spokesman said only five of the 17 new labour-hire businesses had registered with the RCSA.

Labour-hire companies acted as employers for workers and then placed them with rebuild companies. The construction business paid the labour-hire agency, which then paid the workers.

The margins and fees charged were commercially sensitive, the RCSA spokesman said.


EPMU Construction director of organising Alan Clarence said data from the union's members showed some labour-hire companies were taking "a considerable margin".

In some cases, the agencies charged the workers and the employers for their services and fees could go up to $6000 on each side to get the worker started.

Clarence estimated that migrant workers were paid up to $5 less than if they were employed directly.

He said labour-hire contracts had an impact on work quality and pay inequality and needed to be regulated.

The MBIE's labour inspectorate launched an audit programme of recruitment and labour-hire companies earlier this year following an increase in complaints around worker exploitation, especially among migrants.

A MBIE spokesman said there were 36 audits under way on labour-hire companies in Christchurch.

"MBIE will not hesitate to take enforcement action or prosecute if breaches of minimum employment standards are found."

Tradestaff is one of the established labour-hire companies, with 18 years operating in Christchurch.

Managing director Kevin Eder said new companies had set up in a hot employment market. "Today we would probably have about 30 to 40 vacancies that we can't fill."

The newcomers had joined an established group of labour-hire companies "playing by the same set of ethics" before the quakes.

Eder was concerned that new players in the market did not necessarily abide by the same code of ethics and stringent health and safety standards.

It was a difficult business, and the biggest hurdle was to manage cashflow properly as labour-hire companies were responsible for workers' wages, holiday pay, ACC, and public holidays.

Unscrupulous companies posed a threat to the industry as a whole.

"It's dangerous for the employees, for the industry, for the reputation of Christchurch's rebuild."


A spike in injuries among "labour hire" employees has unions and government bodies warning the contracts can be exploitative, dangerous and place workers at risk.

Council of Trade Unions spokeswoman Helen Kelly said injuries in labour hire were "through the roof," and it was becoming a disproportionate contributor to construction injuries.

ACC data showed the average number of injury claims from labour supply services had nearly tripled from the lows it hit in 2009-10, from 5 per month to around 30 per month - or one every day.

Kelly said workers under labour hire contracts were far more vulnerable than standard employees, with less access to training, experience or avenues for expressing concerns.

"If you're a labour hire worker being brought in, you have no security of employment, it's difficult to raise health and safety issues, if you're injured you don't get rehab onsite."

She called labour hire "an exploitative form of employment" that made no guarantees of hours of future work.

Kelly said many workers would not report injuries or unsafe practice, as they were afraid of not being called up for work again.

"All the research shows that if workers don't have employment protection, they're more likely to have an accident, as they're forced to do things they don't want to do."

The New Zealand Independent Taskforce on Workplace Health and Safety found temporary and labour hire workers were "particularly at risk" of injury, and said temporary or short-term contract workers were less likely to report injuries for fear of not being employed in future.

A 2012 study into workplace health and safety found the same competitive pressure that motivated firms to opt for temporary contracts also motivated cost cutting in other areas, including badly maintained equipment, inadequate staffing, longer work hours and corner-cutting in health and safety.

The research also found multi-employer worksites were more disorganised, and workers lacked health and safety knowledge specific to the job.

Kelly said if workers weren't part of the regular team, they were "much less likely to be engaged in safety talks, site hazard walkthroughs, or to have regular hazard training around specifics like asbestos removal".

She said it was the "worst of all possible worlds" for workers.

But Recruitment and Consulting Services Association (RCSA) spokesman Ian McPherson said accident and off-work injury levels in labour hire in Canterbury were actually lower than the national average, thanks to safety management programmes as part of the rebuild. ACC figures indicated only about 5 per cent of accident claims were labour hire workers.

But a spokesman for ACC said they did not require data on contract type when workers reported injuries.

McPherson said some labour hire companies in the city were more committed to health and safety than others. "Unfortunately not all labour-hire agencies are created equal."

The Press