Good piece in the Sunday Star Times today about the reality of working as a Courier Driver. The impact of cut-throat competition, unfair contracting and a lack of minimum protection for dependent contractors is illustrated well.
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.
I’ve been on about this for some time now, including calling for SafeRates and better protections for all drivers. My Minimum Wage and Remuneration Bill, which would have provided at least minimum wage protection to these contractors was voted down early in the term of the National Government.
The National government, despite claiming it is the party for small business, has ignored the problems for small business operators like those in the Courier Industry.
“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……
“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 Paul Holdom, who developed CourierPost Urgent for NZ Post and is now sales manager at Inter City Urgent.
The industry is now coming around to the view that regulation might work better so that there is protection for small business operators who are totally dependent on one firm for their income.
“Every other industry has the minimum wage. You can’t put an ad in the paper offering employment at $7.50 an hour”, Bonnici says.
I’ve had a lot of contact with courier and other drivers over the last three years. Some of their stories are shocking.
Another piece in today’s SST gives an insight into what Labour’s policy will include when it is announced on the 18th October.
Karl Anderson, First Union’s representative for transport and logistics in the Northern Region, 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.
Sadly, he’s right.
If they’re barely getting minimum wage before expenses then after expenses they will, effectively, be paying to go to work as they will be out of pocket. This is the consequence of a “free-labour” policy in a society where we will always have excess people (more people than there is work to do). Increasing productivity results in even more people becoming unemployed and so more competition for the work available.
No, I’m not against productivity increases but we do have to be aware of just what the consequences are and plan for them. Obviously, giving all the “extra wealth” to a few in the form of higher profits as we have been since the 4th Labour government went all neo-liberal on us doesn’t work.
People need to have enough income to live and to run their business (yes, even someone on PAYE is running a business). A Universal Income would go some way to achieving this.
And this is why all businesses need to be cooperatives. When everyone can see the money, where it goes and has a say in the operation of the business then such exploitation can be minimised if not eliminated altogether.
The law is already enough to resolve this situation. The ‘contractor’ status of the drivers should be tested. I believe it will be overturned.
The courier companies have set up a system of structural exploitation by defining a contractor situation on paper. They pay on that basis and force business costs to be distributed on that basis, but in other respects oblige the drivers to behave as employees.
Since no one driver has the means to test this in court (and part of the trap is that if an individual driver makes a fuss, they don’t get jobs allocated to them), the ‘legal’ basis for exploitation remains unchallenged.
In my view an ombudsman should be set up to test these sorts of situations at law, on behalf of entire – and individually powerless – classes of workers.
NZ Post ran this model for how many years Labour was in government? Having worked as a manger in this industry, Courier Post could only capture market share by lowering their prices to lure customers and in a 3 year period that captured 40% of the market. Those that suffered were the couriers – but back then Labour never cared. BTW the company I worked for maintained their high prices and paid their contractors well, including minimum earnings to ensure they did not go bankrupt. We were so good ACC invested in our shares and doubled their money after we were publicly listed. The companies you mentioned are small time and cannot effectively compete on pricing as they rely on larger courier companies for access to their networks. Introduction of regulation will not level the playing field.
I’m afraid to ask what the minimum compensation rules will be. Like all one-size-fits-all rules they are bound to be terrible. I expect Labour will suggest a time-based rule similar to the minimum wage. Then courier companies will no longer be able to pay drivers on a per-package basis and drivers won’t be rewarded for efficiency.
Since Labour seems to be offering a leglislative panacea for low incomes, I’d like to ask what you have to offer small retailers. How much does the average dairy operator make? I suspect it is well below minimum wage. Does labour intend to set minimum price levels for dairies? And what about minimum patronage levels?
“NZ Post ran this model for how many years Labour was in government?” Oh well, here it is again, if Labour did something wrong, national can keep doing the same thing wrong. Great future ahead for all.
If the contractors aren’t being paid enough, they should find a job that pays them more. If they are being treated by their contracting company as employees, it is a matter for the IRD to sort, since they have relatively stiff rules around who is an independant contractor and who is an employee. A company can write what they like in terms of a contract, but if it doesnt fit with the IRD’s definition, it isnt worth the paper its written on. Oh, and I believe a good few years ago, this was all tested in court by the IRD.
Another relavent point is that many courier companies will employ far more couriers than required,so on the odd occasion they are busy they are able to deliver their jobs on time, however when they are quiet they have too many drivers and not enough jobs.
What efficiencies?
Can’t deliver any faster as the route is planned by computer (or should be) and they can’t drive any faster (unless you want them to break the law).
The courier companies are probably in a better position to get good tyres for better prices (both research and negotiation).
There’s no real difference between vehicles – running costs are about the same.
Your call for rewarding the efficiency of drivers is pure ideology and nothing more.
Man, it sucks to be a courier driver
Your bill being voted down? GRRRRR
!
Even if it means abandoning NZ?
Many people will not be able to outrun National’s employment and wage suppression strategy unless they leave this country.
I suppose you are OK with that.
Here is what Labour has to offer small retailers:
a community full of people who earn decent wages and reasonable benefit levels, and who can thus afford to buy things from your shop on a daily basis, increasing the success of your small business.
Its not rocket science dude.
By the way, any small business owner who finds that they can’t afford to pay $15/hr minimum wage should probably quit in order to make room in the marketplace for entrepreneurs capable of doing so.
By the way, any small business owner who finds that they can’t afford to pay $15/hr minimum wage should probably quit in order to make room in the marketplace for entrepreneurs capable of doing so.
You’ll find a lot of small business owners pay themselves far less than $15/hr and work a huge number of hours to get a business moving.
Don’t be so quick to judge, particularly as I suspect your opinion is more based on acquired ideology than experience.
Colonial, “Even if it means abandoning NZ? Many people will not be able to outrun National’s employment and wage suppression strategy unless they leave this country. I suppose you are OK with that”.
Yes, I am OK with that. The world is a small place, and labour is transportable.
“By the way, any small business owner who finds that they can’t afford to pay $15/hr minimum wage should probably quit in order to make room in the marketplace for entrepreneurs capable of doing so”.
Same result Colonial, the courier drivers would have to find a new job. And quite correct. If the business isnt making profits commensurate with the risk being taken, bin it. Perhaps instead of trying to protect independant contractors, Darien should encourage them to take a risk and set up their own courier company (if they are so adamant it’s a good business to be in).
“a community full of people who earn decent wages and reasonable benefit levels, and who can thus afford to buy things from your shop on a daily basis, increasing the success of your small business.”
I am so glad you were not my economics teacher.
@indiana
What we get from the educational department in regards to economics is actually worse. In fact, what’s taught is completely delusional. It’s a monetary hypothesis, not an economic theory. An economic theory would take into account availability of real resources and environmental limits both of which are ignored under present mainstream “economic” thinking.
I was an owner-driver courier contracted to Courier Post 2000-2002. I actually had quite a good run, making pretty good money and working only about 64 hours week. Those few still in the business from those days all tell me how their income has remained static or declined while their costs and work hours have risen. We had horrible contracts – but it was take it or leave it. The only thing Courier Post supplied was a bit of stationery, everything else was paid by the contractor. We were told we were “independent contractors” but we were not allowed to work for anyone else and could be dismissed or have our runs altered at will with no recourse except going to court at huge expense
@Marty – thanks for your story. It highlights the issue really well and fills me with despair that hard working Kiwis are being left to the disasters of the market in this way. All markets need rules. There are none for Courier Drivers. Watch out for our policy release on the 18th October.
@Darien. You say there are no rules. The Courier drivers are independant contractors. Therefore they own their own business. When they decided to take up driving, they knew what they were in for and the risks. If they are not making any money, move on, find another job, or start another business that makes a profit commensurate with the risk. As I have said previously, I believe that the Courier driver\independant contractor relationship has been tested in court by the IRD.
If you are going to make rules around how much the owner of a courier driving business can make, how about a fish and chip shop owner? A womans clothes retailer? A watchmaker?
@In Vino Veritas : trouble is that they are dependent contractors – and there’s a big difference. The only way they can have rights is to challenge their status in the Employment Authority and prove they are in fact employees. Not easy or cheap to do and this is not up to the IRD. Their job is to make sure tax is being paid not test employment rights. It’s not the same as a shop owner because they are not dependent on one person to provide the work.
@Darien. Sheesh. Courier drivers are dependant on themselves to provide the work, just like a shop owner. These people knew exactly what their situation was, and would be when they signed the contract to provide services. They clearly went into it eyes wide open, to come back and bleat about their situation when the work dries up just smacks of opportunism.
The IRD make the rules as to who is, and who isnt an independant contractor, so as to define who pays PAYE (employee) and who pays provisional tax (business).
It would appear that your motivation here is to eliminate all independant contractors?
@In Vino Veritas : Sheesh – don’t you understand the difference between dependent and independent contractors, and small business? I’m not out to eliminate anyone, just see New Zealand workers get paid properly.
Actually, it’s the government that sets the rules, The courts interpret them and the police and other enforcement agencies, including IRD, enforce them. If an injustice is occurring under the present rules then it is the governments job to change the rules to get rid of that injustice.
@Draco. There is no injustice here though Draco. All thats happened is that these business men are involved in a failing\failed business.
@Darien. I fully understand thanks Darien, since I spent over a decade as an independant contractor. And like courier drivers, I signed contracts to provide services to various organisations. I did not however, sign one that predjudiced my ability to run a successful business.
I have also spent a good few years advising small business operators, so have a good deal more experience than you, I would suspect.
You are proposing undermining a legal contract between a purchaser and a supplier that no court would judge unduly onerous, just because times have gotten tough for one section of small business owners.
@In Vino Veritas – I respect your experience. I’ve worked on this issue for years, and I’ve been an independent contractor, and I’ve been a small business owner. The issue of the problems with dependent contracting goes way beyond courier drivers.
Yes there is – people aren’t being paid enough to do the job that they’re doing.
Working for less than true worth or even less than needed to survive is what underpins our system. Our economy/system simply wont work in its current state if everyone is paid fairly. The wealth generated at the top of the tree is, in part, only possible because of a large and unskilled (dependant and stuck) workforce.