Cleaners may miss fair pay
The Government’s proposed ‘‘fair pay agreement’’ laws could result in the entire commercial cleaning industry pretending to have zero employees, MPS have been told.
Dominic Drumm, owner of Westferry Property Services in Auckland, said he was competing with rivals that employed their cleaners as ‘‘contractors’’ allowing them to pay them less than he pays the people he employs directly.
The Government is pushing to introduce fair pay agreement laws, which would allow for industry-wide minimum pay and conditions.
But Drumm told MPS on the education and workforce select committee on Monday that the Government’s proposed Fair Pay Agreements Bill would make the problem worse because it was written only to cover employees, not ‘‘contractors’’.
If it was not changed to cover dependent contractors, the minority of companies like his, which employed cleaners directly, would be forced to move to the contractor model, or the related ‘‘franchise’’ model, or go bust.
‘‘The logical end-point to this is there won’t be any employees in our industry. They will all be contractors and franchisees,’’ he said.
That threatened to worsen conditions for workers for whom a cleaning job was the first step towards escaping poverty, he said.
Sarah Mcbride, chief executive of the commercial cleaning industry association, said the worst ‘‘horror stories’’ from the franchise and contractor models included people earning just $7 to $8 an hour.
‘‘That kind of behaviour is ruining our industry,’’ she said.
Out of the 12,900 registered commercial cleaning companies, 8823 had workers who were not classified as employees, and would not be covered by fair pay agreements, she said.
‘‘For anyone to claim that fair pay agreement legislation as it is written will cover the entirety of our industry is a blatant mistruth,’’ she said.
She said 80% of the cost of a contract was labour costs.
‘‘On a weekly basis my members tell me they are losing contracts to these other business structures because they come in 30% to 50% cheaper than they, who directly employ,’’ she said.
Nam Tran came to New Zealand from Vietnam in 2019 to do a master’s degree. After he finished, he struggled to find work, eventually landing a job as a cleaner, or ‘‘housekeeping associate’’ in a high-end hotel chain.
‘‘The work was heavy, some days it was quite brutal,’’ he told the select committee.
‘‘Our actual working hours were 8am to 4.30pm on weekdays, which seems quite reasonable until you found out that if you wanted to do your job properly, you would have to arrive at work somewhere around 7am, and leave 5pm, maybe 6pm.’’
The housekeeping associates were given an impossible number of rooms to clean, equipment often broke down, and cleaning supplies were often inadequate.
‘‘When we raised these problems to our managers, the answer was always the same. The company was short of money.’’
He was paid the minimum wage of $20.10 per hour when he started, and after several months was paid the living wage, then $22.10.
Nam said he was now a lecturer at AUT.
The country’s largest home loan provider has increased the rate it stress tests home loan applicants at to 7.6%.
An ANZ spokesperson confirmed the bank’s servicing sensitivity rate rose on Monday morning from 7.35%. The stress test was regularly reviewed as interest rates changed, they said.
Mortgage Lab chief executive Rupert Gough said the increase since early May (when ANZ’S stress test sat at 7.15%) equated to about a 4% drop in affordability.
So, someone who could borrow $1 million six weeks ago, could now borrow only $960,000, all other things being equal.
‘‘While the change in servicing rate will have a measurable effect on mortgage applicants, house prices do appear to be also retracting slightly,’’ Gough said. ‘‘It’s likely that the change in borrowing versus the change in house prices will mean buyers are buying roughly the same property.’’
Recently, ANZ has led the market on increasing stress testing rates, with other banks quickly following suit by putting their own rates up.