A couple of recent stories from the world of retailing went something like this.
The first one is from international furniture behemoth Ikea. The company was suffering from massive turnover, post Covid, costing it millions. In 2022, 62,000 workers quit, and the Swedish retailer estimated the cost of replacing them was at least $US5000 ($NZ8162) per departure. Lots of red zeros.
The second story is closer to home, but again involves unhappy retail staff, this time at New Zealand supermarkets.
A survey carried out by First Union found 40% of those surveyed reported being verbally assaulted or threatened at work. Another 4% said they had been sexually harassed or assaulted, and 2% said they had been spat on.
No-one should have to put up with that at work, union national secretary for retail and finance Rudd Hughes said of the results.
‘‘Least of all those who aren’t even paid a living wage and have few prospects for improvements in the workplace.’’
The survey’s findings will inform the union’s bargaining with all the major supermarket chains, he says.
So, working in retail, not without it’s issues.
And yet, it can be fairly safely assumed that those involved in the opening of a new Kmart in Ōtepoti Dunedin this week were mostly seeing the upside.
Shoppers certainly, the trek south to Invercargill’s branch became familiar to many Dunedin bargain hunters in the years following the chain’s exit from the Meridian Mall.
There was delight in South D this week, don’t doubt it.
‘‘That’s really strong, especially for a place like Dunedin, to have a big employer that will employ a lot of young people, predominantly, and pay them a living wage. You don’t find a lot of that in Dunedin,’’ Angus Wilson, First Union’s Dunedin-based organiser says.
‘‘I will see, when I go in there, lots of much happier people. Because they’re not stressed about hours. They’re not stressed about how much they’re making. By and large they’ll be happy with what they’ve got. And if they’re not, then they have pathways through the union to come to us to get help.’’
Wilson - a former retail worker himself - is familiar with the other sorts of workplaces, where everything is stressful, from pay and staffing levels and access to breaks, to the relationship with management.
But whether they’re selling toasters or the bread to go in them, there’s a new mood now at play in the retail sector, he says. It’s the change in attitude among the workforce following Covid, when retail workers, in the supermarket sector in particular, were heroes of the hour, elevated to essential.
‘‘It’s done a lot to dispel the myth of unskilled labour, the attitude, the idea that working in a supermarket is unskilled labour.’’
And that goes for other parts of the retail industry, he says.
Approached for comment, Kmart agreed, in a statement.
‘‘At Kmart, we work hard to be an employer of choice in New Zealand, and that includes focusing on the future of our team by providing them great job security. We’re proud of the roles we can offer within the Kmart family for fulfilling careers with competitive remuneration and opportunities for growth, with dedicated pathways and training for entry-level team members into management,’’ the spokesperson said.
‘‘We are always amazed by the incredible talent pool that apply for roles with us in New Zealand that go on to become great Kmart team members.’’
Asked specifically about the living wage component of the Kmart collective agreement - which covers all their 27 New Zealand stores - the spokesperson did not respond.
In September, the 2024-25 living wage will rise 6.9% to $27.80, to reflect the increase in New Zealand’s average hourly wage, comfortably better than the statutory minimum wage, which sits at $23.15 an hour after a 2% increase this year.
In recent times the gap between the two has been closing, but not this year.
The lowest paid Kmart workers will get the bigger number, $27.80 an hour, from September and anyone there already earning more than that, gets a 5% top up.
Hughes sees it as an employer meeting their responsibilities.
‘‘They have a duty of care to their employees and the duty of care should be that you can earn enough in your 40 hours a week to be able to live in a way that that doesn’t make you have to forego the basic necessities.’’
That’s not the case everywhere, he says. At Woolworths, for example - a business operating in a different part of the landscape, but still big retail - there is evidence of stress.
In union surveys, 75% of respondents have said they can’t make ends meet. Only about 20% said they could afford a one-off unexpected bill of $500.
‘‘We are proud to pay our store team market-leading rates, to offer market-leading team benefits, and to be rolling out a $45 million safety improvement plan to ensure our team is safe at work,’’ the spokesperson said.
For all Kmart’s collective agreement conditions, it’s not actually an accredited Living Wage Employer, with the Living Wage Movement Aotearoa (LWMA), that’s a further voluntary process. But quite a number of retailers are.
Of the country’s 379 accredited living wage employers, retail accounts for 12%. Among some of the other better represented sectors are finance, legal firms, banking and manufacturing. Becoming accredited involves a robust process, LWMA executive director Gina Lockyer says, and the living wage must extend to regular contractors.
‘‘This distinction ensures some of our lowest-paid workers, such as contracted cleaners and security guards, are lifted out of poverty and recognised for the valuable and essential roles they fulfil,’’ she says.
It’s life-changing, she says.
The concept of a living wage is not new. Indeed it derives from a landmark Australian labour law decision back in 1907 in which Justice H. B. Higgins ruled that an employer had to pay their employees a wage that was reasonable for ‘‘a human being in a civilised community’’ to live in ‘‘frugal comfort estimated by current human standards’’, irrespective of the employer’s capacity to pay.
The Living Wage Campaign launched here in 2012.
There’s a significant overlap between collective agreements, like the one at Kmart, and living wage conditions.
The 2024 first quarter Household Labour Force Survey put the number of employees covered by New Zealand collective agreements at 434,800, 18.2% of wage and salary workers - although it’s worth noting that self-employed independent contractors, none of whom will be covered by a collective agreement, are excluded from these statistics.
Dr Stephen Blumenfeld, of the Victoria University of Wellington School of Management, says there are no publicly available data on the precise number of employees in New Zealand on the living wage, because of the voluntary nature of the accreditation programme.
‘‘Nevertheless, according to the Living Wage Movement Aotearoa New Zealand, as of 2022, there are over 130,000 employees covered by a collective agreement that includes a living wage provision. This represents about 10% of all employees in New Zealand who are covered by a collective agreement.’’
Workers in the education and healthcare sectors are most strongly represented.
The most recent research on the impact of collective agreements on wages indicated a positive relationship, he says. Those covered by them generally fared better than employees overall.
The union movement had been hoping to extend that ‘‘generally better’’ circumstance to more working people through Fair Pay Agreements, a new system of sector-level bargaining introduced by the last Labour government but repealed during the current coalition’s rapid fire first 100 days.
Work had already begun on a Fair Pay Agreement (FPA) covering all supermarket workers.
The regulatory impact statement for the fair pay legislation found ‘‘evidence that wages had not kept up with productivity improvements’’, something the Act was intended to address. It further suggested that in some labour-intensive sectors of the economy, employers might be competing by engaging in a ‘‘race to the bottom’’ in terms of wages and conditions.
In repealing the legislation, Minister for Workplace Relations and Safety Brooke van Velden noted in her cabinet paper that the decision would impact, in particular, ‘‘women, Māori, Pacific people and young people’’, those more likely to earn low wages. Disabled people too.
Asked this week about the government’s plans to mitigate the impact of the repeal on those groups, the Minister did not respond.
‘‘Gutted,’’ Hughes says, when asked about the roll back.
‘‘That would have made a huge difference,’’ he says of the FPAs.
‘‘So what this current government has done is given these workers a paltry tax cut, it’s paltry for most of these workers because they don’t earn much. And the one thing they could have done to actually improve their lives, is maintain the Fair Pay Agreements on groceries.’’
The repeal was on the minds of those who gathered a stone’s throw, or two, from the Kmart store last week, at the Dunedin Gasworks Museum, for the Dunedin launch of the Council of Trade Unions’ (CTU) project, Reimagining Aotearoa Together.
It’s about mahi amaru, which the CTU translates as ‘‘good work’’, but can also be translated as ‘‘dignified work’’ - but that’s not all. Concerns about the need to rebuild infrastructure, plan for the transitions the future will demand and ending inequality are up for discussion too.
It is at least in part prompted by the repeals of the coalition’s first 100 days.
It was the approach recommended by Treasury, with the aim of moving workers off the low floor of statutory minima.
The collective bargaining that FPAs involved, across an industry, would have achieved that, Polaczuk says.
‘‘Because, the minimum wage, it would be difficult for anybody to live on the minimum wage. And I think the word minimum itself shows that it’s not intended to be the middle, or the average, definitely not the best. I don’t see why people who have been working in industries, which require skills, knowledge, experience, and where they’ve worked for, in some cases, many years, should be surviving on minimum conditions.’’
Nobel Prize-winning economist Joseph Stiglitz addresses the issue in his new book, The Road to Freedom: Economics and the Good Society, in which he discusses the externalities market economies can produce, including where people are poorly paid.
‘‘When corporations don’t pay their workers a living wage, they impose costs on the rest of society when we have to provide them with basic needs so that they can survive,’’ he argues.
It resonates with Polaczuk.
‘‘Stiglitz is correct,’’ she says. ‘‘Where people are not receiving adequate wages, they are relying on provisions elsewhere.’’
And that’s a particular concern if the government is also cutting public services, that some of the low-paid might otherwise rely on, she adds.
CTU president Richard Wagstaff fronted the Dunedin Reimagining Aotearoa meeting and said later the big picture question was how we might move towards becoming a low-emissions, high-wage, high-skilled, high-productivity country.
As far as the workplace went, we needed to lift expectations more broadly too.
‘‘Work should be well paid, it should be secure, it should be safe and healthy, of course.
‘‘But there’s another dimension that we think really needs to be lifted up in New Zealand and that is really the culture of work. Work should be a place where you have a real sense of purpose, meaning, respect. You should have a voice in the workplace, you shouldn’t feel like you’re not valid.
‘‘It should be a place where those things are really enhanced because of the quality of management.’’
It’s interesting to talk about Kmart, Wagstaff says, because they compete with organisations who don’t have to respect decent wages, or a union voice or meet higher standards, Wagstaff says.
‘‘They would have if we’d had Fair Pay Agreements, because they would have set a standard for industries. And that would have been great for Kmart, because Kmart wouldn’t have had to have competed with bottom feeders.’’
There is a contrary view, held by The New Zealand Initiative, among others.
Senior fellow and chairman Roger Partridge says one of the problems with FPAs would have been setting the boundaries for an ‘‘industry’’.
‘‘Is it the ‘retail industry’, the ‘grocery industry’, the ‘supermarket industry’? The problem with FPAs is that they take a one-size-fits-all approach,’’ he says.
‘‘A set of arrangements that suit one retailer might not suit another. Consequently, FPAs risked locking in practices that might harm competition from innovative firms wanting to adopt different business models.’’
In Kmart’s case, its collective agreement was presumably designed to ‘‘lock in practices’’ that suited it, Partridge says.
And inasmuch as the agreement was freely entered into by employer and worker, it was a product of the market.
In the end, it seems that the market also spoke to Ikea. Faced with such huge staff turnover they took desperate measures, and decided to pay their remaining staff more.
Hughes says he’s seen that here. Where a company has fought tooth and nail to limit wage increases, then had to come back to the table to vary terms because they weren’t paying enough to keep their staff.
‘‘It’s an argument we often make at bargaining, you know. Look, if you pay people well and you treat them well and you give them good terms and conditions, they’re not going to be looking for other work.’’
