Employers that failed to act in spirit of wage subsidy scheme 'may get their comeuppance'

Wednesday, 27 January 2021

Jared Abbott from First Union says companies that didn’t treat workers well during the coronavirus lockdown may find “it can come back and bite them in the backside”.

Companies that haven’t acted in the spirit of the wage subsidy scheme to support their staff during the Covid-19 pandemic may get their comeuppance during wage negotiations, according to the second-largest private sector trade union.

The Government set up a $14 billion wage subsidy scheme last year to help keep people in jobs during the pandemic. However, some employers that took the subsidy paid affected staff less than the target of at least 80 per cent of their normal wages, and then laid off large numbers of workers.

“Where we think companies have profited off those wage subsidies and not taken care of their employees, we may well be looking at using collective bargaining as a way of remedying those kind of things,” said Jared Abbott, the secretary for transport, logistics and manufacturing at First Union.

“It will shape the way we collectively bargain with these companies and what conditions we need to put into contracts to protect that kind of stuff from happening again.”

Around 9000 employees across the country will be impacted by the vaccine mandate introduced by Fletcher Building (file photo).

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More than 10,000 companies have been audited to check they've met the rules of the wage subsidy programme.

Abbott singled out construction giant Fletcher Building, which took $68 million of wage subsidies, cut workers’ pay by up to 50 per cent, and laid off 1000 people in New Zealand.

Fletcher has said its business was massively impacted as a result of Covid-19 restrictions, leading to a $196m loss in the year ended on June 30, 2020. The company has said it won’t pay back the subsidy. It was used as intended to pay staff, but only covered a portion of the significant losses the business incurred, it said.

Abbott said that before even worrying about paying off the wage subsidy, companies such as Fletcher Building should take care of their workers that have been left out of pocket, many of whom were very low paid.

Fletcher Building is due to report its first-half earnings next month, and has said it could make an extra $100m. It expects pre-tax profit of between $305m and $320m in the six months to the end of December, up from $219m in the same period the previous year. The company is likely to resume paying dividends to shareholders this year, after suspending payments last year.

“It’s prudent for companies to make sure that they are not putting the entire company at risk by acting like business as usual when it’s clearly not. But as profits come through and collective agreements come up for negotiation, I think you can probably expect to see a bit of a bite back,” Abbott said.

The Warehouse Group has come under criticism for continuing with restructuring last year that cut thousands of hours and an estimated 600 jobs.

He said the Government appeared to be letting some companies off the hook.

“I think that some of these companies that Government relies on in terms of private-public partnerships are too big to fail for them, so they really get away with blue murder and get overlooked and it’s pretty frustrating,” he said.

The union was seeing concerns come through from workers, he said.

“There are a lot of claims that have been put up and clauses being negotiated around what happens in these kinds of situations now and how the workforce gets treated,” he said.

“I have also seen workers basically seeking compensation either by way of increased wages or other benefits largely driven by resentment over how they were treated during that Covid shutdown.”

Abbott also highlighted The Warehouse Group, which was criticised for continuing with a restructuring that cut thousands of hours and an estimated 600 jobs, while taking a $68m wage subsidy. It repaid the subsidy in December, and this month upped its forecast for first-half profit by $20m to $90m.

The retailer asked distribution staff to take a 10 per cent pay cut even as they worked longer hours through the lockdown, he said. The move backfired as staff began bargaining, took strike action and achieved a pay increase, Abbott said.

“When companies make these decisions they do end up having an impact on the morale of staff and it can come back and bite them in the backside,” he said. “These kinds of events bring out the best and worst in people.”

In response, The Warehouse Group said its people were its greatest asset and the company was constantly doing what it could to support team members.

“During the Covid lockdown last year we did everything we could to support our team, including paying all of our nearly 12,000 team members in full including those who weren’t working during the first lockdown,” a spokeswoman said.

She said that at the height of the lockdown, the company initially asked staff earning between $60,000 and $100,000 to take a 10 per cent pay reduction, which affected a small number of people in its distribution centre. The reduction request was quickly reversed as sales resumed and stores reopened, she said.

Changes made to rosters at The Warehouse were needed to ensure the retailer had the right people in stores working at the right time to meet customer needs, she said.

“This resulted in some redundancies, and we did all we could to provide support to those impacted by the change,” she said.

Abbott said a lot of new sites had joined the union as a result of how managers or companies had reacted during the Covid-19 period, although overall numbers were steady due to a lot of redundancies.

“Companies are being more cautious, and for a company being cautious it generally does mean trying to cut costs where they can. And often the easy option for them is to look at labour.”