The subcontracting model used by Chorus to deliver ultrafast broadband to more than a million people was the right tool for the job but left technicians carrying too much risk and migrant workers vulnerable to exploitation.
The network operator will introduce a number of changes to its supply chain model in an effort to shore-up vulnerabilities exposed in a report by MartinJenkins. The consultancy was tasked with reviewing the practices after a Labour Inspectorate investigation uncovered widespread issues through its contracting model.
They ranged from poor record keeping and underpayment at the low end of the scale to more serious incidents such as forcing workers to work for free in the hopes of getting full-time work or bribery to get a sponsored visa.
Chorus contracts out most of the ultrafast broadband network construction to VisionStream, Downer, Broadspectrum and UCG. The work is broken into two parts – building the actual infrastructure and connecting households to that network. Visionstream and UCG have the connection contracts, and in turn, subcontract that work out to 365 smaller businesses.
MartinJenkins found the model was appropriate for the UFB build, which at 53 percent uptake has far-exceeded the 20 percent expected by 2020, as it could rapidly draw on a migrant workforce to meet that buoyant demand. However, that model also raised the risk of migrant exploitation, something not well-understood by Chorus, Visionstream, or UCG.
“The subcontracted model has been applied by Visionstream and UCG in such a way that the risks associated with volatility of demand for UFB connection may be disproportionately borne by the end technician,” the report said.
“Chorus and the service companies would benefit from a more joined-up approach to workforce strategy and a shared understanding of needs, pressures and risks, with a particular focus on potential impacts on the viability of individual crews.”
The network operator and its service companies had poor visibility into worker conditions and relied too heavily on assurances from its subcontractors.
The Labour Inspectorate initially identified 73 subcontractors that breached minimum employment standards, with that figure now increased to 76 after the probe was made public late last year. It’s completed 48 of those investigations, of which six cleared firms of any breach.
Chorus chief executive Kate McKenzie said the company had underestimated the risk around employment conditions and had focused too heavily on productivity, health and safety, and quality.
“When issues arose we relied too heavily on the assurances given, which are not appropriate checks in a situation where there are a large number of migrants,” she said in a statement.
“We will make the necessary changes to ensure fairness in line with employment laws – no matter where in the supply chain workers are contributing.”
McKenzie told a media briefing that it was difficult to pinpoint where the balance of risk should fall, and that will be an ongoing piece of work to ensure the risk is being borne by the right party.
“In some circumstances, if a technician hasn’t done a quality job and hasn’t completed the work they should’ve, that’s a risk they should bear,” she said. “When it comes to things like contracting arrangements for other things besides quality, it’s not so clear the end technician is in the best position to bear those risks.”
Chorus won’t have to vary its contracts with UCG and Visionstream. McKenzie said the contracts contain clauses that can keep the service companies “honest”. She said the service companies are on board with rolling out the recommendations.
Union E tū has been a long-time critic of Chorus’ contracting practices. Communications industry coordinator Joe Gallagher said the report validated everything he’s been saying for years.
“It’s been shown that this model has led to exploitation of migrants, particularly in Auckland, but in other centres as well,” he said.
The report found linking visas to a specific employer created a perception for workers being exploited that they had limited choices. It was also a barrier to reintegration and recovery for exploited workers.
“While the New Zealand immigration system does allow migrant workers to apply to change the conditions of their visa, including their employer, workers are often not informed of this and may also be concerned that doing this may place their visa status at risk,” the report said.
“As long as employer sponsorship is the dominant entry pathway to New Zealand in both the temporary and permanent migration programmes, visa holders will be more likely to remain in employment relationships marked by pronounced dependency.”
The report notes that the scaling down of the contracting workforce may put further strain on migrant workers seeking to stay in the country.
Chorus has set up a process with government agencies to help shift migrant workers to firms meeting their legal obligations and has rehomed 21 out of 26 workers so far.
McKenzie said the company has had a lot of cooperation from Immigration NZ and will share its experiences with the government to help inform any immigration policy decisions to limit exploitation.
Among the report’s recommendations was for Chorus to work with the government in developing a more systematic approach for ensuring exploited workers can transition to good employers and keep their visa status.
This could mean introducing a fast-track system for workers under the Chorus banner, or a visa that is industry or project-based, rather than employer-based, it said.
“This would also provide a clear signal to workers that reintegration and recovery is a priority for Chorus, reducing the fear among workers that they will be deported if they report abuse.”
E tū’s Gallagher said many migrant workers ended up at the mercy of third-tier contractors, which he described as “cowboys”.
“It’s always easier to blame someone else in this situation and that’s the problem with the model and you’re seeing it in the construction industry as well,” he said.