Business

Migrant exploitation laid bare in report

Vanita Prasad takes a look at a report into migrant exploitation and what we’ve learned from the Chorus fallout

It’s been just over a week since Chorus fronted media as the reluctant poster child for running a business model ripe with migrant exploitation.

In front of gathered media, the telecommunications network’s chief executive Kate McKenzie presented the findings of an independent review into what it could have done to better protect front-line technicians from being taken advantage of within its ultra-fast broadband roll-out model.

Overall, the Martin Jenkins review found Chorus had made some good decisions (its subcontracting model was deemed the most appropriate for the UFB roll-out), some bad decisions (its risk and contract management was found to be lacking) and made recommendations so Chorus and other companies would be better equipped to recognise and prevent labour breaches.

Chorus commissioned the review last year after a Labour Inspectorate investigation alleged widespread breaches of labour laws had occurred in the company’s UFB supply chain.

The investigation found 76 subcontractors in Auckland had breached minimum employment standards ranging from failing to pay employees the minimum wage and holiday entitlements, to making unlawful deductions from pay and failing to provide employment agreements.

So how did it get so bad that Chorus found itself fronting issues of migrant exploitation when it could have been celebrating achieving its 2020 connection targets four years ahead of schedule?

The once-in-a-generation build and the migrants that built it

Industries often turn to migrant labour to resource significant one-off projects when local labour and skills are hard to find.

We see it happen with the seasonal labour shortages in horticulture and viticulture harvesting sectors, the Canterbury rebuild and in Chorus’s ultra-fast broadband roll-out.

But when that occurs, businesses need to adapt their modelling, risk management and auditing to mitigate the complex risks that come with vulnerable workforces - something Chorus and its service companies failed to do, the review found.

At the outset, the network operator required a nationwide workforce of technicians that could easily be scaled up and down to execute its once-in-a-generation build.

Chorus, which had already in part moved to a contracted workforce before it separated from Telecom, contracted out most of the ultrafast broadband network construction to VisionStream, Downer, Broadspectrum and UCG.

“Because the relationship is between the subcontractor and the employee it is very hard to convince these migrants that they are safe to come forward.”

The work was 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.

Connections to the network got off to a slow start and Chorus faced scrutiny over its delivery times. Soon the company’s connection demands accelerated. So too, did the demand for workers.

It found itself needing to nearly double its workforce at a time when New Zealand was experiencing a tight labour market. That led to Chorus and its services contractors expanding its numbers predominantly through an increased use of Indian and Filipino workers.

Eventually over 50 percent of the UFB Connect workforce engaged by Visionstream and UCG were migrants working on temporary migrant visas, and more than 70 percent of the UFB Connect workforce had English as a second language.

Typical to migrant workforces, many of these technicians were young, without family, had difficulties with English and had a lack of awareness of rights and entitlement.

Fear of being deported if they raised concerns about an employer kept many technicians quiet, says First Union general secretary Dennis Maga.

Maga, who welcomed the review, says he’s been in touch with many technicians who were threatened during the review process and after by their subcontractor bosses.

“They’re quite aggressive and believe they’re above the law the way they talk to these migrant workers.

“Because the relationship is between the subcontractor and the employee it is very hard to convince these migrants that they are safe to come forward.”

The review found Chorus, Visionstream and UCG did not adequately anticipate the risks of shifting to a heavily migrant workforce and should have shown clearer leadership and taken more action to ensure expectations of labour standards were met.

“Adequate protection would have included addressing migrant workers’ fear that complaining about labour standards could threaten their right to work in New Zealand.”

It also found that while some subcontracted businesses were knowingly breaching labour laws, many small companies were ill-equipped and in the dark about employee record-keeping requirements.

Including the Labour Inspectorate investigation and the internal review by Chorus, 109 subcontractors in the supply chain were investigated, 22 were blacklisted and 41 are in remediation for low-level issues.

Thirty companies were found to be compliant and 17 are in the audit process.

An arm’s length approach

When technicians did complain, some as early as 2016, their concerns were dealt with an ‘arm’s-length’ approach, the review found.

“Chorus’ response largely consisted of seeking and receiving assurances from the service companies that they were meeting the terms of their contract with Chorus and that their subcontractors were complying with the law.”

McKenzie says the company underestimated the risks of labour law breaches - instead focusing 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.

“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 says the company has given itself six months to implement the review's recommendations made, and has taken steps to re-home workers with subcontractors abiding by the law.

This includes Chorus establishing a supplier code of practice, greater auditing accountability and a worker welfare portal. The portal will provide information and materials for subcontracted workers to help them understand their rights and to provide resources where these are being infringed.

Maga says further steps need to be taken. He says an industry-wide accord on market rates and working conditions need to be established and workers and unions need formal inclusion in Chorus’s ongoing auditing processes.

We will be watching closely

George Mason, employment services general manager at MBIE, says he commends Chorus for taking a leadership role in addressing its worker exploitation issues and is calling for other large companies to do the same.

“More than half of all investigations made by the Labour Inspectorate involve migrant workers, so initiatives like this start to address the pressures and risks that exist for migrant workers."

Mason says it will be watching closely to see that Chorus adheres to its own recommendations.

He says business leaders must take initiative to engage with the issue.

“Don’t stop asking those questions until you get the right answers. Don’t just wait for the Labour Inspectorate to show up.”

Review due out

As a commitment to help eradicate migrant exploitation, the Government has a policy and operational review under way.

Led by MBIE, the review aims to make recommendations to the Minister of Immigration and Workplace Relations and Safety.

The review is due out later this year.

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