Why being made redundant in NZ is so tough

by Kate Newton / 04 September, 2018

Jason Welch in front of the Cadbury building, where he worked for 19 years Photo: RNZ / Kate Newton.

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Axed over the Christmas break, told to be out by lunchtime after 50 years' loyalty - this is redundancy in New Zealand, where there's no mandatory notice period or compensation payments and little support for those searching for new work.

It's mid-winter at the bottom of the southern hemisphere and Jason Welch is wearing jandals, shorts and a t-shirt. He's a big man, with a sleeve tattoo on his right arm, but above him, the shuttered Cadbury factory is a behemoth. It dominates an entire block in Dunedin's low-rise downtown and on this fading winter evening, the four-storey concrete facade, painted the colour of milk, glows orange. As traffic rushes behind him on the one-way heading north, he squints up: "What a waste."

For 19 years, Welch was a Cadbury worker, clocking in each afternoon for the evening shift. Starting off on the packing line, over the years he gleaned the skills needed to operate the machinery, which ingested nothing special but, through an alchemic process, churned out chocolate bars and blocks and Pineapple Lumps and Jaffas and mountains of Rose's chocolates glistening in kaleidoscopic foil.

He points out where everything was: the workers' entrance set into heavy wooden double doors painted deep purple, the four factory floors each with their own specialty, the engineering workshop, the workers' cafeteria, and a huge distribution dockway, with a view through chain-link gates to Otago harbour. Twenty container loads of chocolate used to leave from this dockway every day. Now it echoes with the shrieks of brawling seagulls.

In 2017, Cadbury, now owned by multinational Mondelez, announced it would close its century-old Dunedin operation, axing 350 jobs. On 29 March this year, Welch and about 30 remaining employees worked their final shift and then walked out the door. Many had worked for Cadbury their entire adult lives. Now what?

Welch and his workmates are among the thousands of New Zealand employees each year who are made redundant. So far in 2018, at least 1000 jobs have either been lost or face the axe - university librarians, plastic card manufacturers, wood processors, community journalists - and those are just the redundancies that have been reported.

Research done in 2009 by Statistics NZ and policy think-tank Motu found up to 40,000 people lost their jobs when businesses closed or were restructured between 2001 and 2004. And an OECD report published last year says 29,000 New Zealanders reported being laid off, made redundant, or dismissed from their previous job.

What becomes of those people - particularly those trained in industries such as manufacturing and processing that are haemorrhaging business offshore?

The Statistics NZ paper, along with two more follow-up Motu reports, and the OECD report, found people who lose their jobs earn between 12 and 22 percent less than comparable workers four to five years afterward, even if they find other work.

"Income and especially wage effects upon displacement can be considerable, even for those who successfully return to work, and seem to be more pronounced in New Zealand than in most other OECD countries," the OECD authors wrote.

New Zealand ranks in the bottom third of the OECD for spending on what are known as active labour market policies - government interventions to help people into meaningful new work. The organisation's report last year said Work and Income focuses largely on people receiving benefits, which only includes a minority of people made redundant. "As a result, social assistance and public employment support are reduced to a minimum and act very much as systems of last resort for displaced workers who end up in the welfare system… Displaced workers are, to a large extent, left by their own to find a new job."

Cadbury was one of the largest manufacturing businesses in Otago, where the industry has shrunk by 4000 jobs in the last decade Photo: RNZ / Rebekah Parsons-King

On paper, Jason Welch is a redundancy success story - he walked straight out of the Cadbury job and into another. But from a senior role where he supervised dozens of other staff and used technical skills built up over nearly 20 years, he's gone to sorting parcels at Courier Post 30 hours a week, for just above minimum wage. "What I'm earning a fortnight now is what I was getting a week at Cadbury's, so it's a lot of money to lose."

Don't get him wrong, he says. At 41, with two teenagers and a mortgage, he's grateful for the work. "Look, it's one of those things - you don't want to be wasting your redundancy, so you take what you can get."

It breaks you though, he says. "You've gone from a role where you thought in your own head you were important … to a role where you're nobody, you're absolutely nobody. You're the newest person there, you don't know what you're doing yet, you're still training to do the job, but it's not fulfilling, and that gap you were trying to fill at your other job" - he gestures to his chest - "it's getting bigger."

"You want something that's gonna fulfil you, that's gonna make you feel whole, that makes you feel like you're important to your community, to your people around you, that makes you feel like your kids look up to you and respect you."

At the moment, he doesn't feel like he's got that. "I feel like I'm nothing."

With no mandatory notice period for redundancies, the process can be brutal. The day before Glenn Bratton's 49th birthday, he got a call from his boss at smallgoods manufacturer Hutton's, telling him to come in for a meeting. It was early January, 2014, and the Hamilton factory's 125 workers were all on Christmas break. Bratton and his workmates had watched the business slowly decline - machinery run down, no new products, certainly no advertising - so when they gathered that day there was little surprise when they were told the factory was closing.

"They gave us the notices and some of them were dated the start of December," he remembers. "They must've wanted to keep it quiet over Christmas otherwise there might've been an uproar."

Brothers and sisters worked alongside each other at Hutton's, he says. Two, three generations in one family. Many had walked straight out of school at age 15 and into the job. "A lot of them couldn't read or write, and a lot of [job-hunting] you could only do online. Some of them couldn't use a computer - I couldn't use a computer. I had to buy a computer and learn how to use it to get a job."

The former Hutton's factory in Hamilton. Photo: RNZ

Bratton managed to pick up work at a timber mill, with skills he'd gained prior to his 17 years at Hutton's. "But that was trawling through Seek for days and weeks… I applied for 50, 60 jobs. I got about four responses." Four years later, he's only just made it back to the pay level he was on when he was made redundant. His experience is typical, he says. "I know people that got jobs straight away, but they were low-paying jobs, a lot of them - but you're gonna take anything you can get, to get some money."

Some struggle to find any job at all. The OECD research found that, two years after being made redundant, 16 percent of people remained unemployed. The most recent Motu follow-up report, published last year, found employment rates were still eight to 12 percent lower five years after redundancy, compared to other workers.

Bratton can tell you about those people, too. "There was one guy from the boning room - he was illiterate. I've seen him delivering pamphlets down in Dinsdale. I stopped and said hello and that's all he's doing, is delivering pamphlets and he's making $150 a week or something."

Eight kilometres down the Dunedin motorway from the Cadbury factory, a man in a wool jersey and a wide-brimmed hat is mowing the sloping lawns around a brick-and-tile house. The shrubs in the garden outside are freshly pruned and mulched.

Inside, net curtains mute the bright winter sun and shade the screen of Teresa Gooch's laptop, which displays a job ad for a part-time delivery driver. It's been 16 weeks since she finished at Cadbury, working the final shift alongside Jason Welch, and she's yet to find work.

She estimates she's applied for 25 jobs so far. She's apologetic: "Probably doesn't sound like a lot." She was "a bit picky" to start off with, only considering full-time, when most of the positions advertised are part-time or casual, and generally minimum wage. "Because I'm on my own, a single parent, and I have a mortgage, I didn't really apply for the casual, part-time positions."

She's done the calculations. Her mortgage, insurance and other housing costs, not including food, come to $460 a week. The take-home pay each week on minimum wage, even full-time, is just over $560. That would leave her with $100 a week for everything besides the roof over her head.

Gooch keeps track of everything she's applied for in a hardcover Warwick notebook, noting down the hours, the skills needed, the contact person and the closing date for applications. As each date passes and she hears nothing, she puts a question mark next to the entry. When enough time passes, she crosses the entry out.

Teresa Gooch, pictured with dog Charlie, has spent months looking for a new job Photo: RNZ / Kate Newton

The redundancy pay-out she received - generous, after 17 years of service - is already running out. What might come next - selling the house, maybe, or asking her 22-year-old son to move out so she can take in a boarder, or leaving Dunedin - is a constant worry. "I'm being less picky now. I just need to get something, anything I can, and work from there." She'd hoped to get some kind of home support or nurse aiding role, but the certificates she did 20 years ago are outdated. "That sort of training isn't going to get me into anything, I've now realised."

After weeks and weeks at home, sometimes Gooch worries she's going mad. She walks her little woolly dog Charlie each day, and the neat flower beds are the result of three days' gardening the previous week. She feels tethered to the house, though. "Some days I'm eight, nine hours on the computer just searching through, applying for jobs... It's hard to go away and do anything because I feel like I'm wasting time not looking for a job."

When the factory closure was announced, Gooch thought she and her co-workers would be sought-after employees - they were hard-working and loyal. "I was one of the ones drumming it into people to be confident… I had high hopes for being snapped up somewhere." But she emerged from Cadbury to find the industry in Dunedin had shrunk around her: between 2007 and 2017, nearly 4000 manufacturing and processing jobs in Otago were lost - a drop of 19 percent.

Teresa Gooch keeps track of the dozens of jobs she's applied for in a notebook - crossing out the entries when she doesn't hear back, or misses out. Photo: RNZ / Kate Newton

First Union general secretary Rob Reid says Gooch, Bratton and Welch's stories are typical of what happens to people made redundant in New Zealand. "Even if there's some redundancy paid, and that's not always the case, people ... are more likely to get new jobs at a lower rate of pay or fewer hours."

It shouldn't be like that, he says. Many other OECD countries actively support people to retrain, with proper career guidance, "so they're not sitting down after redundancy … getting lower and lower expectations of the type of work they can do," he says. "That's an absolute waste of that person's life and an absolute waste for the economy as well."

In his hunt for a job after Hutton's, Glenn Bratton found he had only himself to rely on. "Once you walked out the gate, that was it - no one wanted to know you. Even WINZ didn't want to know you, because you've got all that [redundancy] money. So they don't wanna know you until all the money's gone. They were real arseholes about it, to be frank."

Jason Welch is facing the same dilemma. "There's not a lot of support out there to try and work out what you want to do. That's my biggest concern - future employment. I want a job where I love going to work. And I don't know what that is at the moment. Who do you go and see? … Do you go to WINZ? At the best of times nobody wants to go to WINZ."

The OECD researchers found only a minority of people contact Work and Income after being made redundant. "Non-eligibility for welfare benefits is one reason … [but] several other aspects seem to play a role as well," they wrote. "First and foremost, the support Work and Income offers is typically targeted to assist disadvantaged jobseekers and the public authorities do not necessarily have anything to offer or any suitable vacancies for better-skilled displaced workers."

Welch and his former colleagues have struggled to get their particular skills recognised, he says. "All those people I've worked with over the years that can't be doctors or lawyers, but could do their job really well though, are now out on the street trying to find work that isn't a high education job."

He would like to work with wood - "building or joinery or something like that" - but he can't afford to study full-time and besides, classroom learning doesn't come naturally to him. "I learn by doing, and that's how I got good at what I did. Trying to get someone to give you the opportunity to go and do something, like going to be a builder or hammerhand or plumber or electrician - there's still so much you've gotta do before you can go and do those jobs. It makes it very tough."

Council of Trade Unions secretary Sam Huggard says part of the solution is offering different ways for people to learn. "There's developments that need to be done in terms of modulisation of courses, so people can continue to do that learning but not have to take time out of the full-time paid workforce."

In May, the government announced it would seek help from unions and business leaders on a "just transition" plan, to help energy industry workers whose industries are threatened by climate change into other jobs. Rob Reid says the "just transition" approach should apply to any worker who loses their job. "Part of a just transition is that people are actually paid to retrain … so that retraining can take place for jobs that we're told employers are screaming out for workers for."

At the very least, workers who lose their jobs should be getting tailored advice, he says. "[That] involves actually sitting down with each worker and developing plans for what their next job opportunities could be, rather than just saying, 'Oh well, if you want to know a bit more or if you want to get a CV written, just go along to your local Work and Income office and we can help you.' That is far too passive."

Council of Trade Unions secretary Sam Huggard. Photo/www.union.org.nz

The individual approach Reid wants to see has been tried before.

On 15 May 2009, Jack Taylor was an employee in the cutting room at Christchurch clothing manufacturer Lane Walker Rudkin. It was a Friday, when staff worked a half day. Not long before their shift ended, the 350 staff were divided into two groups and, like lambs to the slaughter, directed to different rooms. The receivers had been called in and the company would be folding, they were told. Workers in one room were given notice their jobs would end later that year. Those in the other room, including Taylor, were told their jobs would not exist past 12:30pm that day. "We were told to go to our lockers, take our personal gear, and leave the premises," Taylor says.

Many people had done nothing else their whole working lives. "They didn't know what to do, they didn't know where to go," Taylor says. "They were left literally out on the street, on their bikes and in their cars and off they went." One woman had worked for the company for 51 years. "She was beside herself trying to drive her car out of the car park at 12.35pm that day."

Still grappling with the news himself, Taylor got a phone call. It was the National Distribution Union (now First Union), asking if he would spend a few days getting information from his workmates about what other skills they had and what work they might like to do. With pressure from the union, local politicians and those within the Canterbury manufacturing industry, the Ministry of Social Development agreed after a week or so to fund a full-time role for Taylor, winkling out new employment for his former colleagues.

One by one, he talked to every single worker, "getting to find out what they wanted to do, whether they wanted to do full-time, part-time, whether they were going to retire; what other skills that they had that I could match up to employers".

His phone was "running hot all the time", he says: cold-calling local employers to ask about vacancies, arranging transport to make sure people got to job interviews, checking on their welfare as the weeks dragged by for some of them. "I just kept at it and at it and at it really. TradeMe Jobs and Seek I got on at least twice a day and I also had all the numbers of the people that were made redundant and I made a point of contacting each one of them every two weeks to make sure they were okay, mentally wise, and whether they wanted help." Some he took along to the bank to help them arrange mortgage holidays; others he referred to counselling.

It took nearly a year, but in the end Taylor found work for all but six or eight of Lane Walker Rudkin's 350 former employees. Some ended up viewing their redundancy as a gift. "There was a woman who'd had her heavy vehicle licence and she'd always wanted to be a truck driver… She just couldn't believe how good it was, getting outside in the fresh air driving a truck like she'd always wanted to do."

The experiment wasn't cheap for the ministry, "but the results were there", he says. "The people that pushed for it said, 'Well we don't think you [the ministry] can do it as well as what we're arranging for it to be done, because it's on a one-to-one basis, they know Jack, they're not talking to a stranger on the phone and if they've got an issue they're quite prepared to talk about it.' That was the big thing."

Some of the staff made redundant when Lane Walker Rudkin closed in 2009 had worked there for more than 50 years. Photo: Alexander Turnbull Library, National Publicity Studios Collection. Reference: 1/2-034150; F

What Jack Taylor did at Lane Walker Rudkin was replicated a handful of other times, but the union got the message it wasn't politically popular with the then-National government, Rob Reid says. "We were able to do a couple in 2009 but it became harder and harder. We had a factory, Tachikawa, a timber mill in Rotorua, where over 100 people were laid off. [The ministry] refused to fund that but we managed to get Te Puni Kōkiri to fund that work."

First Union has funded some of that work itself in the intervening years, but Reid wants the government, as part of its Future of Work policy, to consider bringing it back on a much wider scale. "Because it was workers looking after workers, they could do things a government official couldn't do." He believes the approach may even have saved lives, "simply by being that active - going round to people's residences and finding people were at their wits' end".

The 2009 Motu and Statistics NZ research found that where re-employment was built into the closure or restructuring process, it was possible to minimise the effects on both wages and unemployment rates. A year after redundancy, the unemployment rate was 6 percent lower than among comparable workers who didn't lose their jobs, and there was almost no difference four years on.

The OECD authors, too, back a much more hands-on approach from government agencies, including strengthening training counselling and career guidance for adults, and making sure that skills workers have acquired on the job are properly recognised, even if they don't have formal qualifications. "For those aiming to change occupation, combining training with work experience would enhance the chances of finding a suitable job."

In New Zealand, unlike Australia, Canada and several other OECD countries, there is no legal requirement to pay workers redundancy compensation, leaving unions and workers to negotiate redundancy clauses in their contracts. The payments are taxed at 33 percent, and if a business goes into receivership, employees' back-pay and redundancy payments are capped at about $22,000 - regardless of how long they've worked for the company or what redundancy clause their contract contains.

There's no guarantee that a company will pay anything at all, as Rob Dempsey found out. A storeman and distribution worker for most of his working life, Dempsey's natural habitat is Auckland's East Tamaki, where factories and warehouses squat row upon row, bordered on three sides by the brackish water of Tamaki River.

Ear muffs slung round his neck, he sits in the cafeteria of his current employer, Vitaco, and recalls the day in 2016 that he and 150 other Pumpkin Patch head office and distribution workers were told that not only did their jobs no longer exist, but there was no money to pay out their redundancy. "We were basically shafted."

They weren't sure who was ripping them off, he says - whether it was the company or the receivers on behalf of ANZ, which was the largest creditor. Facing the prospect of unemployment and no redundancy to tide them over, Dempsey and other union delegates embarked on a six-month battle to get their money.

Rob Dempsey found a new job after being made redundant from Pumpkin Patch, but says, over a year later, some of his former workmates only have casual or temp work Photo: RNZ / Kate Newton

Unlike many other workers in the same situation, the Pumpkin Patch employees were also shareholders. Pubs in Howick and Titirangi became war rooms as they discussed how they could wield their shares as a weapon. "KordaMentha, or the bank, wanted a particular receiver to do the liquidation. So we had the opportunity to vote for who was going to be the [liquidator]. We voted for one the bank didn't want."

The day of a planned protest outside ANZ on Queen Street, Dempsey got a phone call - the receivers wanted to talk. "They said, if you guys vote for our liquidator, we'll pay you redundancy. So the money magically appeared out of nowhere."

It still wasn't anywhere near what their contracts had provided for, he says. "For most people the payment should've been around $30,000 or $40,000 - we ended up with somewhere between $10,000 and $14,000 after all that."

Both the Council of Trade Unions and the OECD advocate introducing mandatory redundancy payments, funded through a system similar to ACC levies. The idea was also proposed by a government advisory group, with members from the State Services Commission, unions and Business New Zealand, in a June 2008 report. The timing was poor. Five months later, as the global financial crisis reached a nadir, the Labour-led government was voted out - and the report was shelved.

What money can't make up for, and the research doesn't measure, is the emotional impact of redundancy.

Jason Welch doesn't remember much about the day Cadbury announced the closure of the Dunedin factory but afterwards it became "terrible" to go to work, he says. "People who were normally lively … were quiet, withdrawn. A lot of broken people that just wanted to get out."

All around him, the factory's machinery was being dismantled and the ranks of co-workers were dwindling as the redundancies took effect. "You walked around and it was like a ghost town," Welch says. "It was heartbreaking, absolutely heartbreaking to watch."

First Union's Rob Reid says the experience of redundancy is "almost existential" for some people. "Their whole life is, 'I am a clothing worker', or 'I am a wood processing worker'. That is taken away from them … making them often feel sort of worthless."

Those are the former workmates doing it the hardest, Welch says - the lifers. "That's what they knew, that's who they were, it was everything about them. They were Cadbury workers and they were proud of it…. and their whole world got torn up."

Reported job losses in 2018

    • July: Te Papa - 20-25 job losses proposed (Wellington); Nestle - 55 potential job losses (Wiri); NZ Bus - 226 jobs cut after contract change (Wellington); The Warehouse - 120-140 job losses
    • June: University of Auckland libraries - 45 job losses proposed; University of Auckland School of Music - 5 jobs cut; Spark - 100-200 potential job losses (nationwide)
    • May: Cadbury World - 39 jobs (Dunedin)
    • March: Schneider Electric - 50 jobs (Christchurch); Cadbury - 350 jobs (Dunedin)
    • February: Stuff/Fairfax community and rural titles - up to 60 jobs affected; Juken wood mill - 100 jobs (Matawhero/Gisborne); ANZ - 39 job losses proposed (Wellington)
    • January: AB Corp - 55 jobs (Christchurch)

* Since she spoke to RNZ, Teresa Gooch has found work at a bakery, on minimum wage. She still hopes she can eventually start a new career in support work.

This article was first published on Radio NZ.

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