With courier drivers in the news for all the wrong reasons, including poor pay and long hours, Donna Chisholm spent a day on the road with one contractor to find out what their job is really like.
They’re a gift to Henri from his wife and children. “I donut know what we would do without you,” reads the inscription on the box. But somewhere between the office staff and Henri, the donuts have disappeared, and now the courier driver who dropped off the precious parcel but did not deliver it directly into hungry Henri’s hands is being blamed. For Sub60 contractor Jacqui David, the mission is urgent and simple – get the $14 worth of replacement donuts to Henri: stat.
“I have to find Henri with an i,” says David, racing up the stairs to an East Tamaki office with her cargo. The first box was delivered at 10.15am and it’s now after 1pm. Henri is out and the staff are unrepentant. “They got accidentally eaten,” they tell her. Henri is called and told his donuts have arrived. He’ll be up in a minute, he says, just leave them there. Risky.
David will never know if the donuts reached their man, but she does wonder who took the financial hit for replacing them and redelivering the box. At least she’s being paid for the 3.8km trip from Dunkin’ Donuts in Botany to Henri’s office. By the time she taps “completed” on her screen, the job has taken around 10 minutes and earned her $4.74. Just as well it made her smile. Financially, it wasn’t really worth the effort.
The pay and working conditions of the country’s roughly 5000 “independent contractor” courier drivers have been in the news after extensive coverage on Radio New Zealand’s Checkpoint programme drew attention to their long hours and, in some cases, very poor returns. Now First Union is preparing a test case for the Employment Court, in a bid to address what it calls a “huge power imbalance” in the contractual deal. It says courier driver earnings are dipping below minimum wage, and their working conditions are such that they should be considered employees, with the associated benefits of sick leave and holiday pay.
Professional drivers’ advocacy group ProDrive – which represents owner-operators – analysed the earnings of 20 Freightways contractors in June last year and found that, on average, the drivers worked 2800 hours a year and received about $63,300, of which $33,000 went on costs. That gave them the equivalent of an hourly rate of around $11 before income tax or depreciation – $5.50 an hour less than the minimum wage.
ProDrive CEO Pete Gallagher says a re-analysis of a smaller group in the past few months found conditions have improved, with average incomes of around $68,000, but he says he hasn’t yet dealt with a driver who’s earning as much as the minimum wage. “They’re the working poor,” says Gallagher. “It’s an industry-wide problem.”
In August, Freightways, which operates 11 courier and business mail brands including Sub60, Post Haste, New Zealand Couriers, Castle Parcels, Now Couriers and Kiwi Express, reported a $62.2 million annual profit – $40 million of that coming from courier and post services. In the same financial year, Freightways contractor Jacqui David was earning just $15.30 an hour.
She reports in when she stops for a coffee or toilet break, even though technically she doesn’t have to. “I do it to be polite.” Some dispatchers, though, keep an eye on the GPS on her van. They will know exactly how long she’s stopped for, or whether she takes an unexpected detour. “I’ll pop home sometimes, to go to the bathroom or eat my lunch, and they’ve said a couple of times, ‘How long are you going to be?’, and I’m like, ‘Shut up!’ It really annoys me; I need to have a break.”
Don’t get her wrong – Jacqui David loves her job. Driving is in her blood; her mother was a courier driver and she met her husband Ebenezer on the job. She’s been driving off and on since 2002, taking time off for her two children, a stint as a relief driver with another company, and a few short weeks as a postie, before returning as an independent contractor in February last year. Now, though, it’s only because her husband is on good pay as a truckie that she can afford to stay in business. She can’t afford to leave, because she’s locked into loan repayments on the new $37,000 van she bought last year. In six years, her Toyota Hiace will log up around 375,000km, averaging 250km a day.
David’s day begins a little later than many contractors – she’s negotiated more flexibility so she can start work at 8am rather than 7am, to drop off her sons at school. She’s usually still going at 6.30pm or later. Today, her first pick up is a couple of bathroom cabinets to be taken from Bunnings in East Tamaki to a new home being built 18km away in Wattle Downs. At Bunnings, the warehouse staffer who helps her load the van will be earning about $3 an hour more than David is. The builder at the construction site where she drops the cabinets will likely be on almost twice as much.
By the time she’s signed the necessary paperwork, loaded the van, negotiated morning traffic queues and hefted the cabinets up a muddy driveway to the site, a half hour has passed and David has earned $15.48. She’s pleased with that. Sometimes, she can wait 30 minutes for the parcel to be found at the pick-up point. This time, she was there less than three minutes.
Sub60 drivers get 59% of the fee for every job, but there’s a confusing range of different job rates, including heavily discounted fees for regular customers, through to premium charges for priority and “direct” deliveries. A string of discount jobs, she says, is profoundly depressing. Although ProDrive has been pushing courier companies to agree drivers should receive a minimum of $300-$350 a day (up from around $250 that was typical before the group got involved), David says she’d rather see the percentage for each job raised. A higher day rate, she says, could encourage some drivers to do only the minimum.
“What’s to say one person isn’t working harder than another and some are being lazy? I know some boys who would get that rate and sit back and relax.”
Relaxation isn’t in David’s lexicon. She routinely jogs to and from her van, and is often required to single-handedly manage deliveries that weigh up to 70kg. “I just figure out a solution and I’ve managed every time. I don’t think some of the boys can even do it. You can call for an assist but I don’t do that. It’s a waste of time.” She remembers getting help only once, when she press-ganged a couple of homeowners for the delivery of a 250kg tool cabinet.
Weight’s no issue on the next job: two boxes of papers to be delivered to the Manukau Family Court, and Beachlands. Beachlands! David almost yelps with joy – that’s a 30-minute, 30km trip and it’ll pay $43. The court job is relatively lucrative, as well: $16.33. Her day improves further when she diverts to Bunnings in Botany to pick up a shelf to deliver to Howick and sees six aluminium fence panels waiting to go to Beachlands. “I’ll take ’em – I’m going that way,” she tells them. Ka-ching. That’s an extra $25.50 for somewhere she’s already going. The distance jobs are the best, she reckons. “When you’re just going round and round all day you’re like, ‘Oh, my head.’ When you get to drive straight for half an hour, it’s ‘YES!’”
Before Beachlands, though, other jobs have come in. A box of mussels to take from Drury to Penrose ($30.23), a small box of truck parts from Papakura to Otahuhu ($22.37). She contacts her dispatcher on the RT with her call number. “173. I’m going to knock that Manukau [family court] off now and head to the mids.” In courier parlance, the “mids” are around Penrose, the central part of the southern run she covers. She switched from “mains” – Auckland central, where there are 50 drivers – to south, which has only seven, in August last year because it offered more work and was closer to home, in Conifer Grove.
It’s 10.30am and time for a toilet stop. There’s a company in Penrose that she knows has good, clean loos, so David leaves the van running (as she does with every job), and dashes through the reception area where the staff know her, and heads to the bathrooms. In less than two minutes, she’s behind the wheel again, heading east to Howick. After a quick fuel stop (the diesel costs $90 a tank and she fills up three times a week), she hits the open road to Beachlands.
“Very few of the drivers are Jacquis,” says Gallagher, “although they are all Jacquis. The conditions are the same whether it’s Tom, Dick, Harry or Abdullah.” He believes the contractors sign up without knowing exactly what they’ll be taking home. “When they’re in the interview, the companies can’t tell them the truth – that you’ll work all hours of the day, flog yourself to death, and they won’t pay you enough to feed your family.” He says drivers are told there’ll be a safety net of a guaranteed minimum daily rate, of around $300, but, when costs are accounted for, even that sometimes won’t give them the minimum wage. According to Gallagher, every contractor he’s dealt with in the past four years has the same range of returns and expenses. “Would anyone go into business if they didn’t expect they would make a living wage? The answer is no.”
He says courier companies have “driven themselves to the bottom. In order for them to make a profit, something has to give, and there are only two dimensions in the industry: the van and the driver. Once costs are cut to the minimum, there’s only one place you can capture costs, and that’s labour.”
ProDrive has raised the suggestion with Freightways of increasing the percentage drivers take from each job, but “they’re not going to move on it. That goes straight to the shareholder bottom line and it’s not something they are going to shift on easily.”
Drivers, however, are still sold the idea they’re on their way to a better life. One company’s contract, for example, contains this line: “Soon you’ll be driving your way to business success.” In many cases, says Gallagher, this is not true. “They’re promising autonomy and delivering entrapment.”
“The days go extremely fast, and I love being able to talk to people, but also being on my own when I want. I remember being in an office job and hitting 3pm and feeling dead and just holding on until five. I hated that. I like the idea of being a business person, but if the pay was good [elsewhere] and I enjoyed the job I would go, definitely.”
She and her family are currently living with her mother and sharing rent and expenses to save money – they were renting separately until four years ago, when money got too tight. Things should improve next year, though, when her husband’s parents retire overseas; they’ve left Jacqui and Ebenezer their home in South Auckland, which they’ll renovate and refurbish before moving in.
She tries to put away $1000 a month in savings, “but I always end up taking about $700 out”, and her credit card is always “maxed out”. Monthly income varies greatly, from around $5200 in the slower winter months to around $9000-$10,000 in the chaotic lead-up to Christmas. She often takes leave in January, when many businesses are closed for the first fortnight. Thanks to the fact they have two incomes, though, the family gets an annual holiday, sometimes overseas.
Back from Beachlands, she’s heading to Mt Wellington for pick-ups in the “mids”. There’s a $34.13 “van job” her docket lists as having 13 parts, but two men at the depot insist it’s just one smallish box. A few minutes later, she has to return – the men were wrong. But it’s her bottom line, not theirs, that will suffer that day.
She doesn’t stop for lunch until 3pm; she heats up last night’s leftover chicken tenders at the depot in Penrose and forks food from the container when she stops at the lights on her way to “the shallow west”: Blockhouse Bay. It’s a $14 job, and the next one – taking a letter warning of a water supply disruption from Penrose to Meadowbank ($15.86) – is a bit better still.
But by now, David realises she’s missed out on the usual relatively lucrative run of jobs dispatched from Middlemore Hospital every Friday afternoon, many of them delivering medicines for the weekend to outpatients. They’re good ones, she says. Long distances, with the benefit of landing her near her South Auckland home at the end of the day.
David is left with rats and mice in the mids before getting a delivery that will take her south at six. The afternoon has been quiet, and the dispatcher says she can call it quits – the last job is just 400m from her home. As she turns her Hiace into a peak-hour gridlock of cars heading slowly home, a vivid double rainbow arches across the blackening sky to the south.
For David, there is no pot of gold at the end of it. After 10 hours and 262km, she is going home with $320.74 from 17 jobs, a sum that will be almost halved by her costs. Next week, she will do it all again, in the hope of a bigger payday. In the meantime, she is driving on a one-way street. The signpost on it reads “No Exit”.
Running the figures
At the top end, the gross pay is in many cases surprisingly large and the list of six-figure sums surprisingly long. The highest is $285,000 for one driver, who’s been in the business more than 30 years. That’s followed by other similar amounts: $251,000, $244,000, $208,000, $197,000, $185,000, $184,000, $176,000… Troughear says the annual gross income of a courier contractor across the business is $95,000 and the median is about the same. Costs, he says, are around $25,000.
But typically, those high earners are not the Sub60 drivers like Jacqui David, who pick up a parcel from point A and deliver it to point B. David averages 17-25 jobs a day; the others are so-called “hub and spoke” contractors who run routes that are regular and concentrated, often within 20 city blocks, and involve potentially hundreds of pick-ups and drop-offs each day in quick succession.
Freightways says these drivers have built up their businesses over many years, and often have parcels to pick up when they make a delivery to the same place. “Hub and spoke” operators pick up or drop off from the Freightways Penrose depot several times a day – often leaving and arriving with their vans packed to the gunwales with parcels. David, however, has only a couple of items on board each trip, and is at the mercy of her position in the city when a job comes through, and the skills of the dispatcher in distributing jobs fairly.
“We want our couriers to earn more money – we want that more than anyone,” says Troughear. The company is tackling the issue in several different ways. The first is by lifting residential delivery rates, which have historically been charged at the same rate as business deliveries, and which he says aren’t sustainable for the company and drive down profits and contractor incomes. The second is “route optimisation” to improve efficiency and prevent several couriers covering the same areas, and the third is shedding jobs charged out at unrealistic and heavily discounted rates. It’s also controlling how many contractors are licensed.
“The more couriers you have on the road, the better your service will be but the less each contractor will get. The issue is how can I get more items onto the route you’re doing and how can I charge more for them?”
According to Troughear, when New Zealand Post entered the courier market 25 years ago, it drove the race to the bottom. NZ Post told North & South that as an SOE, it was required to act commercially. It set itself the goal of becoming market leader, which it did in 2003. “It is natural that increased competition puts pressure on prices.”
Troughear says both Freightways and its contractors would be against fundamental changes to the business model, saying employees would be less motivated and less productive. “The minute you go to an hourly rate, productivity drops. Transport in Australia is heavily unionised and the productivity rate is terrible.”
When the company uses waged drivers to cover runs, they’re less productive than contractors and have more minor prangs on the road, “because it’s not their van”, he says.
Using its business model, Freightways calculates David would be earning around $19-$20 an hour, but that’s based on a van repayment rate at half of what she’s paying and a lower fuel cost. Troughear says many drivers can put more equity into their vehicle, or pay a lower interest rate by extending their residential mortgage, if they have one – which David does not. “If you went into a café business and it cost you $100,000 to set up and you put that on a high-interest-rate loan, it’ll be hard to make money.”
He urges David and other drivers unhappy with their incomes to talk to their fleet managers about how to improve their earnings. “We’d rather have a fleet of drivers earning $100,000 because you get better productivity, better customer service and more motivation to find more customers.” The company has worked closely with the contractors ProDrive’s Pete Gallagher represents and had often found ways to increase their returns. Some weren’t working full time, or clocked off for periods during the day, or early to pick up children. “Availability is a key issue and that’s where they made a lot of improvements. If you make yourself unavailable, I can’t give you the work.”
He says if drivers aren’t earning even minimum wage, as ProDrive claims, “how come there are thousands of contractors working as couriers? They wouldn’t be doing it – they’d be in the office doing a job for $18-$20 an hour and having holidays. It’s their choice.”
The Government intends to improve the rights of independent contractors and will start investigating potential policy changes early in 2019, says Workplace Relations and Safety Minister Iain Lees-Galloway.
The last attempt to address contractors’ rights – David Parker’s Minimum Wage (Contractor Remuneration) Amendment Bill, which followed a similar effort by another Labour MP, Darien Fenton – was scuppered in 2016, but Lees-Galloway told North & South the issues remain.
“There is a group of contractors who are essentially in a dependent contractor relationship. They operate in a very similar way to employees but don’t have the rights afforded to employees under the Employment Relations Act, and that includes the right to be paid a minimum wage. There’s definitely concern that contractors are paid poorly and don’t get the basic work rights we expect everyone working in New Zealand to get.”
Modern employment relationships are much more diverse than the traditional employee-employer model, he says, but the legislation doesn’t capture that. He’s asked the Ministry of Business Innovation and Employment to explore what a 21st-century industrial relations framework needs to look like to meet the needs of both businesses and workers. “This is the cutting edge of future-of-work programmes.”
In January, Lees-Galloway announced the establishment of a Film Industry Working Group to find a way of restoring workers’ rights in the film industry, and he says the contractor legislation will draw on its findings. He’s particularly interested in whether contractors can have the right to collective bargaining to improve their pay rates and conditions, but won’t be drawn as to whether he wants some form of minimum wage clause in any new legislation.
The only information he has so far on contractor pay is anecdotal, both from courier companies and contractors. “A driver came into my electorate office to drop off a package and made the comment that he was making good money because he’d been doing it for a long time and had good runs, but a lot of the people he worked alongside would be struggling to earn a living wage on the work they got, so it’s variable. We need to hear the evidence and base future policy on good evidence.”
This article was first published in the November 2018 issue of North & South.