Social Issues

Why pay to work?

It’s time for Queenstown to face the human cost of being a high-turnover, transient tourist town, Poppie Johnson writes.

Living in New Zealand’s tourism hotspot, Queenstown, comes with its benefits – we have world-class restaurants and bars befitting a city 10 times our size. There is every type of cuisine imaginable available, opening hours are the most generous in the country, and there’s always a venue for any event.

All of these restaurants and bars require staff. For many on working holiday visas, Queenstown’s thriving hospitality scene offers an opportunity to get a job easily. It is great in some respects. It works well for those who are visiting our shores and want to have an easily-transferable skill-set that allows them to travel and find work throughout the country.

The thing is, for all of our variety and offerings, New Zealand doesn’t do hospitality particularly sustainably. Queenstown is a hotspot, a magnet for so many people that it derives a cosmopolitan atmosphere from their very presence. We offer variety but it comes at a cost – a human cost. This leads to high turnover, instability and an industry that survives on those factors, not on a sustainable workforce.

The value we place on careers

Hospitality is not considered, by and large, an honourable career. Students at the local high school may work in a cafe or restaurant while still studying but few would consider it a career choice. It’s a backstop, the work you get when you can’t find anything else, the job that you will get as a local because you can offer long-term availability – even if guest workers have more experience.

France, Italy, Spain, and much of Europe have a different approach to hospitality. Many restaurants are family-owned and operated, and waitstaff will work for years for the same businesses. They are valued and become a part of the community. Here? Not so much.

The industry relies on low-paid, high-turnover staff who are on visitor or working holiday visas. They accept low wages because they are usually supplementing savings they’ve arrived with. They are not intending to live for the long-term on a wage that is out of step with living costs.

Visiting workers are not immigrants in the true sense of the word. They are not moving here, so there’s no need for them to integrate fully into society and if it gets too hard then they can always go home. Employers get away with using workers and, to put it bluntly, exploiting them.

Difficult path to residency

Dylan Firth is executive director of the Brewers Association of New Zealand, but spent four years until early 2018 working for Hospitality NZ. He has an overview of the issues facing workers who may wish to stay longer.  

"For that long-term migrant looking to get a pathway to residency through the hospitality sector, it will be difficult."

Most jobs are under the threshold for jobs on the skills-shortage list. That means travellers, rather than migrants, gravitate towards the industry.

Hospitality NZ Central Otago president Chris Buckley – himself a Queenstown bar owner – is concerned not only about the number of migrant workers, but about the fact that they are no longer enough to sustain demand. The industry is in danger of imploding with a high number of vacancies still advertised at the height of summer.

As soon as an industry becomes reliant upon imported labour it creates a disruptive effect. What is occurring in the hospitality sector is essentially a form of social re-engineering, creating a fracture in our society. We don’t need to look too far afield to see what will happen if we continue down this road.

Lessons from Germany

In post-war Germany there was a huge shortage of labour so the government opened the doors to a swathe of migrant workers. The scheme was known as ‘gastarbeiter’, a literal translation of which is ‘Guest Worker’.

Turkish immigrants soon became the largest group and by the early 1970s there were millions of migrants who had been living and working in Germany for many years. The children born to guest-worker parents had no citizenship rights and could only apply after 15 years’ residence.

This is where the cautionary tale gets interesting. The economy had shifted, the need for immigrant labour had declined and the government did not want the guest workers ‘taking German jobs’. So they offered them a small payment to return to their country of origin, despite many not having been there for decades. In short, the country took labour but did not integrate the people into society. It led to multiple problems; schisms that are still being rectified.

Chancellor Angela Merkel recognises the value of an immigrant workforce and has sought to learn from the past. In a speech addressing immigration she spoke specifically about the past.

“Many of them will become new citizens of our country. We should learn from the experiences of the ’60s when we asked gastarbeiter to come to us and make integration the top priority from the start.”

Germany’s current, open-minded approach to immigration and acceptance of other cultures is in many ways a response to the lessons learned from the gastarbeiter scheme.

Why not pay a living wage?

The cost of paying a living wage is often touted as one of the main reasons businesses don’t offer higher than the minimum wage – they say they simply can’t afford it.

The Living Wage Movement of Aotearoa NZ currently puts the calculation for a living wage at $20.55 – four dollars more than the minimum wage. The number is based on significant research and updated annually. The definition is simple: ‘The income that is necessary for workers and their families to have the basic necessities of life, to live with dignity and to participate in the community.’

That rate is currently $160 more than the minimum wage (before tax) for an average week’s work – enough to make a significant difference to the quality of life. The government has committed to raising the minimum wage to $20 an hour by 2021 and so the gap may be closing.

A local cleaning business owner had two staff leave without notice in the same week.

“We’re doing the jobs ourselves, and can’t get around all the properties.”

That sort of inconsistency in staffing makes it hard to build and grow a business. They pay over the minimum wage, but not quite a living wage. The only staff the business can get are migrants: no locals apply.

You can't grow without staff

First Retail Group is a planning and strategy organisation that works with leading hospitality businesses to grow its business. Managing director Chris Wilkinson believes the staff shortage is one of the major challenges.

“There aren't the numbers of local workers in places like Queenstown to be able to sustain the demand for both shop staff, hospitality staff and also in terms of adventure tourism as well.”

The Living Wage Movement conducted structured research in 2017 into the effects businesses had noted after implementing a living wage. The respondents overwhelmingly noted positive changes in increased staff stability, motivation, and a sense of belonging.

One employer spoke of their experience: “I did not expect or receive any kind of gratitude but I feel [that] staff appreciate being rewarded more appropriately. It seems easier to retain casual staff.”

That direct correlation to retention rates is important in a context with extremely high turnover. Even working holiday visa staff are more likely to spend a significant portion of their two years in one place if they are earning a decent wage. Local workers who stay in the community need to earn enough to live – far more than the minimum wage. Paying a higher wage, a living wage, for hospitality workers would do much to attract locals.

Similar aspect in Queenstown’s sister city

Aspen, in Colorado, United States, has seen similar, interrelated issues. Housing has been a major block for obtaining workers and most large companies now offer worker accommodation along with a job offer. This mitigates pay rates somewhat and subsidises workers.

Local residents have observed a flow-on effect – as billionaires and millionaires purchase holiday homes, they often make renovations and create building jobs. Former Mayor of Aspen, Kevin Ireland, has observed the phenomenon.

“When the super-wealthy prosper, there is a huge surge in demand for Aspen residential real estate and a consequent jump in employment rates related to the economy and other service jobs." 

Queenstown currently has over 180 jobs advertised in the hospitality and service industries. There’s no shortage of opportunities for inexperienced workers to get a foot in the door. Some businesses are paying up to $18 an hour – yet it still doesn’t come close to a living wage in the most expensive town in the country.

According to Tenancy Services, the median rent for a three-bedroom house is more than $750 per week and more than $250 for just a single room. Even on a higher-than-minimum-wage rate of $18-an-hour, the take-home pay of $616 is woefully short of covering the rent on a house. Most hospitality workers pay upwards of 40 percent of their weekly earnings on rent alone. Given the success of subsidised housing in Aspen, the concept should be a part of the conversation here.

Where to from here?

Sustainability is more than off-setting carbon emissions and using eco-friendly recyclable materials, it’s about creating a sustainable community too. We’ve lost the ability to see how jobs fit into society, how a cohesive workforce that can afford to live creates a significant effect on the community they live in. The apocryphal story of the happy backpacking worker and booming tourism industry is being exposed for the illusion that it is.

Better to have fewer restaurants that can afford to look after their staff. Better to have subsidised accommodation than cold, overcrowded, ridiculously-priced doss houses. And far better to have people able to become locals that live and work in a community that they feel invested in, rather than a loose federation of transients.  

There’s no one solution. Local body government is aware of the problems but needs national support to do something. Businesses are aware of the problem but are too busy frantically keeping their heads above water to look collectively. Perhaps if all interest groups work together, a multi-faceted solution can be found.

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