Search News
For the Media
For media inquiries, call CWA Communications at 202-434-1168 or email comms@cwa-union.org. To read about CWA Members, Leadership or Industries, visit our About page.
New Zealand's Troubled Telecom Industry a Warning for U.S. Workers
New Zealand may be halfway around the world, but labor leaders say severe rollbacks in its deregulated telecom industry, with dire consequences for its once-unionized workforce, is a cautionary tale for telecommunications workers in the United States.
The dismantling of Telecom New Zealand occurred on Verizon's watch. The U.S. company became the principal owner of TNZ when the government privatized telecom services in 1990. Last fall, it sold its remaining 20 percent interest in the company to institutional investors in New Zealand for $1.4 billion.
Under Verizon's management, TNZ employment plummeted from 22,000 workers with nearly 100 percent union membership to roughly 4,000 workers in both its fixed line and wireless business, with another 3,000 to 4,000 jobs contracted out. Scarcely any of the reduced workforce is unionized.
"Telecom New Zealand provides a stark example of what can happen to telecom workers and telecom service when management aggressively challenges their union, collective bargaining and universal service," CWA Executive Vice President Larry Cohen said. "For those who think a free market and competition is all that's needed for economic efficiency and social justice, New Zealand is the perfect opposing case."
To assess the situation and try to begin to help unions reorganize, Marge Krueger, administrative assistant to District 13 Vice President Vince Maisano, visited New Zealand in November with Neil Anderson, once president of the TNZ union and now head of the Union Network International (UNI) Telecom Department. What they found was alarming.
"It wasn't enough to knock down people's wages and benefits through contracting out," Krueger said. "Now they've got contractors bidding against each other to see how low they can go for a job, and that means wages and benefits will drop even more."
Just a handful of company departments, such as accounting, administration and customer service, are still run by TNZ itself, although some of the jobs TNZ claims as its own appear to be under contract. Only about 50 technicians remain; all other such jobs are contracted out.
"All of this happened during a period when Verizon was their major shareholder," said Cohen, who is also world president of UNI Telecom. "If this can happen in an advanced economy like New Zealand, it can happen in the United States."
It's already begun in Canada. Telecom jobs and services have been slashed and more rollbacks are coming in British Columbia, Canada, where Verizon is the largest shareholder in the local phone company TELUS. Verizon holds 21.4 percent of the stock and last year its directory services arm, Verizon Information Services, acquired TELUS's directory operation.
In British Columbia, the Telecommunica-tions Workers Union has erected a billboard across the street from the TELUS headquarters. "Are you satisfied with your TELUS service?" the giant yellow ad asks passersby. E-mail addresses on the billboard tell people whom to contact to complain about service levels and the company's lack of loyalty to workers and customers.
"In some instances, employees are refusing to leave by the front door of Telus offices because they want to avoid enraged customers who are lying in wait for them," said Rod Hiebert, president of the TWU. "Cancelled maintenance programs and lack of staffing are starting to cause lengthy major service outages. In all likelihood we have only seen the tip of this disastrous iceberg."
In New Zealand, Anderson said few workers have a pension plan and all have seen their pay stay the same or fall in the last 10 years, with overtime, holiday and sick pay meeting just the bare minimum of the law. Layoffs are widespread, with little financial compensation for job loss. As for contractors, piece rates are common. "This means if there is no work, there is no pay," he said.
He cited the case of a highly qualified transmission specialist who was laid off and eventually got a job with a contracting company that does all the work his department once did - but with only 10 percent of the previous staffing level. He's paid what his base salary was a decade ago, but with far more duties and responsibilities, and no special rates for after-hours calls.
Further, contract employees don't get company training, or even time off to learn how to install new equipment. "Often, it was just, 'Do your best, put it in and make it work,"' Anderson said.
One subcontractor has found a particularly galling way to exploit the need for training. It pays workers the minimum wage, $10 an hour, yet charges them $24 an hour for course fees, textbooks and related costs. "In effect, the trainees are paying for their own training and effectively being paid less than the legal minimum wage," Anderson said. The changes have been bad for customers as well as workers.
Complaints about service in New Zealand are mounting, prices haven't dropped appreciably and in rural areas bills have gone up. In fact, TNZ is now threatening to charge some rural customers several thousand dollars for hook-ups.
While such drastic circumstances are hard to imagine in the United States, companies here have already cut tens of thousands of jobs and are contracting out wherever they're not blocked by bargaining agreements. Cohen said the situation in New Zealand is a warning about how U.S. telecom companies would likely behave without union restraints.
"This is a case study for anyone who doesn't grasp how critical it is to have strong unions and contracts to protect not only jobs but a high quality of service," he said.
The damage done by Verizon and Ameritech, which also owned shares of TNZ between 1990 and 1998, goes beyond lost jobs and crushed unions. Anderson said they "stripped the company of cash and assets and reinvested nothing."
"The only surprise with Verizon's final retreat from TNZ was that it took so long," he said. "But finally it looks as if the two U.S. multinationals have extracted all they can. They've decided that it's been milked for all it is worth."
Further - and eerily similar to corporate America - company executives saw "spectacular pay growth" during the years of workers' layoffs and frozen pay, he said. Some executive salaries more than doubled some years.
In his role at UNI, which oversees 3 million unionized telecom workers, Cohen said he'll make reorganizing a telecom union in New Zealand a top priority, while helping Canada's TWU and other unions in their fight to hold on to their jobs and contracts.
"This is a political fight as much as it is an organizing challenge," he said. " Even if Verizon was not actively leading this attack in New Zealand, top Verizon management was clearly supporting it. We must let Verizon know that we have learned the lessons of New Zealand and we will block 'low road' management behavior like this whenever it appears."
The dismantling of Telecom New Zealand occurred on Verizon's watch. The U.S. company became the principal owner of TNZ when the government privatized telecom services in 1990. Last fall, it sold its remaining 20 percent interest in the company to institutional investors in New Zealand for $1.4 billion.
Under Verizon's management, TNZ employment plummeted from 22,000 workers with nearly 100 percent union membership to roughly 4,000 workers in both its fixed line and wireless business, with another 3,000 to 4,000 jobs contracted out. Scarcely any of the reduced workforce is unionized.
"Telecom New Zealand provides a stark example of what can happen to telecom workers and telecom service when management aggressively challenges their union, collective bargaining and universal service," CWA Executive Vice President Larry Cohen said. "For those who think a free market and competition is all that's needed for economic efficiency and social justice, New Zealand is the perfect opposing case."
To assess the situation and try to begin to help unions reorganize, Marge Krueger, administrative assistant to District 13 Vice President Vince Maisano, visited New Zealand in November with Neil Anderson, once president of the TNZ union and now head of the Union Network International (UNI) Telecom Department. What they found was alarming.
"It wasn't enough to knock down people's wages and benefits through contracting out," Krueger said. "Now they've got contractors bidding against each other to see how low they can go for a job, and that means wages and benefits will drop even more."
Just a handful of company departments, such as accounting, administration and customer service, are still run by TNZ itself, although some of the jobs TNZ claims as its own appear to be under contract. Only about 50 technicians remain; all other such jobs are contracted out.
"All of this happened during a period when Verizon was their major shareholder," said Cohen, who is also world president of UNI Telecom. "If this can happen in an advanced economy like New Zealand, it can happen in the United States."
It's already begun in Canada. Telecom jobs and services have been slashed and more rollbacks are coming in British Columbia, Canada, where Verizon is the largest shareholder in the local phone company TELUS. Verizon holds 21.4 percent of the stock and last year its directory services arm, Verizon Information Services, acquired TELUS's directory operation.
In British Columbia, the Telecommunica-tions Workers Union has erected a billboard across the street from the TELUS headquarters. "Are you satisfied with your TELUS service?" the giant yellow ad asks passersby. E-mail addresses on the billboard tell people whom to contact to complain about service levels and the company's lack of loyalty to workers and customers.
"In some instances, employees are refusing to leave by the front door of Telus offices because they want to avoid enraged customers who are lying in wait for them," said Rod Hiebert, president of the TWU. "Cancelled maintenance programs and lack of staffing are starting to cause lengthy major service outages. In all likelihood we have only seen the tip of this disastrous iceberg."
In New Zealand, Anderson said few workers have a pension plan and all have seen their pay stay the same or fall in the last 10 years, with overtime, holiday and sick pay meeting just the bare minimum of the law. Layoffs are widespread, with little financial compensation for job loss. As for contractors, piece rates are common. "This means if there is no work, there is no pay," he said.
He cited the case of a highly qualified transmission specialist who was laid off and eventually got a job with a contracting company that does all the work his department once did - but with only 10 percent of the previous staffing level. He's paid what his base salary was a decade ago, but with far more duties and responsibilities, and no special rates for after-hours calls.
Further, contract employees don't get company training, or even time off to learn how to install new equipment. "Often, it was just, 'Do your best, put it in and make it work,"' Anderson said.
One subcontractor has found a particularly galling way to exploit the need for training. It pays workers the minimum wage, $10 an hour, yet charges them $24 an hour for course fees, textbooks and related costs. "In effect, the trainees are paying for their own training and effectively being paid less than the legal minimum wage," Anderson said. The changes have been bad for customers as well as workers.
Complaints about service in New Zealand are mounting, prices haven't dropped appreciably and in rural areas bills have gone up. In fact, TNZ is now threatening to charge some rural customers several thousand dollars for hook-ups.
While such drastic circumstances are hard to imagine in the United States, companies here have already cut tens of thousands of jobs and are contracting out wherever they're not blocked by bargaining agreements. Cohen said the situation in New Zealand is a warning about how U.S. telecom companies would likely behave without union restraints.
"This is a case study for anyone who doesn't grasp how critical it is to have strong unions and contracts to protect not only jobs but a high quality of service," he said.
The damage done by Verizon and Ameritech, which also owned shares of TNZ between 1990 and 1998, goes beyond lost jobs and crushed unions. Anderson said they "stripped the company of cash and assets and reinvested nothing."
"The only surprise with Verizon's final retreat from TNZ was that it took so long," he said. "But finally it looks as if the two U.S. multinationals have extracted all they can. They've decided that it's been milked for all it is worth."
Further - and eerily similar to corporate America - company executives saw "spectacular pay growth" during the years of workers' layoffs and frozen pay, he said. Some executive salaries more than doubled some years.
In his role at UNI, which oversees 3 million unionized telecom workers, Cohen said he'll make reorganizing a telecom union in New Zealand a top priority, while helping Canada's TWU and other unions in their fight to hold on to their jobs and contracts.
"This is a political fight as much as it is an organizing challenge," he said. " Even if Verizon was not actively leading this attack in New Zealand, top Verizon management was clearly supporting it. We must let Verizon know that we have learned the lessons of New Zealand and we will block 'low road' management behavior like this whenever it appears."