15 Jun 2020

Engineers under pressure over wage cuts, job security

7:58 am on 15 June 2020

Consulting engineers say some government agencies are insisting that if firms cut staff pay to survive, they pass these cuts on as a cost saving on public projects.

Image of engineer or architectural project, two engineering discussing and working on blueprint with architect equipment, Construction concept.

Engineers want the government to help councils restart projects worth billions of dollars that have stalled since the Covid-19 pandemic began. Photo: 123RF

This comes amid an industry survey suggesting 2000 highly skilled jobs are at risk.

Read ACE NZ's full report

In one case, a firm with 300-plus employees, Harrison Grierson, is moving to a four-day week and has cut the board's and executive pay by 20 percent.

"We are continuing to look at all options to manage our costs going forward which may include staff reductions," the company said by email.

Association of Consulting Engineers chief executive Paul Evans has written several times to ministers calling for more stimulus, especially to fund local councils to restart the multi-billions of dollars of projects stalled by Covid-19.

Read one of the letters to the ministers

In addition, the government must play fairer over contracts, he said.

"What we've seen is where firms have gone to their staff and asked them to take voluntary pay reductions to free up cash flow ... we're seeing government clients who've asked for those savings to then be passed on to them."

He had heard of 10 to 15 instances of this, but would not name names.

"That staff member has taken a voluntary pay reduction to ensure that their fellow colleagues can maintain employment."

But the firm did not get the benefit - "it just makes a saving for the Crown", and while the taxpayer might benefit, ultimately someone might be made redundant.

A recent survey by his association of member firms with thousands of engineering staff, has found:

  • 46 percent of firms are experiencing cash flow and financial issues
  • 84 percent indicate that general uncertainty is a significant concern
  • 75 percent are indicating decreased demand in terms of the forward pipeline of work
  • 45 percent are already reporting the potential for job losses, with an average estimated loss of 15 percent of the workforce.

"If we don't see relatively rapid stimulus we could see a 10 to 15 percent loss across the consulting sector," Evans said.

"That's up to 2000 highly skilled jobs ... if a trans-Tasman bubble opens up, we will lose these people to Australia."

A series of letters to government ministers in April, May and June had attracted little response, he said.

The more closely a firm worked with government agencies, the better off it was - with transport and water the sectors where firms had most confidence - and the more it relied on local councils or the private sector, the more vulnerable it was, he added.

Government urged to accelerate local government projects

At the largest council, Auckland, Covid-19 has cut revenue by half a billion dollars, and its response is a tight emergency budget, and a hope the government will give the nod to a good share of the 73 projects Auckland has submitted to the shovel-ready programme.

"Rather than retrenching, now is the time for local government to maintain projects and programmes, and accelerate these where possible," Evans wrote to Finance Minister Grant Robertson.

Read the full letter

A $200 million grant to Auckland would allow the council to borrow another $500m, he added.

Money was going out to create jobs in the regions under the Provincial Growth Fund, said the Ministry of Business, Innovation and Employment.

It cited:

  • a $16.8m boost to complete the Ruakura Spine Road in Waikato
  • opening of the Pics Food Factory in Nelson, the building of which involved 50 construction workers

Engineers are also pushing for emergency regulations that speed up the usually slow and expensive process of bidding for a job, which provides no guarantee of getting the work in the end.

"The speed and the cost to procure under typical models are untenable during times of crisis," Evans wrote to Economic Development Minister Phil Twyford.

"We must identify and develop rapid deployment models. Fair and balanced contract conditions and risk allocation are critical."

At Harrison Grierson, managing director Glen Cornelius said they had not called for nor received voluntary redundancies from their staff.

"We remain fully committed to servicing our client projects across all our offices," he said.

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