air cheap bastards

March 15th, 2008

Warning: Sarcasm ahead.

Good to see Air New Zealand is doing its bit to give New Zealand a bad reputation in China.

Alright, sarcasm ended.

So it’s hard to know the full story or who’s version is closer to the truth, but I think it’s safe to assume this is going to find its way into the Chinese media and internet and not too many people here are going to bother seeking Air New Zealand’s side of the story.

And why bother? So far their response is, “Well, our contract is with Fasco who hires the staff according to Chinese terms.” That is pathetic.

And at least one of the attendants was a New Zealand resident hired from New Zealand under the impression she would be working for Air New Zealand but suddenly found herself signing a contract with this Fasco outfit earning a mere fraction of what her  Kiwi colleagues got.

So let’s review the statistics, as listed in the “summary for dummies” at the end of that first, general article:

China-based flight attendants:

Annual base pay $6240.

Hourly rate (Herald calculation based on 40-hour week): $3.25.

Daily allowance on long-haul flights: $55.

New Zealand-based flight attendants:

Annual base pay $24,000.

Hourly rate (Herald calculation based on 40-hour week): $11.54.

Daily allowance on long-haul flights: $170.

And yet I think those headings should be changed to “Chinese-nationality flight attendants” and “New Zealand-nationality flight attendants” in light of Ms Zeng’s story. I’ll let her state her own response to this situation:

“Unlike the Kiwi crew who get cash allowances, what we get is tied to having meals at the hotel and a Chinese restaurant, and if we don’t eat at a specific time, we have to go without food. We felt like prisoners in the hotel,” said Ms Zeng, who quit the airline last July after nine months.

The only time they felt free to go out was when “kind people from the Kiwi crew ask us out and offer to pay for our drinks”.

It’s not entirely clear, so let me make a few assumptions, here:

  1. In addition to their base pay, New Zealand-based New Zealand-passport holding attendants get $170 per day while they’re in Shanghai, which at first glance would seem quite reasonable- Shanghai is expensive, yes, but that works out to an allowance of roughly 850 Chinese yuan per day in Shanghai. Would I be right in assuming accomodation is also covered? If so, then even though their base pay is only slightly more than the New Zealand minimum wage that’s pretty sweet.
  2. In addition to their base pay, which works out to be a mere fraction of New Zealand’s minimum wage (29% by my calculation), Shanghai-based Chinese-passport holding attendants get $55 for each day spent in Auckland.

So, yeah, I can understand why the Chinese crew would be upset.

And Air New Zealand’s response is:

Air NZ’s group general manager, Ed Sims, said it was unfair to compare salaries of the Chinese crew with the locals on an hourly-rate basis because the wages were set based on “local market relativity”.

“Anyway, we don’t set the pay, Fasco does, and our contract is with Fasco and not the individual,” he said. “I believe Fasco has set salaries based on the market relativity in China.”

But:

The Department of Labour, which oversees immigration, said it was aware that Fasco was the employer of the Chinese staff, but would not say why Air NZ was shown as their employer on the permits.

A department official also refused to comment when asked if this would set a precedent for companies wanting to flout New Zealand employment laws or avoid paying the minimum wage.

And it would seem Air New Zealand was somehow able to have Ms Zeng’s work permit revoked when she left Air New Zealand, leaving her with a job offer in New Zealand but stuck in Shanghai.

So considering the comments from the Department of Labour, the listing of Air New Zealand as the employer on the attendants’ work permits, and Ms Zeng’s experience, it would seem perhaps Air New Zealand is a little more involved than their pathetic excuse would suggest.

And that is a pathetic excuse. “Market relativity” my arse. “Oh, we didn’t do it, it was a Chinese company”. Yeah, that’ll serve you real well when the Chinese people hear of this. Can anybody in Air New Zealand spell “impending Chinese boycott”? And can’t you make sure that the company you deal with meets certain minimum standards? Or do you just go for the lowest price without taking anything else into consideration?

Or should I just assume this is yet another example of Kiwis being crap at doing business in China? Yeah, maybe, but if so this has potential to backfire in big, nasty ways. Backfire on the whole country, like when those idiot fly-by-night, Chinese-students-are-walking-ATMs language schools went out of business. Earth to Air New Zealand: Chinese people use the internet, news spreads fast here, and Chinese people don’t take kindly to even the mere suggestion of perhaps being bullied by foreigners. Doesn’t bloody matter who signed contracts with who, it’s still your responsibility, and you’ve been caught.

Now I’m going to see if I can find any Chinese responses to this….

17 Responses to “air cheap bastards”

  1. NZ Herald: Air New Zealand’s mile-high pay gap | rice again Says:

    […] Kiwi Chris’ views here at his blog, one of my favorites, Bezdomy Expatria. And that is a pathetic excuse. “Market […]

  2. Gary Says:

    One thing that remains missing from all the figures being quoted – just how much is Air New Zealand paying Fasco for the services of each flight attendant? There will be a premium over and above what the flight attendants receive, but just how much could be quite revealing – either way!

  3. wangbo Says:

    True, and it would be interesting to see what kind of a deal Air NZ made. Are they paying Fasco enough for Fasco to pay the flight attendants a decent wage? I.e., is it Fasco ripping off the flight attendants? Or are they paying Fasco enough for Fasco to make a reasonable profit only by keeping the attendants’ pay and benefits as low as possible? I.e. is Air NZ to blame for playing the same “force them to squeeze their margins so we get an absurdly low price” game so loved by the likes of Walmart.

    Either way, it’s not going to help Air NZ’s image when this hits the Chinese internet.

  4. terry Says:

    Foreign companies like Air New Zealand are not allowed to directly hire PRC nationals because every person in China has a “personal file” which foreigners are not allowed to see. This is a leftover from the nastier days of political control and the information on these files are deemed sensitive. This is a government regulation so ANZ therefore has to hire its PRC nationals through a government approved organization like FASCO. These organizations usually also provide and charge for the government mandated social insurance “benefits” (medical, retirement, housing fund etc.) which are now averaging 52% of annual salary (not cheap). They also charge a service fee on top as well. Ms Zeng is probably making a lot more than flight attendants on local airlines in China, but as she is still a PRC citizen, can’t avail herself of the better pay/benefits that are standard in NZ mostly because of her own govt’s policies.

  5. wangbo Says:

    Terry, you are largely right, and I don’t have the legal expertise to really dispute you, but I was under the impression the situation had changed. Trouble is, the law has been changing rapidly. What is a Wholly Owned Foreign Enterprise to do if it can’t directly hire staff? And my wife did do two trial periods at WFOEs without going through a Chinese company… Really, the legal situation seems to have changed in this respect, and I would not be at all surprised if Air NZ has found itself caught on the wrong side of horridly outdated legal advice combined with the usual Kiwi-trying-to-do-business-in-Asia naivete.

    I don’t know Air NZ’s (I hate referring to it as ANZ for the obvious confusion with the bank) legal status or ability. Can it set up a WFOE and therefore directly hire staff? Or is it still legally required to run a JV or go through a middleman (a situation which is becoming ever rarer in industries that are not seen by the CPC as being vital to “national security”)? Aviation would seem to be one of those industries still jealously guarded lest some airliine cut a deal with the CIA or whatever… Anyway, what exactly is Air NZ’s legal status in Shanghai (and soon to be in Beijing, if their corporate propaganda can be believed) and just how much control did they have over Fasco’s employment contracts? And perhaps more importantly, how much control did they assert over Fasco’s practices in employing Air NZ’s attendants?

    Yeah, sure, wasn’t so long ago practically every foreigner wanting to employ any Chinese for even the most menial task had to go through some state-sponsored (at least) agency, but these days…

    And even if Air NZ had no choice but to work through Fasco, they really should’ve made sure their flight attendants got a decent deal, because no matter how you cut it, it’s only going to fall back on Air NZ.

    And it still doesn’t excuse Air NZ fobbing flight attendants off onto these Fasco clowns just because they hold a Chinese passport when they were hired in NZ. If they’re in NZ, then they are not subject to Chinese law and should have, and could have, been hired according to the appropriate NZ laws. Terry, bring me some credible evidence from somebody qualified to prove me wrong on that point.

  6. mal Says:

    Here’s a thought, Why doesn’t Air New Zealand set up bank accounts in New Zealand for the staff and then put the money in their accounts.

    Kiwis are always proud of giving people a fair shake of the stick and these attandents should be paid exactly the same as those of New Zealand. They do the same job, same hours and work in the same conditions. Surely having Chinese staff on flights is beneficial to NZs tourism. And I’m pretty sure that they would talk to the Chinese nationals and word will get out about how they are treated.

    The Chinese won’t boycott anything but will answer in the best way they know by voting with their feet. They will go somewhere else for travel. With 10% of chinas population being millionires it would behoove Air New Zealand to do the right thing and give equal pay for equal work.

  7. wangbo Says:

    You’re absolutely right, Mal, trouble is I don’t think the message has gotten through to Air New Zealand yet.

  8. Robbo Says:

    This is p-a-t-h-e-t-i-c!
    China is a developing country and its competitive advantage – (remember that from Econ 101) is motivated people and plenty of them. To have them pricing themselves off the market because of this grating preachy ‘do gooderism’ is beyond belief. How would we like it if some EC farm commissioner said to NZ give up YOUR competitive advantage of year round pastoral farming and put your cattle under cover for the winter – like we have to.

  9. wangbo Says:

    Sorry Robbo, but the real world is a little more complex than that. First problem is the difference between competitive advantage and exploitation. The wages offered to the Chinese crew, as they were reported, amount to exploitation. You’d probably have to live in China and have some knowledge of the real cost of living in cities like Shanghai and Beijing to know that. Secondly, in a market like China’s, if Air NZ is even perceived to be exploiting Chinese workers, regardless of whether it really is or not, then Air NZ can kiss whatever competitive advantage it may have ever had goodbye. If Air NZ wants to stay in business here, it has to make sure everything it does is fully above board and on the level and that it’s corporate nose is kept meticulously clean.

    And besides, the EC does negate NZ’s competitive advantage through it’s massive agricultural subsidies. There’s no argument for you there. Try a better example.

  10. Ben Ross Says:

    When comparing wages between different countries, purchasing parity must be included in the statistics. Without doing so assumes that the price of goods and services are the same around the world. While 3.25 an hour is below poverty in New Zealand, this is actually a pretty good salary in China, especially for a job which doesn’t necessarily require a high level of education. When I worked in a Chinese hair salon for a month, my salary, had it been calculated hourly, would have come to 25 cents (USD) per hour. A more accurate report would have compared New Zealand’s Chinese flight attendants salaries to other Chinese airlines, not to those in New Zealand.

  11. wangbo Says:

    Except, Ben, that the flight attendants did have to live in New Zealand at least part of the time, and when they weren’t in New Zealand, they were in Shanghai, which isn’t cheap, either. Purchasing power varies just as widely through China as it does across the world.

  12. NZer Says:

    So. . . err. . .

    Why did they take the job then?

    Presumably Air NZ didn’t snatch these people off the street and force them to work under ‘exploitative’ conditions?

    Zeng Xiaojie excepted, some of these women have remained with Air NZ for quite a while now. Guess it can’t be that bad.

  13. wangbo Says:

    Might I suggest rereading the article?

  14. NZer Says:

    I did read the article.

    I also know several of the Chinese hired flight attendants who work for Air NZ.

    They mostly seem to be relatively unambitious young women who are happy to be doing a job that pays above the Shanghai average while making below average demands on their time.

    The comments here about NZ wages being appropriate given the high cost of living in Shanghai are stupid. The majority of employees in Shanghai work for wages that would be simply unsustainable in New Zealand – in many ways a good thing, since it is one reason why they are an economic powerhouse and we are a backwater.

    Air NZ was (I hear anyway) strongly ‘encouraged’ to create local jobs in exchange for access to Chinese airports. Consequently Air NZ has an over-sized local crew base. I certainly know that few 40 hour weeks are being worked, and many of the local hires do other work on the side.

    So Ms Zeng’s confusing experience aside I don’t see the big problem.

  15. wangbo Says:

    Alright, fair enough. But there is still a huge discrepancy in pay rates for Kiwi and Chinese crew, and correct me if I’m wrong, but the Chinese crew do have to spend time in New Zealand on their Chinese wages, do they not?

  16. NZer Says:

    They spend time in New Zealand, but Shanghai is where they live.

    They are issued credit cards to cover spending in New Zealand. I think the cards were introduced as a supplement to their daily cash allowances.

    I see the Shanghai based crew eating out in Auckland at exactly the same places that crew from other airlines frequent (e.g. Belgian pub in Vulcan Lane – the mussels there are very popular with Asian flight attendants by the way). I have also run into them out partying in Wellington. They seem to be doing OK for themselves.

  17. Tama Says:

    55 FOR AN OVERNIGHT IN NZ. SO THEY EAT MAYBE TWICE. AND WITH OUR PRICES HERE. NOT LIKE THEY CAN COOK THERE OWN FOOD WHILE HERE. MOST PEOPLE EAT 3 TIMES A DAY. CANT BELIEVE AIR NZ DIDNT LOOK AT THIS IN THE CONTRACT WITH FASCO, THAT IS IF FASCO AINT CORRUPT. DONT KNOW WHO TO BLAME BUT FEEL SORRY FOR THOSE CREW.

    [Please try and avoid ALLCAPS in future- 王博]