Businesses must raise wages to stay competitive: minister

Daniel
Daniel MacEachern
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Keith Hutchings, minister of innovation, business and rural development, speaks to a luncheon meeting of the Business Association of Newfoundland and Labrador on Tuesday. — Photo by Daniel MacEachern/The Telegram

Businesses will have to continue to raise wages if they’re to close Newfoundland and Labrador’s wage gap, says the province’s business minister.

Keith Hutchings, innovation, business and rural development minister, addressed a luncheon meeting of the Business Association of Newfoundland and Labrador at the Battery Hotel Tuesday, speaking about the province’s business strategies as outlined in last week’s budget.

After his speech, in response to a recent report by Statistics Canada that showed large gaps between the hourly wages paid for unionized trades here versus elsewhere in the country, Hutchings told The Telegram employers will have to increase the wages they pay, adding that it’s something he knows businesses are already doing.

“At some point, if they need to continue to flourish, they need to continue to increase and be competitive in terms of the wages they provide,” he said. “I think over the last number of years, we have seen an increase in those wages.”

Richard Alexander, director of the Newfoundland and Labrador Employers’ Council, acknowledged wages have to go up, but said it can’t happen overnight.

“If we were to jump wages by $10 an hour within one year, then you’d end up bankrupting some of the smaller firms,” he said. “They just cannot absorb that kind of an increase over a short period of time. So we need to be patient. We need to allow the market time to adjust.”

Alexander said the high wages in Alberta in particular are driven by the oilsands, which is on a larger scale than Newfoundland’s offshore industry.

“(The) oil and gas (sector) in this province is very small in comparison to the oilsands development, so the employment opportunities that the oilsands offer are long term,” he said. “It’s going to go on for years and years and years. It’s one of the largest reserves of oil in the world. They’re going to be dealing with oilsands development for many, many years. Some of these projects we have are fairly short, medium term.

“Like Hebron, they’re talking about six years of work. So we need to be careful we don’t drive wages up so high in this province that after all these special projects are over we become known as a high-wage jurisdiction and then we’re unable to compete and attract more work to the province because of that.”

 

Business leaders were disappointed last week when the provincial budget didn’t include a reduction in the payroll tax this year. Last year, the Progressive Conservatives election platform included a promise to eliminate it, something Premier Kathy Dunderdale at the time estimated would take six years.

“We did make a commitment when we went to the electorate last fall that we would look at, over the next four years, reducing payroll tax. We have done it in past years since we’ve come to power. We’ve put in place a number of initiatives for small business … over $91 million in tax incentives. We’re certainly very engaged with small business — we realize how important it is to the economy of Newfoundland and Labrador.”

 

dmaceachern@thetelegram.com

 Twitter: TelegramDaniel

Organizations: Business Association of Newfoundland and Labrador, Battery Hotel, Statistics Canada Newfoundland and Labrador Employers Progressive Conservatives

Geographic location: Newfoundland and Labrador, Alberta, Hebron

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Recent comments

  • response to LOSTONAWALKABOUT
    May 10, 2012 - 07:18

    You post reeks of someone who lacks ambition, or justifies others not having ambition. I never said I was a Rhodes Scholar and frankly, you do not need to be one to be successful. Education and ambition is the key. I stand by my comment that I wish for the demise of the fishery cause you get no personal benefit, but my position is entails a bit more than that. To be clearer, I main concern witht he fishery is that I do not want my tax dollars used to prop up the fishery. For years, government has used my tax dollars on the fishery, so I now wish for its demise so that my tax dollars cannot be used on the fishery. I do not trust the government to stop funding the fishery, and I know the fishery workers have no problem living off our tax dollars. So in that vein, I figure that if the fishery dies, then money can no longer be wasted on it. Plain and simple. And for teh record, I do not hate NL. I love NL. But I hate doing business here. So I do not do business here. I chose not to deal with the unions, the entitled workers or the overpriced minimum wage laws. well I hope that the same doesn’t have to be said for all the businesses you create and all your clients or customers feel the same way. I just happen to know the pain and frustration of shopping for a cheaper no name lawyer that charges the published rate, fixed and agreed upon by the society. The amount of money you pay or I pay has no bearing on the case and only clouds the topic. Likewise, I am not about to tell you where you should live but I can tell you I would think that it is pretty difficult for anyone to have to live some place that they hate so much, wherever it might be. As for me, I’m proud to be a Newfoundlander, supporting Newfoundlanders wherever and whenever I can, and will continue to do so.It’s not all about money. I just love it when people from all walks of life and from around the globe, say,"you Newfoundlanders, I just love you." United we stand-divided we fall. Oh, and by the way, I didn’t just fall off the back of a turnip truck. !!!!!

    • David
      May 10, 2012 - 08:46

      1) messageboard...not manifesto board. 2) get a room.

  • LOSTONAWALKABOUT
    May 04, 2012 - 18:19

    Response to A Business Man fr LostonaWalkAbout......... Not everyone is nor can be a Rhodes Scholar so more power to you for being able to earn all that money, pay that much taxes and create all those offshore jobs. I am glad you can see that times have changed and at the moment the fishery may not play as an important role that it did in the past. If you have to wish for the demise of the fishery cause you get no personal benefit, well I hope that the same doesn’t have to be said for all the businesses you create and all your clients or customers feel the same way. I just happen to know the pain and frustration of shopping for a cheaper no name lawyer that charges the published rate, fixed and agreed upon by the society. The amount of money you pay or I pay has no bearing on the case and only clouds the topic. Likewise, I am not about to tell you where you should live but I can tell you I would think that it is pretty difficult for anyone to have to live some place that they hate so much, wherever it might be. As for me, I’m proud to be a Newfoundlander, supporting Newfoundlanders wherever and whenever I can, and will continue to do so.It’s not all about money. I just love it when people from all walks of life and from around the globe, say,"you Newfoundlanders, I just love you." United we stand-divided we fall. Oh, and by the way, I didn’t just fall off the back of a turnip truck. !!!!!

  • response to Lostonawalkabout from a business man
    May 04, 2012 - 09:36

    Lostonawalkabout, What I post is not garbage, it is reality. I am legally allowed to open offices in the USA/Asia/China and pay workers $7/hour or less. So I do it. I would be a fool to pay a NL worker 30% more to do the same work. Why would I practice what I preach and live on $7/hour? I went to school, got educated and now am enjoying life. I went to law school and business school, and possess skills that are in demand. If I didn't have skills that were in demand, then I would only be worth $7/hour. I don't care what it is like to live on $7/hour, but those who earn that kind of wage need to ask themselves why. I know the fishery WAS an important part of NL's economy, but times have changes and the fishery is no longer important to anyone except the fishermen. So as a taxpayer who gets no benefit from the fishery, I wish for its demise. I do have fish in my freezer that is not from NL, and I'll tell you it is cheaper. AND yes, I have created thousands of jobs in USA/Asia/China, but I will not go live with them. Why do you suggest that? I was born in Canada. I pay my taxes here, I follow all the laws. what gives you the right to tell me where to live? I am a frigging citizen for god's sake! I am not sure how much taxes you pay every year, but I pay over 7 figures in taxes every year. Clearly, I contribute to the coffers. how much do you contribute in taxes? how much do fishermen contribute (when you factor in EI)? You may not like the fact that I get rich by offshoring jobs, but remember that I pay exponentially more in taxes that many other people, so do not tell me to leave. I will not leave. I will stay here and continue to work here. In addition to being an entrepreneur, I provide offshoring consulting (both on the corporate side and the legal side) to many large companies. I help them offshore jobs, and gets paid hundreds of dollars per hour to do so. And because I am a Canadian born citizen, I will continue to run my businesses as I see fit, mainly by offshoring profitable companies to make even more profit for myself and my shareholders. I will continue to help companies make more money by relocating their operations and line my pockets while doing so. And I will comment about this as widely as I can in hopes of alerting Canadian employers of the fact that they are paying to much for unskilled labour, because the same unskilled labour is available to them for a cheaper cost in USA/Asia/China.

  • Mike M
    May 03, 2012 - 15:02

    If this is the best advice the Innovation, Business, and Rural Development minister can provide then good luck competing with the rest of the world. Education and investment in R&D drives innovation. Innovation helps companies compete. Wage disparities are driven by the free market. If you can get more money elsewhere, go there. Labour shortages drive up wages. No business man in that audience is increasing wages unless the skills are in short supply.

  • a business man
    May 02, 2012 - 20:11

    why would I pay my NL workers more when I can use US workers and pay near $7/hour? what does an NL worker offer that a cheaper American or Asian does not? Why is a NL worker worth 30% more? Hate to say it, but I cannot answer the question. As a result, I don't invest in NL. Furthermore, I agree with JT. ....................JT said "Why should every man, woman, and child be burdened with supporting government-provided services to every God-forsaken outport in this province full of people that think they are entitled to make a living wherever they want instead of going to where the work is?"....................I absolutely agree with JT. I am so disgusted with support these outport communities and the fishery. I cannot stop the government from supporting these people and communities, but I CAN more my company out of Canada and NL and keep my money away from the government. And when I close a company, workers get fired, which means I take away the ability of some people to further contribute to the tax base. In short, if the government makes decisions that are against my interests, then I can and will do what I can to undermine the tax base by moving companies and firing/offshoring workers. To be perfectly honest, I would rather pay taxes to the US government or Asian goverments instead of paying taxes to a Canadian government or NL government that acts against my interests by supporting the fishery and opoutport communities. Fortunately, I have the choice, and I choose to pay taxes to US/Asian governments and create jobs in the USA/China. I also encourage my business minded friends to do the same.

    • Lostonawalkabout
      May 03, 2012 - 08:59

      My first time response and normally I would not take the time to comment on the garbage that this so called "Offshore Businessman," writes.Paying his workers $7hr. He should practice what he preaches and be like the Under Cover Boss and go live on that $7 an hour. He probably would want to go move back to one of those OutPort communities to survive. More than likely he has a dream " Cottage," on the hill there anyways. Likewise, don't loose site of the fact that the fishery started and drove the very economy that this businessman or his forefathers probably got his start from. Maybe not directly connected but certainly interconnected and these outport communities probably supported him so he could enjoy the life style he has become accustomed to.I bet he gracefully and boastfully stocks his freezer with frozen fish, a product of China and caught in our Newfoundland waters. You obviously have chosen to create jobs in USA/Asia/China, so go live with them and write your criticism's in their papers. The Province will do quite well without you, the cities will survive and the OutPorts will be places that people will die for.

    • Brett
      May 03, 2012 - 20:35

      I think you missed the point "lostonawalk...." people have to change, you can't live like your grandfather lived, we aren't Indians, and the rest of Canadian society isn't beholden to us to maintain an outdated and uneconomically efficient lifestyle.

  • Anon
    May 02, 2012 - 16:52

    Trouble is you have people that have not completed high school that think they should get $15 plus an hour. Where is the logic there? If they make $15 plus an hour what will we have to pay somebody with their high school, college or university diploma?

    • Brett
      May 03, 2012 - 20:42

      I don't know - but I've heard of data entry clerks making over $22/hr with the city. Data entry isn't a skilled position. I guess you need to be able to read/type and use an electronic device... I do wonder what the wage inflation rate would be if the city hadn't upped pretty much all union salaries by 30% over 4 years 5 years ago...

  • Too Funny
    May 02, 2012 - 13:52

    Well, government is negotiating new collective agreements with it's workers. Do you think they'll be practicing what they preach? Neither do I.

    • Greg
      May 02, 2012 - 18:02

      No, they better not either. You realize the government is using YOUR money to pay for it's workers right? Do you want a tax increase? It is not the government that's supposed to be setting market wages, it's supposed to be private businesses who are in demand, and the government adjusts accordingly (which they would then be able to do without raising taxes, since they would be collecting more tax revenues from people having higher wage). Everyone in this province wants government jobs / government money for everything, but they want low taxes and low prices for services, etc, too. Can't have it both ways people. Either let the free market work freely, or embrace socialism. Both can work, just not at the same time.

  • JT
    May 02, 2012 - 08:37

    "It is better to train the workers who haven't left and change the attitudes of seasonal workers and Employment Insurance abusers than raise already high wages to extremely high wages for the privileged few!" Wow, you make it sound so easy!!! What you are suggesting is giving the shaft to those people who have worked to actually get a decent, semi-well-paying job in this province and throwing YET MORE MONEY at those people who don't care to put in the effort? A big part of the reason that we have a 13% unemployment rate, EI abusers, and seasonal workers with these attitudes you suggest requires changing is that many Newfoundlanders think the government should reward them for doing less. In other places they have realized that you should be rewarded for doing more. "Why should every man, woman and child be burdened with the debt of a few select workers?" Why should every man, woman, and child be burdened with supporting government-provided services to every God-forsaken outport in this province full of people that think they are entitled to make a living wherever they want instead of going to where the work is?

    • todd
      May 05, 2012 - 16:04

      Yeah, I will go where the work is. Newfoundlanders are becoming super greedy like jt and a businessman. In fact, it is happening nearly everywhere now, but Newfoundland has been totally screwed over. Not everyone abuses EI. EI is there for people to use when you get laid off due to no fault of your own and you continue to look for work while on it, such as what happened to me when a contract was lost. I am not in the fishery, I am in technology and I have a college degree. I am still finding it very hard here because people like you guys are outsourcing even those jobs. You also have no interest in training people in any field unless its your family (nepitisism, not you nesscessarily, but many are doing this). How do you expect people to grow? Btw, this article is about the trades, not menial workers, but I am sure there are trades businessmen who are using Chinese too. Realistically you are paying into their slavery and constant mistreatment. That sorta makes you a communist like the people in China running the plants. I've heard the Chinese want raises too, but it will be demanded that they just go back to work. "Oh its ok for apple to do it, so I will too". There was a time we made things in Canada more, and people were still successful so come off it and give your whining a rest. You truely are wrong. Making profits is not what it should always be about. There are things in life that are more important. Greedy Newfoundlanders! Unskilled workers are oftend people who were not able to go to college or who are currently attending college to better themselves, so how are they suppose to live? Even college students are getting screwed. Rent, food, and everything has gone up, and you "business-savy" people are sending jobs overseas? It should be a crime or you should have to pay more for it. You are the problem with disparity in the world and why the world is collapsing now. You don't care WHATSOEVER about the future generations here or anywhere else. Move to China if you are going to be throwing your work to them. It is very unfortuate that college has become something completely necessary for an individual to be successful. In the past, there were much more people like Albert Einstein, Peter Jackson, George Eastman, etc. who were able to make something of themselves without a degree. Those times are fading and that is sad. We have let our future down. There is far less guidance now because everyone is just out only for the buck. Try putting yourselves in other's shoes for once!

    • todd
      May 05, 2012 - 19:10

      That all being said, I understand you have a business and probably high cost as well, but you do make money. You can hire people here and make a world of difference, and help them learn. You can pick people who are hard workers and who will help your business grow. But for them to become experts, they need to learn and be able to thrive. There are plenty of people here who fit that description. And I will never disagree with people learning more whether it be self-taught or in college. It is always good to improve your skill.

  • David
    May 02, 2012 - 07:40

    Workers must posess skills and show productivity to warrant increased wages: common sense

    • Holden
      May 02, 2012 - 08:27

      Looks like common sense is in short supply. You don't have to be a genius to know that the employees referred to by the Minister already possess the required skills. As for small companies, if they can't survive then they should go out of business. That is the way successful businesses rise to the top.

    • Christopher Chafe
      May 02, 2012 - 08:31

      Highly skilled and productive workers should not be held to slave wages because they live on an island either! Not everyone can move, and please do not start with the garbage that it is cheap to survive in Newfoundland.

    • David
      May 02, 2012 - 09:23

      So in summary: 1) "Adequate skills". There's always someone looking for work who has more, and that's where lazy, self-satisifed, entilted people like you get your comeuppance. But you don't see it that way, and that's just fine with me. 2) "It's expensive here". Paying artifically high wages to support someone's preferred location is not the luxury or responsibility of business. Best you figure that out sooner than later.

    • Christopher Chafe
      May 02, 2012 - 10:38

      No David it is not the responsibility of business, but there is no way in hell you can honestly say that a web developer(for example) gets hired for $35k here in NL and a web developer with same exact skills and education background gets paid $55k in another Atlantic Canadian province where the cost of running a business is the same as here in NL.

    • David
      May 02, 2012 - 11:40

      Chris: If that were me, I'd have a decison to make: take what's offered, or find something better...somewhere. If I take what's offered, I live up to my end of the deal --- i don't pout, or complain or live in resentment. If I don't accept what's offered, I take the risk of finding sometihng better or endiong up with something worse or not at all. It's called being a grown-up. More Newfoundlanders should try it...it's very empowering.

    • Christopher Chafe
      May 02, 2012 - 12:24

      You are absolutely right David, it is called growing up, however perhaps the business community in NL should also grow up and stop using the age old excuse of having to hire outside labor, when they damn well know there are qualified individuals here in NL.

    • David
      May 02, 2012 - 14:59

      What color is the sky in your world? Are there ponies?

    • Brett
      May 02, 2012 - 18:35

      Christopher Chafe: I do my contract work outside of NL, and for my skill set I find it very difficult to find the volume + quality of work here that I find in Toronto. While I can command a similar hourly rate, when I take into account the necessary networking + the possible down time between projects I am much better off living here, and flying to the mainland for my contracts. It's those same lack of projects as to why the employers cannot compete with Toronto. If NL had a larger population and the full tier of employment options that comes with being a metropolis, then salaries would be closer. Aside from that, when I look at how long it takes me to get something done in town as opposed to "away", the speed is much slower here. It is what it is, but if you're doing 3 projects a year "here", and 5 "there" in a year, you're going to get paid more "there".

  • Michael
    May 02, 2012 - 07:32

    I just don't get it! Pay higher wages when Newfoundland has a 13% unemployment rate? It doesn't make sense! Newfoundlanders always have had the travel bug! Do you really think higher wages will bring people back. Most unlikely! It is better to train the workers who haven't left and change the attitudes of seasonal workers and Employment Insurance abusers than raise already high wages to extremely high wages for the privileged few! If you want to narrow the wage gap, you need to raise the minimum wage and lower the top wage! In the last budget the government started a sound program for seniors that will address wages and benefit them immensely! This will help all people of the province if it is made available to everyone. Do you know what it is? It is the elimination or significant reduction of user fees(electricity should be included)!! This is the way forward. With reduced user fees or eliminated fees, this will make a person's wage buy more and travel further than a wage increase for the have's! Newfoundland is already a place of Have's and Have-nots. Higher wages for the top end will only further increase the wage disparity and it will not fix Newfoundland structurally or fairly. Also, privatize the Public sector's pension. Why should every Newfoundlander be held accountable for a select few who work for the government? Of course, government workers should be provided with a pension contribution, but that contribution should be put in a private pension plan. Provincial governments have to get out of the pension business. That's the job of the banks! Why should every man, woman and child be burdened with the debt of a few select workers? Just look at the Marine Atlantic ferries. The funding was massively increased 2 or 3 years ago, but ferry prices keep going up . Do you know why? Because the increased money is only going out to pay for Marine Atlantic pensions. The money doesn't have a chance to do its intended purpose, which is to have a low cost transportation route to the mainland!! Smarten up NL government!! Use your brain for once and help all the residents and not just a select few.

    • Holden
      May 02, 2012 - 08:37

      This is the kind of "logic" in Newfoundland? Lower the wages of those that receive the top wage. WOW! And just who is going to train and mentor the learners? Is it any wonder why this province will never be a success. Train 'em and send them away, train 'em and send them away, and on and on!!!