Federal policies will drive down wages for all

Lana
Lana Payne
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Why is Canada’s prime minister so determined to drive down, or at the very least, suppress the wages of Canadians?

As an economist, Stephen Harper must know what his government’s changes to employment insurance (EI), the Temporary Foreign Worker Program (TFWP), the elimination of the Fair Wage Act and the assault on collective bargaining in the federal sector will mean for the wages and working conditions of Canadians.

Combined, they will result in a transformation of Canada’s labour market, erode the right to fair and free collective bargaining, and make workers more vulnerable, less demanding, more compliant. Combined, they work to the full advantage of employers, at least in the short-term.

The underlining message taken from all these policy measures to workers is lower your expectations. Don’t demand more or better. Put up. Shut up.

As an example, the changes to the TFWP will allow employers to pay higher skilled migrant workers 15 per cent less than prevailing wage rates.

Employers will also be able to fast track applications for migrant workers. Approval of applications is now merely a rubber stamp, reduced to 10 days from the 12 to 14 weeks it currently takes.

This new labour market policy will depress wages in all parts of the country, but was designed to cater to the developers of Alberta’s oil sands, weary of paying the premium wages dictated by their rapid pace of development.  

But the federal government’s intervention will not just affect wages in the oil sands; it is a national policy with implications and impacts across the country.

Ironically, while the federal government rushes to do the bidding of employers, feeding into the notion that Canada has a massive labour shortage rather than a skills and wage shortage, a new study by Statistics Canada showed that there are six unemployed Canadians for every job vacancy in the country. In Atlantic Canada, there are 10 unemployed workers for every job vacancy.

Labour shortage? Or skills mismatch?

The Harper government is working hard at perpetuating this myth that Canadians have an EI dependency, when instead there is a cheap labour dependency.

Economist Armine Yalnizyan has been quite critical of the federal government’s new TFWP rules.

She says that even if such a rule were rigorously applied and monitored, it guarantees a downward trend in wages for everyone. “Fifteen per cent below the average is a recipe for continuous decline.” She says the new rules will result in a permanent temporary class of workers, keeping wages and expectations low.

“As an economist, I understand cheaper labour will benefit some employers in the short term, though the longer-term results will slow purchasing power and growth. As a Canadian, I am appalled that public policy can be boiled down to this. We are all cheapened as a result,” Yalnizyan wrote in a recent column for The Globe and Mail.

But for this Alberta-centric federal government, all roads lead to the oil sands.

The changes in employment insurance requiring workers to travel an hour or more, based on local average worker commutes, will also force Canadians, any Canadian who is unemployed (not just seasonal workers), to work for up to 30 per cent less at any job or lose EI benefits.

As a number of economists have pointed out, the new rules will have a ratcheting-down effect on wages. Andrew Jackson, chief economist with the Canadian Labour Congress, has noted out that a worker forced to take a lower wage job may have to accept an even lower paying job during a subsequent job search.

Jackson says any competent economist should recognize that the new rules will depress wages. “They will create few if any new jobs, while increasing the downward wage pressures of unemployment. The biggest impact will be on wages in relatively low-wage jobs, given that the average EI beneficiary earned about $16 per hour in her or his previous job.”

Instead of attacking unemployment and the skills gap or skills mismatch by investing in training, the Harper government chose to attack the unemployed as if they laid themselves off, as if workers closed plants or were somehow responsible for the seasonal nature of so many Canadian industries.

Then there’s the Fair Wage Act.

A line in the federal government’s omnibus bill eliminated

this 1985 piece of legislation that required companies bidding on federal contracts to pay prevailing wage rates and overtime.

No longer.

And last week, the Harper government moved for the fifth time in the past year to interfere in collective bargaining, this time at CP Rail, legislating striking employees back to work after just days on a picket line.

As was the case at Canada Post and Air Canada, the government gave plenty of warning that the back-to-work legislation was coming, handing the employer the upper hand. Where was the incentive to negotiate?

Collective bargaining is one of the few ways we have of increasing wages in Canada, and not just for unionized workers.

Of course, this is not merely an assault on wages and working conditions, it is an assault on worker rights and on unions who, like environmentalists, are atop the Conservative enemy list.

Make no mistake, these federal policies will take a swipe at the wages and working conditions of all Canadians, forcing many workers to feel insecure or “thankful” to have a job.

As an economist friend of mine recently joked: “There are two kinds of economists. Those who can add, and those who can’t.” I will leave it to you to decide into which category the prime minister falls.

In the meantime, welcome back to the future.

Lana Payne is president of the

Newfoundland and Labrador Federation of Labour. She can be reached by email at lanapayne@nl.rogers.com.

Her column returns June 30.

Organizations: Statistics Canada, The Globe and Mail.But, Canadian Labour Congress CP Rail Canada Post Air Canada Newfoundland and Labrador Federation of Labour

Geographic location: Atlantic Canada, Alberta

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Comments

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Recent comments

  • Derek
    June 08, 2012 - 00:31

    So True: There have been a few waves in the past of domestic & foreign operations, industries involved in mining, fishing, merchandising, production, harvesting & processing that have caused wages drop, environmental degradation for operations they have taken over/developed & existing competitors in NL and across Canada. Now it is looking like "Harper's Canada resource/product sale with no end to it" guaranteed to lower wages bring in 3rd class "work immigrants" (who often are afraid of unions and exercising basic human rights to protect themselves and others from exposures to hazardous conditions/chemicals in workplaces for fear of being sent back). There will undoubtedly be a large number with language and communications barriers also. Sounds like the sales pitches & agreements have already been made to US, China, Brazil and any other country that wants cheap oil, minerals and raw materials. Employment program for Chinese, Brazilians etc. in their new companies with their own people seems to be getting put in place quite well..... Where many will get to design & build the pipelines, industrial infrastructure with us also. Get jobs as "security guards" to protect their countries interest of product flow out of country and soon hired to stop protesters standing up for rights and environment. We can expect to see a larger growth in personnel agencies also where they will handle the processing of staffing for industries. The negative impacts of this agenda are surely immense on individual, community and social well being that will effect our children's futures for sure.

  • a business man
    June 07, 2012 - 21:08

    I do not think that these policies will drive down wages for all, but I do think that they will drive down the wages for unskilled uneducated workers, and I think this is a good thing. I am very happy with the changes to the foreign worker program and to EI. It ultimately mean more money for my family and investors. I worked very hard to build my companies, and get to higher cheaper workers. I will make lots more money, and pay lots more in taxes to support the systems like health care that serve us all. I will put more money into the tax base that support all of us by cutting out a few hundred local workers. Honestly, it seems fair to me.....A few hundred workers lose their jobs, and more money goes to support the services of a few hundred thousand citizens. it works for everyone except the few hundred workers. Of course, I could not do this to a skilled educated engineer, accountant, programmer, teacher, or scientist, but I can do this to the unskilled uneducated worker who contribution can be replicated with minimal effort. And while I may be condemned for my decisions by some, those who oppose such decisions should ask why is the unskilled uneducated worker unskilled and uneducated? Why do they not have a university degree and specialized training? Why do they not have the skills and knowledge that employers desire? and whose fault is that? If you ask me, I say the unskilled uneducated worker is the product of their own decisions, and should have done more schooling to be someone with skills worth retaining and paying for. The only jobs that can be done foreign temp workers are those jobs which can be done by anyone.

  • Sasha A
    June 05, 2012 - 12:18

    Actually Harper's degree is neither here nor there; we all know people who's degree has nothing to do with how they earn a living. The fact of the matter is that he has never worked as an economist. His employment history post-university has been working for politicians or political parties, in one capacity or another.

  • David
    June 04, 2012 - 09:03

    Andreww Coyne, weekend NP....read it.

  • It's nothing short of frightening what is coming down the chute in Ottawa
    June 03, 2012 - 08:54

    Holden, it sure would be nice to view his credentials backing up his economics ability! Of course records substantiating those credentials would have to come directly from any University he claims to have taken a course from.

  • Holden
    June 03, 2012 - 08:03

    Where does this Stevie Harper, economist come from. In an article in The Toronto David Olive stated that Stevie had three courses in economics. If you count the Economic History course taught by C Avery I have four courses, but I would never claim to be an economist. But for people from Western Canada I can understand the hyperbole as they feel so inferior to the rest of Canada that they have to boast to in order to try to feel equal.