Fair wage policy: Think before scrapping

TheStar.com – Opinion/Editorials
Published On Tue Nov 09 2010

Mayor-elect Rob Ford’s promise to scrap Toronto’s 117-year-old fair wage policy is only worth trying on the condition that it would save a substantial amount of money and it won’t cause undue harm. Unfortunately, Ford’s proposal fails on both counts.

Ford campaigned saying he would save $80 million a year by axing this long-standing policy requiring companies bidding on city work to pay their employees a wage in keeping with prevailing industry standards. That generally translates into paying close to union rates, whether or not a company’s workers are unionized.

The policy has been in place since 1893, when it was installed to keep taxpayers’ money out of the hands of construction contractors bent on exploiting new immigrants by paying pitifully low wages. Critics of the policy argue it has morphed into a way to protect union work from non-union competition and that restricting cheaper alternatives in this way only drives up the cost of city projects.

According to Ford, eliminating the fair wage policy would save Toronto about $320 million over his four-year term. But he hasn’t backed that up with any real evidence. Indeed, Ford’s projected savings are almost certainly over-stated. For a start the industry standard that contractors are obligated to pay doesn’t represent current union rates but, rather, union wages in effect in 2003 and 2004. That lag time is the result of successful tactical manoeuvring by conservative councillors, led by Doug Holyday. As a result, companies employing non-union workers already have a potential competitive advantage over firms with unionized staff.

More importantly, workers’ wages represent only about one-third of a contractor’s costs. Other factors include building materials and equipment. And when the construction sector is busy, even non-union skilled workers can command high rates, regardless of city policy. That makes it difficult to project big savings from cancellation of the fair wage program.

There could also be unintended side effects from scrapping the program. Labour leaders warn it could mean bids will be won by unscrupulous contractors more intent on their bottom line than on workers’ well-being. The tragic Christmas Eve death of four men, who plunged 13 storeys when a scaffold in Toronto collapsed, is a stark reminder of what can happen when industry standards are allowed to slide. Three men and a construction company face criminal charges in connection with that accident.

In short, given the questionable savings resulting from axing Toronto’s fair wage policy and the potential harm in such a move, Ford and city council would be wise to pause. A full study is needed to get a better handle on the likely costs and benefits. If any change is undertaken at all, it might be simply to write into the rules the current six- or seven-year lag in paying a union rate. It would be a mistake to keep an ill-advised campaign promise without the evidence to support it.

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