Depressed wages are a drag on Canada’s economy

Posted on in Policy Context

Source: — Authors: – Opinion
September 01, 2012.   Sid Ryan

Just in time to celebrate Labour Day, the American retail giant Target rolled into Canada, swallowed up 150 Zellers stores from the Hudson’s Bay Company, and promptly fired all 15,000 employees.

If that isn’t the very definition of precarious, I don’t know what is.

Unfortunately, it is also a sign of the times. Roughly 1.7 million workers in Ontario find themselves in precarious jobs characterized by low wages, few benefits and no job stability. They pour our coffee, serve us in stores, clean our hotel rooms, maintain our offices, run our factories and their very existence challenges the notion that employment is an antidote to poverty. After all, if four out of five jobs added to Canada’s labour market since the 2008 recession are temporary or contractual then it is no wonder that 22 per cent of the working population in Ontario can’t call themselves “gainfully employed.”

What does it feel like to be working on the margins? I suggest you ask a former Zellers employee. Before being summarily dismissed by Target, barely any of them were making more than three dollars an hour above minimum wage — even if they had given the company more than 15 years of loyal service. If any manage to get hired back to work at one of Target’s discount fashion stores opening next year, they will likely return to earning minimum wage, with minimal benefits and without full-time hours.

This is the fate that awaits service workers in Canada when foreign companies gobble up our retail industry. It is part of a growing downward pressure on wages that is stranding an emergent class of vulnerable workers who are often living close to the poverty line – a group predominantly comprised of women, people of colour and new or established immigrants.

The competition created when workers are shuffled from one precarious job to another is at the root of Ontario’s race to the bottom. Add to that a new federal policy that allows Canadian companies to fast-track temporary foreign workers and pay them 15 per cent below the going rate and that descent speeds up.

The lack of protection in these precarious jobs, both under the law and because of low levels of unionization, means that many casual, part-time and contract workers aren’t familiar with the few rights they do have, or else they are afraid to exercise them for fear of reprisal, blacklisting or deportation. It serves as a reminder of the ongoing importance of labour unions and it is one of the biggest challenges that faces the Ontario government in elevating the standards of all workers.

Over the past two hundred years, unionized wages in Ontario’s industrial, manufacturing and public sectors have raised the bar for every worker, as employers in non-union shops competed to keep a skilled workforce. Their collective wage gains helped create Canada’s middle class and many of their benefits became the law of the land — including the eight-hour work day, sick leave, maternity leave, pensions and injury compensation.

But workers in Ontario’s expanding retail and service sector are forming a new underclass of vulnerable workers. spending less in neighbourhood shops and businesses.

For Ontario’s economy and communities to thrive, our government must invest in meaningful job creation, enforce stricter standards on corporate take-overs and protect the democratic rights of workers. When workers are free to form unions and maintain them when a business is sold or transferred, they can work together to raise wages and improve standards for all workers — both union and non-union.

That is why more and more service workers in retail chains, hotels and many other workplaces are realizing that joining a union is a critical pathway out of poverty. In today’s challenging economic climate, legislators have a responsibility not to close but to expand these pathways for all workers, especially those in precarious employment.

Sid Ryan is President of the Ontario Federation of Labour The Ontario Federation of Labour (OFL) represents 54 unions and one million workers.

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One Response to “Depressed wages are a drag on Canada’s economy”

  1. Michael Green says:

    I largely agree with the analysis. However, I think a few things need to be said, on both sides of the argument.
    Was Zeller’s profitable? Not, was it really REALLY profitable, but did it run in the black. If it did, then the sale wasn’t about divesting a money losing operation but rather an exercise in maximizing profits and efficiency of capital investment. There is a case to be made for bailing on an operation that is in the red, for an owner or corporate parent to sell it off and get what they can for it. Simply closing the doors would result in all employees losing their jobs. Selling with the chance of ongoing operations, under new ownership, leaves former employees with at least an opportunity for some work.
    Liquidation for profit (despite it being a rational and paradigm-accepted option) where the new owner will recoup the takeover investment back by jamming 100’s or thousands of newly terminated employees (creating an oversupply of labour – giving the employer huge leverage) exploits workers and worker desperation. HBC walks away with $1.8B and, despite costs, debt and other considerations being a likely part of that price, it’s still a hefty chunk of change. Great for HBC investors. Not so great for the workers.
    Yes, Target is coming in and investing on the order of $10M per store in renovations, putting all that money into the economy. Hopefully all of those renovations aren’t to be paid for by lowering the wages for 6,400 people from $13/hour to $10/hour.
    Perhaps market forces, competition for from walmart and other corporation for labour will lend some counter pressure, but it seems pretty unlikely. There really needs to be a way for corporations to be profitable while employees get at a living wage and more. Corporations are wired to pay the very least possible. It’s what corporations do. The sad reality seems to be that without labour laws, unions, or some other mechanism beyond the individual, the employer holds all the power.
    Yes, a significant labour shortage would serve as a balancer, but the way things are going, that seems to be profoundly unlikely for the foreseeable future.


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