War on wages: The issue no one talks about
The war to drive down wages continues apace.
Stephen Harper is prosecuting it. But he did not start it.
The Conservative prime minister is merely playing his part in a war that started long ago — a war stemming from the needs of business to drive down labour costs in a fiercely competitive world.
To date, neither Tom Mulcair’s New Democrats nor Justin Trudeau’s Liberals have come up with much to reverse the damage caused by this war.
Damage there has been. In the ’80s and ’90s, the Bank of Canada, with the approval of successive Liberal and Progressive Conservative governments, engineered two punishing recessions in order to boost unemployment and squeeze wages. This was called fighting inflation. In the mid-’90s, another Liberal government gutted Canada’s social safety net — including employment insurance and welfare — which ensured that the jobless would have little option except to work for whatever wage was on offer. This was called fighting the deficit. Meanwhile, successive Progressive Conservative and Liberal governments opened up well-paid manufacturing sectors of the Canadian economy to low-wage, foreign competition. This was called free trade. The results were predictable. Wages stagnated, particularly in the ’80s and ’90s.
A 2012 Statistics Canada study concluded that when inflation was taken into account, the real median hourly wage of full-time workers rose by only $2 between 1981 and 2011.
Young men were hit particularly hard. Males between the ages of 25 and 34 saw virtually no real wage gains over the entire 30-year period.
As the study points out, much of this had to do with the decline of unions.
Unions get a bad rap. They are routinely castigated as self-serving and out of date.
More often than not, their leaders are dismissed as union bosses.
But when it comes to wages, unions deliver the goods.
On average, says Statistics Canada, unionized employees still make $5.67 an hour more than non-union workers.
No wonder then that unions are unpopular among those crying for cheap labour.
The shift away from factory production has hit unions hard. Today, only 30 per cent of the Canadian workforce is unionized, down from 38 per cent in 1981.
In the private sector, only 17 per cent of workers are union members.
Harper’s Conservatives are doing their best to weaken unions even more.
This year, they rammed through Parliament a law that, under the guise of encouraging transparency, would make it easier for employers to winkle out union weaknesses.
Earlier, at the behest of employers, they repealed another law that required government contractors to pay their workers fair wages.
The Conservatives have also taken every opportunity to order striking workers back on the job, even when, as in one Air Canada dispute, there was no good reason to do so.
In effect, they are eating away at organized labour’s key weapon, the right to strike.
Unions have not been Harper’s only target in the battle to drive down wages. He has continued the work, begun by the Liberals, of hacking away at employment insurance.
The reason? A properly functioning EI scheme removes the element of desperation needed to keep wages down.
Simply put, jobless workers eligible for EI have more choice. They don’t have to take the first low-wage job that comes along.
Such choice is good for the worker. But it creates what economists call rigidities in the labour market. To eliminate these rigidities, the Con- servative government has made it harder for EI recipients to turn down lower-wage jobs.
Finally, the government has greatly expanded programs that allow business to import cheap, temporary foreign workers.
The best-known vehicle is called, appropriately, the temporary foreign workers’ program. In one notorious case, the owners of a British Columbia coal mine received the OK to import 494 Chinese temporary workers, or roughly 65 per cent of its labour force.
But there are other avenues for companies hoping to replace expensive Canadian workers with cheaper short-term foreign help.
The intra-company transfer program, for instance, has been used to undercut wages in fields ranging from information technology to construction.
Over Harper’s time in office, the total number of foreign temporary workers allowed into Canada has doubled.
Last year, in the face of complaints, the Conservatives promised to scale back the numbers. Jason Kenney, who at the time was employment minister, admitted that foreign tem- porary workers had suppressed wages in the Alberta fast-food sector.
Whether the Conservative reforms have had any effect is not yet clear.
Oddly enough, the recession of 2008 helped to push real wages up in Canada. Economists cite two reasons.
First, Canada’s then-booming oil and gas sector skewed the figures. As long as energy prices remained high, well-paid oil workers in Alberta were less likely to lose their jobs than, say, chicken pluckers in Ontario.
Second, with inflation dropping sharply, even workers who received no pay increases found they could buy more with their earnings.
In economist-speak, their nominal wages stayed flat but their real wages rose.
Those gains don’t impress Dalhousie University economist Lars Osberg. “Don’t forget that real wages also rose during the Great Depression — for those lucky enough to keep their jobs,” he reminded me in an email.
With oil prices collapsing and the overall economy stuck in neutral, Osberg said there isn’t much reason to expect significant Canadian wage growth in the future. Unless some government does something. But what can government do? More to the point, what is it willing to do?
In this election campaign, most of the factors that serve to suppress wages are not being discussed. No one — including the NDP — is talking about making it easier to unionize poorly paid workers.
No one is talking about the danger to good-paying jobs posed by globalization and free trade deals.
In this campaign, no one is talking of scrapping the various temporary foreign worker programs.
The NDP is promising to raise the minimum wage for federally regulated industries to $15 an hour by 2019. The party estimates that this will directly affect about 100,000 workers.
But in the context of a long and bitter battle to drive down wages, it is like spitting into the wind.
The Liberals promise to borrow billions to spend on infrastructure. This too is a promise that, indirectly, would boost some wages. But it, too, is insufficient. In the end, wage and salary earners still get the short end of the stick.
The United Nation’s International Labour Organization calculates that Canadian labour’s share of national income has fallen to 56 per cent, with the rest going to those who own capital.
Among the eight most developed G20 nations, the Geneva-based organization says, only Australian and Italian workers have done worse.
On the campaign trail, no one is talking about that either. Thomas Walkom’s column appears Wednesday, Thursday and Saturday.
With oil prices collapsing and the overall economy stuck in neutral, there isn’t much reason to expect significant Canadian wage growth