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Canadian Conservatives Pursuing U.S.-Inspired “Right to Work” Laws, but Wages are Not the Problem

Canadian Finance Minister Jim Flaherty recently met with the nation’s top business and policy leaders at his sixth annual policy retreat. Attendees expressed an interest in lowering the wages of Canadian workers by implementing U.S. based policies (yay, us!) such as “Right-to-Work” legislation.

According to notes obtained by The Globe and Mail, raising the retirement age, lowering pay for public service workers, and allowing two-tier health care were also on the agenda. The Conservative-led government has already begun to chip away at workers’ wages over the past year.

Much like in Wisconsin, the jobs of lower level public employees are in particular danger:

The memo indicates calls were made for junior public servants to be paid less. “Reduce public service wages (not in higher ranks, but those in the lower ranks such as administrative and clerical staff as they earn more than their private-sector counterparts) and reduce the overall size of the public service.”

Over the past year, the Conservative government has made several policy moves that unions said will drive down wages. Among them, Canadian companies will be allowed to bring in temporary foreign workers more quickly and to pay them 15 per cent less than the average wage for their jobs. Also, changes to Canada’s employment insurance rules will mean that Canadians who fall into a new category of “frequent” EI users will be expected to take any available work after six weeks on EI, even if it pays up to 30 per cent less than their previous job.

Lowering the wages of workers by limiting the power of unions? Oh yeah, that’s on the agenda, too. Documents show that business leaders want to see policies based on the United States’ “Right-to-Work” obsession:

Labour issues surface in several discussion categories, with the general view that Canadian workers are overpriced. “Need to address wage differentials in labor market among countries; we are losing jobs to other countries,” the memo reads. “Right to Work legislation should be pondered as it creates inequities in productivity; US example was provided.”

In response to the documents, Andrew Jackson, chief economist for the Canadian Labour Congress (CLC), described how Canada’s economic problem is not high wages:

The reality is that the pay of most workers has stagnated in real terms over the past 30 years as the profit share of GDP has increased at the expense of wages, and as wages have become much more unequal with more and more of the total wage and salary bill going to the top 1 per cent made up mainly of senior executives. As the OECD recently reported, since 1990, 6 per cent of total national income has been shifted from wages to profits and the pay of the top 1 per cent combined.

And a recent Statistics Canada study documents the stagnation of real hourly wages of the majority of Canadian workers between 1981 and 2011. Over that entire 30-year period, the average hourly wage of full-time workers rose by just 14 per cent (and that includes the top 1 per cent). This compares to growth of over 50 per cent in real GDP per person over the same period.

The view that wages are “too high” boils down to saying that workers have no right to share in rising national income, all of which should go to profits and senior managers. That is, to say the least, a curious basis on which to sell the proposition that workers have any kind of stake in our current economic arrangements.


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