Labour Economic Monitor (Summer 2006)

The following report is intended to give trade unionists reliable, current information on the provincial economy. The data is drawn from government sources, including Statistics Canada, the Government of Alberta, and the US Government (Energy Information Administration. Our current plans are to update it four times a year. The AFL hopes that this information will be of assistance to unions in the province. From time to time we will focus on issues of special interest to unions, such as income and earnings trends.

Gil McGowan, President of the Alberta Federation of Labour,  June 13, 2006

Sometimes life proceeds as expected - sometimes you get thrown a curve ball

Getting an invitation to speak at this conference was a curve ball

It would be an understatement to say it's unusual for management here in Alberta to come to labour for advice - especially management in the resource sector.

But the truth is there are actually a lot of things we can agree on. For example, we all want the Alberta economy to remain strong. And we all want individual Albertans to benefit from that prosperity.

And despite the stereotypes about unions - that we're always spoiling for a fight and never want to cooperate - the truth is we want to be constructive.

In that spirit of constructive engagement, I'd like to do three things this afternoon:

First, I'd like to begin by talking about the nature of the challenge that we face in the Alberta labour market - for the obvious reason that if you don't have a clear understanding of the problem, you'll have a hard time coming up with solutions.

Second, I'd like to offer suggestions about what, from a union perspective, employers should be doing - and what they shouldn't be doing - if they want to attract and retain employees.

Third, I'd like to step back and look at the big picture. In particular, I'd like to address the question: what can and should government and business, broadly defined, be doing to help makes the challenges presented by Alberta's tight labour market more manageable?

I'm big on metaphors and analogies - so I'll describe my mission is nautical terms: what I'd like to do today is talk about just how choppy the waves are in Alberta's labour market; what individual firms can and should be doing to avoid getting swamped; and what we can do collectively to calm the waters and keep all of our boats afloat&

So just how high are the seas?

Looking at the Alberta economy from a distance, it looks like an almost entirely unblemished good news story.

There is unprecedented demand for our most important commodities: oil and gas. And all signs suggest that demand will remain strong.

In the past, oil producers like Alberta were almost entirely dependent on the U.S. economy. If demand fell there, world price would fall. But this time around things are different - U.S. is not the only game in town. China, and to a lesser extent India, have emerged as major forces. So even if the U.S. economy slows oil prices may dip, but probably won't collapse.

We're also bumping up against the reality of declining world-wide petroleum stocks in a way that was the case in the 70s or 80s.

The result for Alberta has been staggering amounts of money being invested in our economy - particularly in oilsands development. Depending who you talk to, more than $100 billion in energy projects are on the books.

At the same time, after years of neglect, the government is finally spending substantial amounts of money on public infrastructure. This spending is welcome, and many would argue long overdue. But in an important way, they're competing with the private sector for resources.

All of this has led to record employment levels, strong job growth, strong consumer demand. And after 15 years of virtually zero growth in average real wage, over last three years we've been seeing wage increases that have been keeping ahead of inflation.

Some critics in the business community have complained about the increase in average wages. But, from our perspective, the real test of an economy is if it's working for ordinary people. So we strongly believe that rising incomes are something to be celebrated, not feared.

But, despite first impressions, the Alberta economy in not all good news - there are downsides.

First, the truth is that prosperity in Alberta is not universally shared. Energy is king, but it is not everything. Prices have been going up for oil and gas, but not for many of the other things we produce. Livestock, agricultural products, forestry products & the Alberta Advantage has not included rising demand or prices for these things.

Just last week, Stats Can released a report showing that farm incomes in Alberta have fallen by 50 per cent - 50 per cent in one year. The price for cattle about the same as it was during the BSE crisis. And the price for wheat, barley and oil seed, lowest in decades

In forestry, I've been talking to our members in the Hinton pulp mill and our guys who work in saw mills. Their employers aren't talking about growth. In many cases they're talking about lay-offs.

Wage increases are also not universally shared. The AFL represents 31 different unions in all sectors. One of our big private sector affiliates is UFCW, which represents thousands of retail workers. Their employers - companies like Safeway and Superstore - are not giving out double-digit wage increases.

And just this morning, I was on the phone with a group of school board workers in the Pincher creek area who are looking at a wage offer of 9 per cent - over five years.

It sounds like what workers came to expect during the last recession - but it's still the reality for many.

So, like the broader economy, the Alberta labour market, is a complex beast. The headline in today's Calgary Herald screams about a labour shortage & a shortfall for the city of 30,000 workers over the next ten years. It sounds ominous. But the truth is much more nuanced.

The construction labour market has been the subject of greatest attention lately. And there is no doubt that the industry is red hot & thanks mostly to oil sands development. But some important points need to be made about construction.

For example, construction is by its very nature cyclical. 60,000 trades people may be needed this year, but maybe only 10,000 the next year. That's the way construction works.

We're currently at or near the top of the cycle. But even here at the peak, within the construction labour market, we need to acknowledge that the situation is fluid.

The best you can say is that some trades are in shortage at some times & it depends on which trade and which time.

So right now for example, several major projects have recently been completed & the biggest example being the UE-1 expansion at Syncrude. The result is that hundreds of trades people who have been tied up in some cases for two or three years are now available for work.

The Alberta Building Trades Council just completed a survey of hiring halls around the province and what they found was that there are literally thousands of unionized trades people available for work.

So for those of us in the labour movement, something just doesn't compute. On one had we have employers screaming labour shortage and calling for desperate measures like radical increases in the use of temporary foreign workers. And on the other hand, we have thousands of unionized tradespeople people who are ready, willing and able to work - but who are still sitting on the sidelines.

That's why we have a hard time agreeing that there's a labour shortage in contraction - when the pool of unionized tradesmen is not being fully utilized.

Having said all that, there is no doubt that in many sectors and in many occupations we have a tight labour market.

As I said, this tight labour market is the natural result of a strong economy & and it's good for workers. But we recognize it does create challenges for some employers.

The challenge for employers - people like everyone in this room - is compounded by what I would describe as Alberta's labour market hierarchy.

There has always been a pyramid in the Alberta labour market & with the energy sector at the top.

They've always been able to pay more. But with oil at $70 barrel, the energy sector's ability to outbid other employers in other sectors has probably never been greater & and that's a challenge.

How, for example, do you compete with energy companies that are offering signing bonuses of up to $30,000; moving bonuses of $15,000 and annual retention bonuses of $25-30 thousand?

Interestingly, the challenge is no longer restricted to non-energy companies. Probably for the first time ever, energy companies are competing with each other. In fact, I don't think it's a stretch to say that the most popular past-time at Petroleum Conference around town this week will be staff poaching.

So how do you stay afloat in these stormy seas? You've been discussing this amongst yourselves for past day and a half & and I'm confident that you've identified many workable solutions. But for what it's worth, I'd like to present my list of do's and don'ts from a union perspective.

My first "do", perhaps not surprisingly, has to do with wages.

DO accept that the cost of labour has gone up & and DON"T attempt to defy the economic laws of gravity.

Not that long ago, I remember one of the buzz phrases used by employers was "cost certainty." They were always coming to the bargaining table and saying they couldn't proceed with this project or that project without guarantees that wages would stay flat.

That's was the rationale that the provincial government and Canadian Natural Resources gave when CNRL was granted special status under the labour code for the Horizon project. They said that government intervention to keep wages flat was warranted be Horizon was so important to the Alberta economy and because the company needed "certainty."

But as an acquaintance of mine, who happens to be an engineer and project manager for a big construction firm, pointed out: if you don't pay the going market rate, if you try to defy the economic laws of gravity, you loose out.

As he said, if you balk at paying the going market rate, workers vote with their feet & and you end up with what he described as the "bar stools and high schools" approach to recruiting.

This approach sets off a vicious cycle. In a tight labour market, with lower pay you get a lower quality of worker or no worker at all; you get declining performance; you get increased workplace accidents; you get delays and missed deadlines; you get angry clients, maybe lawsuits and you get lost business opportunities.

There was a time, not that long ago, when the Alberta economy and the broader Canadian economy was sluggish. In that kind of economy, employers could more easily get away with doing the minimum. They could more easily get away with layoffs and "outsourcing" & and with treating employees like Post-it-Notes, to be used and discarded.

But those days are over. Bragging about being the "low cost" provider doesn't mean being the smartest guy in the room anymore, if it ever did.

Now it means being the guy who is going to have chronic labour relations problems. It means being the guy who provides a sub-standard product. It means being the guy who's going to miss targets, disappoint investors and clients and who's going to loose out on the next contract.

The bottom line is that you need to value you employees. Part of that means viewing paying the going market rate as an inescapable cost of doing business.

Of course, paying them well is not the only way to show your people that they're valued. It's necessary, but not sufficient. That leads me to the rest of my list of "dos" & and some of these may surprise you &

For example & DO make a point of having on-site HR people &

Delegating day-to-day hr responsibilities to you foreman may sound like a great way to save a few bucks & but it'll cost you & why? & because most of these guys couldn't tell the difference between the Employment Standards Code and the DaVinci Code & because you might get a foreman who wants to be everyone's buddy on the morning shift and a foreman who's Attilla the Hun on the afternoon shift.

Employees hate that kind of inconsistency and petty unfairness. And in a tight labour market where employees have options, you can't afford to loose people because one of your manager like to play job-site Rambo.

Also DO think of the other half of your employees life & the half that they spend away from work.

This is particularly important given that so much of the work that's being done in Alberta today is in remote locations & where people are forced to be away from their families for long stretches & and where they don't have access to amenities.

The good news is that Albertans are hard workers & they don't mind putting in a hard days work in exchange for their paycheques.

But given a choice & and in the current sellers market workers have choice & employees will choose those employers that do more to make it easier for them to live a real life.

Whenever I want to understand what trades workers in particular really want out of their jobs, I sit down with my brother in law.

He's a journeyman electrician & and for the better part of the last three years he worked in Fort McMurray on Syncrude's UE-1 expansion.

He made buckets of money & more than he every imagined. But it came at a price. He has a wife and three young kids at home. For three years, almost never saw them.

So a lot of people in our family used to rib him about his huge salary. But you know what he really wanted? To be closer to his family.

His dream job is not another stint in the camps. He may end up doing that & but his real dream job is to get on with Epcor, the Edmonton power utility. Because it would allow him to live his real life - instead of the half life that works live in isolated camps.

So those employers that are in the bigger centres & where people can actually settle and build lives & you have an advantage & which you should play up. For those who have no choice but do put people into remote locations & ever effort you make to that isolation more tolerable and the time away from family shorter will pay dividends.

Another important item on my DO list is training.

Your employees want to gain more skills, they want to get better at their jobs, they want to contribute and they want to advance. To put it in a nutshell they want the prospect of a better future & and training helps them get there.

Training & whether apprenticeship or some other kind of on-the-job instruction & makes sense for both the employee and the employer.

For workers it makes sense because with their improved skills comes confidence, self-worth and hope for the future.

And for employers training makes sense because you get a bigger pool of trained workers to draw from. Training also makes sense because you get that most of elusive things: loyalty. I've seen it time and again & employers who train, get employees who stay.

But there's a problem & and I think all of you know what it is. For years now, both governments and employers have been neglecting apprenticeships and training.

Only recently has the provincial government ramped up spending to fund new apprenticeship spots at technical schools like NAIT and SAIT. That's great, but those spots are only part of the solution. We all know that these young people can't get their journeyman's tickets without being indentured & they can't become an answer to your labour market shortages until they get on-the-job training from companies like yours.

And that's where the system is falling down. According to a study that was done recently by Skills Canada and the Canadian Apprenticeship Forum, only 18 per cent of Canadian employers take on and train young apprentices - although 41 per cent had the capacity to do so because they already had qualified tradespeople on staff who could supervise training &

The Construction Owners Assoc of Alberta came up with similar numbers. Of the 20,000 trades employers in Alberta, only 11,000 have apprentices.

This is what economists call the free rider problem. Most employers agree that it's desirable to train more apprentices. But too many of them don't want to bear the cost themselves.

Instead, they assume that "the other guy" will do it. Unfortunately, the "other guy" usually makes the same assumption and the number of apprenticeship positions available - even if Alberta's hot economy - fails to meet demand.

The energy sector is a particularly big culprit in this regard. A few years ago, the federal government - through the tripartide petroleum industry sector council - produced a report on training in the energy sector. As part of that consultation, the council's steering committee consulted with a number of big energy CEO from right here in Calgary. And do you know what they said? The petroleum big wigs said: "we don't have to train. We pay more, so we can just take the people we need from other sectors." That was only three years ago.

This helps explain why thousands of the young people who enroll in the trades never finish. The numbers on non completion are actually staggering. Less than half of those who enroll are completing their apprenticeship in the expected timeframe & and more than 40 per cent have still not earned their certificates after 10 years.

Given the current nature of Alberta's labour market, this is a travesty. And it's direct result of employers shirking their responsibilities when it comes to taking on apprenticeships.

And unfortunately, it's not just apprenticeships. Employers in Canada spend less on on-the-job training than almost any other OECD country & including the US.

So when it comes to my list of DOs training is a big one. In fact, I present it to you as a challenge. We're all suffering because, employers have shirked their obligations in training & it's time to start holding up your end.

That leads me to my list of don'ts.

DON'T be afraid of unions & and don't allow yourself to fall prey to the snake oil salesmen, often dress up as reputable sounding lawyers, who promises fool-proof "union avoidance" strategies. Those strategies, make the snake oil salesmen money. But they often leave you with a legacy of poisoned labour relations. And for what? So you have bragging rights?

The truth is that in tight labour markets, having a union in your workplace can be a big advantage. The record clearly shows that there is lower turn-over in unionized workplaces. Unions can also be useful partners in recruitment. Build trades unions have formal connections with hiring halls in other parts of the country where there are higher rates of unemployment. Industrial unions don't have hiring halls with guys sitting on lists & but we do have networks.

Unions can also be important partners in developing retention strategies that are tailored to your workplace. And a union contract can actually help you achieve that elusive goal of "cost certainty" & at least in the short term.

At the beginning I promised to do three things & I promised to talk about how rough the waters were; how you could avoid getting swamped and finally; I promised to look at the big picture. In particular, I talk about the importance of understanding what has been causing all the waves in our labour market. And I promised to make some suggestions about what, collectively, we can do to calm the waters.

As I've said, a big part of the problem is the failure on the part of government and employers to invest in trades training.

But I also think at least part of the problem is that the provincial government has deliberately been administering steroids to our economy & in the form of unreasonably low royalty rates.

The interesting thing about steroids is that they work - at least in the short term. They can greatly improve performance. But in the same way that steroids are ultimately bad for the human body, economic steroids can be bad for the economy.

What I'm talking about of course is the Alberta government's now famous one-per-cent royalty rate for the oil sands.

Like the steroids that athletes use, the one-per-cent royalty rates have worked. Coupled with record high oil prices, the one-per-cent royalty has set off a gold-rush of development. Oil companies are flocking to the oil sands - and why not. With the one-per-cent rate the provincial government is essentially giving away ours resources. None of the big oil companies want to miss out on the party.

Why you might ask is this of concern to a union leader. This is a labour issue because these low rates - all this development comes after years in which government failed to invest in trades training and employers failed to hold up their end by taking on adequate numbers of apprentices.

The result is as frustrating as it was predictable. Because of the steroids, demand goes up for trades people, but because of the inattention training the supply struggles to keep up.

The bottom line is that the Alberta government and the Alberta business community are authors of the tight labour market they are now complaining about. They are reaping what they have sown.

And what do they offer as a solution? More of the same on training and temporary foreign workers, that's what.

We think a better approach would be to get business and government to make commitments to ensure our apprenticeship system actually works. In particular, we need to squarely address the reality that employers are not holding their end up when it comes to providing jobs and placements for apprentices.

It's probably also time to revisit the one-per-cent royalty. These kind of fire-sale incentives were never prudent - even when oil was at $15 a barrel. And they are certainly not justifiable when it's at $70 a barrel.

It's also important to keep in mind that the oil sands is a resource that we, as Albertans, own collectively. It's fine for the Premier to say we'll get our pound of flesh eventually. But with all due respect, he's wrong. Once that oil is gone at one-per-cent, we'll never see it again - and we'll never get another chance to get money for it.

And we're not talking about pennies here. We're talking about tens of billions of dollars lost. That's money that could be spent on public prorities like health care, education and infrastructure.

We're short of like a junky. Not only are we taking a drug that ultimately hurts us & we're flushing our money down the drain to get it &

Thank you.

EDMONTON-Alberta's largest union organization, the Alberta Federation of Labour, weighed into the debate over skills shortages today by unveiling a detailed new policy paper, entitled "Beyond Chicken Little: Understanding the Need for Measured Reforms to Alberta's System for Skills Training." (Access the report here)

The policy paper was submitted to the provincial government as part of a process aimed at developing a new ten-year framework for labour force development in the province.

"These days, when it comes to discussions about the labour force in Alberta, it's hard not to be reminded of the old children's fable about Chicken Little," says AFL president Gil McGowan.

"No matter who you're talking to, they all seem to be saying that the sky is falling. That's why we think our policy paper is so important. It shows clearly that the sky is not falling - and that there is really no justification to embrace the radical solutions being put forward by some employers and employer groups."

Among other things, the AFL paper uses current statistics to question the notion that Canada has "run out" of skilled trades people. It also highlights serious deficiencies in our current system for apprenticeship training which, if rectified, could greatly increase the number of Alberta trades people available for work.

"Unfortunately, when it comes to the skills shortage, most of our leaders in business and government have misdiagnosed the problem," says McGowan. "And as with anything, if you haven't identified the problem correctly, you probably won't be able to find the proper solutions. With our paper, we hope to put the government on the right track."

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For more information call:

Gil McGowan, AFL President   @   (780) 915-4599

Workforce Facts

1. Is Alberta actually short of skilled construction workers?

Alberta has an extremely tight labour market in particular skills, and the cost of labour is rising as a consequence. However, there is no evidence available, aside from unreliable anecdotal stories,  that there are actual shortages of any single skill. Nor will the province likely be short of workers in the near future. Government and employer estimates show no real shortages (where demand for a particular skill situation actually exceeds supply) between now and 2009.

The Alberta Construction Workforce Development Forecasting Committee (CWDFC) is a collaborative effort between business and government - involving the Alberta Construction Contractors and Labour Organizations, the Construction Owners Association of Alberta, Alberta Advanced Education, Alberta Human Resources and Employment and Alberta Economic Development.

The CWDFC actually predicts very small surpluses of all construction trades workers throughout the period. For example, this year the Committee predicts a demand for 5980 plumbers and a supply of 6320; a demand for 3655 steamfitter/pipefitters and a supply of 3498; and a demand for 382 boilermakers with a supply of 411.

2. How long will this tight labour market for construction workers last?

Government and employers predict massive reductions in construction workforce demand by 2009. The CWDFC predicts that the construction workforce employed on major projects in Alberta will fall from 24,050 in 2008 to 8,800 in 2009. That means 15,000 fewer skilled construction workers will be employed on major projects in Alberta inn 2009 than the year before. In fact, the Committee predicts double-digit unemployment rates for most trades in 2009.

This shows the extreme volatility of construction employment - from 24,000 working one year to less than 9,000 working the next. Rapid swings in employment like this have made it extremely difficult for apprentices to complete their training in Alberta. Apprentices are often the last hired and the first let go - and without work, there is no apprenticeship the way things currently operate.

3. There are skilled Canadian construction workers who cannot work in Alberta.

For many construction trades, workers must be certified before they can work in Alberta. That means passing Alberta journeyperson exams or, alternately, getting the national Red Seal certification - which allows Canadian skilled tradespeople to work in any province in Canada. Any skilled worker in Canada can take the Red Seal exams.

However, only 16 % (184,000) of skilled workers in the Red Seal trades have their national certification. That leaves nearly a million (968,670) skilled workers who cannot carry move freely from province to province to work. This represents a huge untapped source of skilled workers for Alberta.

For example, there currently 56.3% of all plumbers (20,529) in Canada do not have their Red Seal. As well, 99 % of all ironworkers (9,893) and 84% of all industrial electricians (27,744) have no national certification.

4. How efficient is the Alberta apprenticeship system?

The public school system in Alberta views a 25% failure to complete rate a disgrace at the high school level. By contrast, over half (57.3%) of all apprentices in Alberta fail to complete their apprenticeship within the optimum program time. Even after eleven years, the failure to complete rate is over 40%.

The Alberta Apprenticeship and Industry training Board claims that 75% of apprentices complete their training - however, the Board does not include apprentices who fail to complete their first year in their calculations. That is like a high school not counting anyone who fails to finish grade 10 in their overall failure rate.

5. Do employers fully support the apprenticeship program?

Only 18 % of Canadian employers take on and train young apprentices - although 41 % of all employers had the capacity to do so - according to a recently released joint study by the Canadian Apprenticeship Forum and Skills Canada.

6. What about skills shortages in other areas?

Although there are skills shortages in various other sectors, the most notable is health care - where there has been a province-wide - and in fact global shortage of registered nurses for a decade. There is an extremely tight labour market, paralleling the current construction industry situation, throughout the technical and professional health care occupations. In 2005, the unemployment rate for professional healthcare occupations was 0.5% and the unemployment rate for related technical occupations was 0.3%.

Ireland has, since 2002, made tuition free for nursing students. Alberta does not have enough nursing seats at post-secondary schools to even begin to meet the predicted future demand for registered nurses.

Read the Policy Paper

Will our children have the luxury of lounging by the lake? Or will they be worrying about where the next pay cheque will come from?

It's Labour Day again - and we all know what that means. It's the last weekend of summer. The last family picnic of the year. The last boat ride around the lake.

The truth is that - despite the name - "labour" is usually the last thing on people's minds as the holiday weekend approaches.

But this year it may be a little more difficult to take the "labour" out of Labour Day. That's because there are currently two major workplace disputes, involving thousands of workers, going on in the province.

As Albertans head out to the lake or the local park, there's a good chance they'll drive by at least one picket line erected by locked out Telus or CBC workers.

These disputes have focused attention on labour issues partly because they touch almost every community in the province. But more importantly, they're getting attention because they reveal a troubling workplace trend - a trend that threatens to take the bloom off Alberta's flourishing economic rose for thousands of workers and their families.

The disturbing trend that I'm talking about is the trend towards less secure employment - and it's at the heart of a growing number of labour disputes.

Despite Alberta's booming economy, low unemployment and relatively high wages, more and more people in the province are working on a temporary or contract basis. The latest figures from Statistics Canada suggest that only about half of working Albertans have jobs that can be described as long-term or stable - down significantly from previous decades.

The benefits of contract and temporary work for employers are obvious - companies save money by not having to shell out for things like pensions and other benefits. In other words, big business gets to have its cake and eat it too. This is what management types mean when they talk about "flexibility."

But the benefits of these so-called "contingent" work arrangements are more difficult to discern for individuals and communities.

Workers with little long-term job security have a much more difficult time putting down roots and making all the transitions that have traditionally characterized middle-class life in Canada. For example, it's more difficult for them to buy a home, start a family, save for their kids' education, plan for retirement or even set money aside for modest family vacations.

And it's not just individuals who are hurt by the insecurity that comes with a growing contract or temporary workforce.

Job insecurity also has negative impacts on communities, local businesses - and even the companies that make use of contract workers themselves. Who wants to "go the extra mile" for an employer that treats you like a Post-it-Note - something to be used and discarded without a second thought?

This is what the locked-out Telus and CBC workers mean when they talk about job security being their hill to die on.

They're not asking for "jobs for life" as some critics have claimed. They recognize that the economy rises and falls and that lay offs are sometimes inevitable. All they're saying is that if a company is profitable and if it has work that needs to be done, then why not make as many of those jobs permanent as possible?

Of course, the problem of insecure jobs is not restricted to Alberta - it's a phenomenon that's been sweeping the country and, indeed, the world.

But too many companies have been getting a free ride in the public and the press when they characterize traditional permanent jobs with benefits as "old style" and argue that contracting out is inevitable.

This new age management mantra wears particularly thin here in Alberta in 2005 where, thanks to our red hot economy, most firms can clearly afford to do better by their employees.

Before we let corporations like Telus and the CBC get away shedding their obligations to their workers, Albertans and Canadians need to ask: is the kind of society we really want?

Do we want a society where real careers disappear, to be replaced by a string of temporary jobs?

Do we want a society where pensions, health benefits and even vacations become a distant memory for most people?

Do we want a society were a small group of "core" employees have security, while the majority of working families watch their middle class dream slip further and further away?

That's the issue on picket lines around the province this summer - and it's the reality that we may sleepwalk into if citizens and policy makers don't start questioning the desirability of so-called contingent labour force strategies.

Maybe what's needed are stronger labour laws to level the playing field between management and labour. Or maybe we should be talking about portable pensions and benefits that can follow workers from job to job.

Finding answers won't be easy - but it's certainly a debate worth having.

If we don't start asking tough questions - and if simply continue deferring to the wisdom of Corporate Canada - then I worry that future Labour Days may look a lot different from the ones we currently enjoy. Instead of lounging by the lake, you may be spending the weekend in you cramped apartment scanning the papers for your next temporary job.

Let's hope it doesn't come to that - and let's hope that when it comes to Labour Day our children can afford to focus on water skiing and barbeques instead of worrying about where their next pay cheque might come from.

by Gil McGowan
AFL President
September 2006

Hundreds of Fort McMurray workers are expected to rally tonight to send a message to the Conservative government and to Oilsands Companies that the boom in Alberta needs to be shared among all Albertans. The rally coincides with the visit of many Conservative MLAs to tour Fort McMurray.

"Tonight's rally is an event organized by local workers who are frustrated with recent developments in the Oilsands projects," says Alberta Federation of Labour President Gil McGowan. "It is sending a message that Alberta is built by workers, and that workers deserve a fair share of the economic prosperity."

At issue are attempts by oilsands companies to lower wages and working conditions at their mega-projects north of Fort McMurray. Three strategies are being employed: use of employer-friendly unions willing to sign sweetheart deals, use of non-union contractors, and the threat of importing temporary foreign workers.

"At a time of record profits for energy corporations, instead of sharing the growing pie, these companies are trying to trim the edges of the workers' piece," says McGowan. "This is about their greed and the rights of workers to receive a fair share."

"And the government has been actively supporting this effort to bust unions and drive down wages, through the use of rarely used provisions in the Labour Code," adds McGowan.

"In the past, all oilsands construction was built using union labour � not because the employers liked unions, but because unions were able to provide high quality workers who could get the work done," observes McGowan. "The unions are still keeping their end of the bargain, but the employers are breaking it.�

"The rally is to let MLAs and the big energy companies know that workers won't take this lying down."

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"Up to 300 Albertans are going to lose highly-paid industrial jobs as Celanese moves its operations to low-wage countries," charged Barrett, "yet the Klein government continues to embrace free trade and globalization and refuses to construct a pro-active industrial development policy."
"The employer is simply closing its Alberta operations and moving production to its Mexico plant," said Barrett. "It is making this move despite staff cuts and real sacrifices by the workers to keep the plant in operation."
"For years, the Alberta government has relied upon the energy sector to carry the provincial economy, said Barrett, "but their lack of any commitment to long-term planning or to any kind of industrial development plan is now costing hard-working Albertans their jobs."
Barrett pointed out that the current government has focused far too much on resource export and far too little on building a healthy value-added industrial base. "There must have been something the Alberta government could have done to prevent this plant closure," said Barrett. "But, as usual, this government has done nothing before the fact and will doubtlessly do even less after the fact."
"This plant-closure should come as a wake-up call to Albertans. Why was there no government action before the closure? Why is there no government help for the displaced workers? We have a right to expect answers to these questions," said Barrett.
"Maybe it is time for Albertans to reconsider who should be governing this province and what public policies would best serve them," said Barrett. "If the state-owned Chinese mining company can be praised for buying Canadian mining giant Noranda, isn't it time to consider an Alberta crown corporation to make use of the province's natural energy wealth for the benefit of all?"

The Alberta Federation of Labour has released data showing that real, inflation-adjusted wages in the province have fallen for the second year in a row, and for the fourth time in five years. According to figures published by the Government of Alberta, average weekly earnings in the province rose from $699.18 in 2002 to $708.24 in 2003, an increase of 1.3%. During the same period, the Consumer Price Index for Alberta, which measures inflation in the province, increased from 124.2 in 2002 to 129.7 in 2003, giving an inflation rate of 4.4%. The net result is a decline of 3% in real wages. (To see chart tracking the decline, click here.)

AFL President Les Steel said this latest data confirms a disturbing trend: "The fact is that, despite a booming economy, high energy prices and huge government surpluses, the average working Albertan is seeing a slow but steady decline in their standard of living."

"The amount of goods and services we can buy with our paychecks is dwindling, and at the same time we're getting fewer public services because of government cutbacks," said Steel. "If this is what the boom looks like, I don't look forward to seeing the next recession."

AFL researcher Tom Fuller said the figures confirm a trend of wage stagnation identified by the Federation in a study published earlier this year: "In our booklet Running to Stand Still, we pointed out the puzzling reality of stagnant real wages in a booming economy - something economic theory says shouldn't happen."

Steel points to government policy as the culprit, "You've got anti-worker labour laws that help hold down wages, but deregulation for industry that lets profits and prices shoot up. The average Albertan in caught in the middle. It's time the citizens of this province woke up and demanded their share of the benefits from this booming economy."

Since 1998, real weekly earnings in Alberta have fallen by a total of 5%.

- 30 -

For further information contact:

Les Steel, President   @  (work) 780-483-3021/(cell) 780-499-4135
Tom Fuller, Director of Research @ (work) 780-483-3021/(cell) 780-719-7840

EDMONTON - What do ordinary Albertans have to show for a decade of unprecedented growth and prosperity in their province? As it turns out, very little.

In a new research report released today - entitled Running to Stand Still - the Alberta Federation of Labour shows that Albertans have not seen their standard of living increase as a result of the so-called "Alberta Advantage."

"Our economy has been growing faster than any other province, our unemployment rates are low and we have the highest levels of productivity in the country," says AFL research officer Tom Fuller.

"But this has not translated into improved wages for working Albertans. In fact, once you adjust for inflation, wages in the province have remained stagnant. All the other economic indicators point up - but the one that matters most to people has remained stuck in the mud."

According to standard economic theory, real wages and the overall standard of living should increase as growth and productivity rise. That hasn't happened in Alberta over the past decade, and in his report, Fuller lays the blame squarely at the feet of the current Conservative government.

In particular, the report argues that government policies such as Alberta's low minimum wage, low welfare rates and cuts to seniors programs have acted as a significant drag on wages. Fuller also points out that Alberta's restrictive labour laws have acted to reduce wages by making it harder for workers to join unions.

"Union contracts are the tractor that pulls wages up, both in the unionized sector and the non-unionized sector," says Fuller. "By restricting the rights of people to join unions, the government is basically guaranteeing that wages will be lower for most people."

The problem of stagnant wages is compounded, the AFL report says, by other government policies that have dramatically driven up the costs of utilities, auto insurance and college and university tuition.

Taken together, the report concludes that the Alberta government's approach to things like welfare, deregulation and labour standards add up to a conscious and deliberately implemented low wage policy.

"The government doesn't use the phrase, and they certainly wouldn't brag about it during an election campaign, but what we're really talking about here is a low wage strategy. That's the reality of the Alberta Advantage," says Fuller. "And in a province as wealthy as our, that's simply not justifiable."

For more information contact:

Tom Fuller, AFL Research  @ 780-483-3021

Les Steel, AFL President   @ 780-483-3021 or 780-499-4135

Gil McGowan, AFL Communications @ 780-483-3021 or 780-910-1173

Backgrounder

Alberta's Booming Economy

• Among Canada's ten provinces, Alberta has enjoyed the highest rates of growth in provincial GDP for nine of the past ten years.

• Natural gas prices have jumped from an average of $1.66 per 1000 cubic feet in 1993 to more than $6 in 2003. This has fueled growth in both the provincial economy and revenues for the provincial government.

• Alberta's labour productivity is the highest in the country. Total value added per worker hour was 109 % of the national average in 2001.

The Truth About Wages

• Most economic indicators have been pointing up, with one notable exception: wages. After adjusting for inflation, average wages in Alberta have stagnated over the past decade. Measured in 2001 constant dollars, the average weekly wage in Alberta in 1993 was $676.79. In 2003, it was $676.14.

• Standard economic theory suggests that wages should go up as labour productivity increases. Alberta has led the country in productivity gains for more than a decade. But this has not translated into a higher standard of living.

Added Burdens for Working Families

• As if stagnant wages weren't enough to worry about, working Albertans have also been hit hard by the government policies in areas like utility deregulation, auto insurance and college and university tuition.

• Before deregulation, Albertans paid among the lowest utilities rates in the country. Now they pay the highest. Albertans are also paying substantially more for auto insurance than provinces with public systems.

• Between 1992-2002, Alberta had the highest increase in university tuition fees (161%) among all provinces, and the second highest increase in college tuition fees (293%).

• As a result of these increases, the number of young Albertans getting an advanced education is dropping. Alberta has slipped to seventh among all provinces when it comes to the percentage of our young people attending post-secondary institutions.

Elements of Alberta's Low-wage Strategy

• At $5.90 per hour, Alberta has the lowest minimum wage in the country. It is about 90 cents an hour below the national average.

• Alberta treats its citizens on welfare more harshly than do other provinces. We rank last when it comes to the annual welfare benefits paid to single parents with one child ($11,634).

• Seniors benefits worth about $563 million a year in 2002 dollars have been cut by the Klein government since 1992. This has forced many seniors back into the workforce - often the low-wage workforce.

• Alberta has the lowest rate of unionization in the country (about 25 percent versus a national average of about 33 percent). But surveys show Albertans are no less willing to join unions that workers in other provinces. The difference? Alberta's restrictive labour laws.

• Alberta labour laws are carefully drafted to hamstring unions and limit their ability to organize and effectively represent workers. For example, unlike other provinces, the Alberta Labour Relations Code, does not provide serious penalties for employers who refuse to bargain with duly elected union locals. It also gives Alberta employers much more latitude to pressure and intimidate employees during union membership drives.

The headlines in city papers proclaimed the happy news: a saviour had arisen who would lead the west out from the wilderness. Westerners - and Albertans in particular - would finally enjoy real power at the centre of the Canadian universe! Hallelujah!

The agent of this wonderful change was none other than Anne McLellan - former federal health minister and Liberal MP for Edmonton West. And the occasion for celebration, of course, was the decision by newly-minted Prime Minister Paul Martin to name McLellan as his second-in-command.

Deputy Prime Minister Anne McLellan! And minister of post Sept. 11 overkill ( er& I mean national security) to boot! Cue the trumpets!

You'll forgive me if I don't join the chorus in praise of St. Anne.

You see, I'm one of thousands of left-of-centre Albertans who have watched McLennan's career over the past decade. And to put it bluntly, it has been a huge disappointment.

It wasn't always thus.

I remember back in 1994 when McLellan was making her first bid for election in Edmonton West. Many people who I respect were excited about her campaign.

She's a top professor at the U of A's law faculty, they told me. She's progressive. She's a feminist. She's savvy. Caring. Tough.

I have to admit, it all sounded good at the time. In a province where the forty or so percent of the population that doesn't support the Reform/Alliance/Conservatives is routinely denied representation by the vagaries of our first-past-the-post system, the prospect of electing a "social Liberal" in the Trudeau-Pearson mold was pretty appealing.

Ten years later, there are still some people - many of whom should know better - spouting the "Anne as Progressive" line. The problem is, we're still waiting for evidence.

Anne in Action

Political junkies in Alberta are familiar with McLellan's story. After winning a razor-thin victory in the 1994 general election, McLellan - as one of only a handful of western Liberals - was quickly brought into the Chretein cabinet: first as Minister of Energy and Natural Resources, then as Justice Minister, and most recently as Health Minister.

By virtue of these lofty postings, McLellan became a member of the federal government's inner circle. Despite all the current hoopla about her newest job in the Martin cabinet, the truth is that McLellan has been one of the most powerful and influential Liberals in the country for the past decade. The question is: what did she do with that power? The answer, unfortunately is: not much.

In fact, for all those who believed she would be a beacon of liberal light in a sea of mean-spirited Reform-Alliance darkness, McLellan has proven to be worse than a "do-nothing": she has often ended up supporting the very conservative politicians and policies many people thought she had been elected to oppose.

If you doubt this assessment, let's take a look at her record in three key areas: civil liberties, the environment and health care.

The War on Civil Liberties

Anne McLellan had the dubious honour of being Canada's Justice Minister during the aftermath of the September 11 terrorist attacks in the United States.

At the time, there was tremendous domestic and international pressure on the government to enhance the security of Canadians and make it more difficult for would-be terrorists to operate in the country.

Given this atmosphere, politics dictated that McLellan had to do something in support of the so-called "war on terrorism": the question was, what?

Unfortunately, McLellan opted for legislative changes that lean more towards the American-style heavy-hand than towards traditional Canadian-style moderation.

The two anti-terrorism bills that McLellan produced - Bill C-36 and Bill C-35 - can best be described as draconian. In the eyes of many, the new laws' broad definitions of "terrorism" essentially act to criminalize legitimate dissent. And they profoundly undermine the rights and civil liberties of Canadian citizens - especial those who have the misfortune of sporting Arabic sounding names or who happen to have been born in Middle Eastern countries.

Significantly, it wasn't only progressives and activists who thought McLellan had gone too far. The list of those vehemently opposed to the new anti-terrorism laws also included such established groups as the Canadian Bar Association, the Canadian Civil Liberties Association, the Canadian Human Rights Commission and the citizen oversight committee for CSIS.

Today, Canada's anti-terrorism is in place - and some observers say it is at least as much of a challenge to civil liberties as the much reviled Patriot Act in the U.S. The question for supporters of Anne McLellan is this: what happened to her vaunted "progressive" values? And when, exactly, did appeasing the current hard-right administration in Washington become more important that preserving the democratic freedoms of ordinary Canadians?

Kyoto Lite

The next item on the list of "Most disappointing moments" for Anne McLellan came during the debate on the Kyoto Accord.

It was the fall of 2002 and Prime Minister Jean Chretein was finally showing some interest in implementing a "social-Liberal" agenda before stepping down. One of the main components of that agenda was, of course, action on global warming through support of the Kyoto Accord.

Poll after poll at the time showed that Canadians overwhelmingly supported the Accord. People understood the issue of global warming and they saw Kyoto as the first step in dealing with the problem.

Even here in Alberta, the majority of people backed Kyoto. In fact, the only two groups of any note that opposed the deal were the Calgary-based energy industry and members of the Klein government.

And who did McLellan side with in this debate? Did she honour the wishes of own constituents? Did she support the position staked out by her own government?

Unfortunately, the answer to these last two questions is 'no.'

Instead of standing behind the Prime Minister who appointed her and fighting for a policy that the majority of Canadians clearly supported, McLellan chose to stand shoulder to shoulder with the Klein government and their patrons in the energy industry.

To make matters worse, McLellan broke ranks just as the Kyoto debate was reaching a crescendo. And she didn't just choose to abstain from the vote on Kyoto implementation. She threatened to resign unless the government essentially exempted the energy industry (one of our countries biggest producers of greenhouse gases) from Kyoto targets.

Eventually, the federal government decided to go ahead with its plans for Kyoto - and McLellan voted in favour of a watered-down version of the bill to implement the deal. However, there can be no doubt that McLellan's intervention took a great deal of wind out of Kyoto's sails.

Most alarmingly, McLellan's views on Kyoto seems to be very similar to the views held by new Prime Minister Paul Martin. With these two in charge, the likelihood of any meaningful action towards reducing the emission of greenhouse gases seems to have been greatly reduced.

Score one for the oil barons.

Medicare's missed opportunity

Anne McLellan's track record on the Kyoto Accord and terrorism is highly questionable - and it certainly earns her a place on the list of "Most Conservative" Liberal cabinet ministers ever. But those are not the things that people are most likely to remember her for. Instead, if she is remembered at all, it will be as the Health Minister who missed the chance to save Medicare.

It was on her watch, after all, that Roy Romanow delivered his sweeping and widely praised report on the future of health care.

After touring the country, examining health systems from around the world and talking to literally thousands of experts and ordinary Canadians, Romanow concluded that Medicare was worth saving. And he said that the best way to save it was by keeping it public.

In many ways, Romanow made it easy for McLellan and our country's ten provincial premiers. He gave them a detailed and workable road map for reform. And, thanks to his tireless touring, he helped build the political momentum to do big things: Canadians overwhelmingly supported his vision and were willing to get behind major reforms.

But did McLellan take advantage of the ideas and the opportunity handed to her by Romanow? Unfortunately, the answer is no.

More than a year has passed since the Romanow report was released and only one of its major recommendations (the creation of a national health council) has been implemented. All the other recommendations - on things like Pharmacare, primary care reform and rural health care - are all but forgotten.

Obviously, the Premiers (especially conservative Premiers like Ralph Klein and B.C.'s Gordon Campbell) have to shoulder much of the blame for the failure of governments to embrace the Romanow roadmap.

But, as the federal Health Minister, Anne McLellan could have played a leadership role. She could have used the wide public support for the Romanow report as a tool to pressure the Premiers into action.

But she did none of that. In fact, it can be argued that McLellan's interventions actually encouraged the Premiers to reject Romanow. For example, she was quoted saying that private delivery of health services might actually make sense - contrary to all the evidence presented in Romanow's report. And she also made a point of praising Alberta's blueprint for health reform - the controversial Mazankowski report - even though it pointed in an entirely opposite direction from Romanow.

Based on her performance, it's not unreasonable to conclude that McLellan never really wanted Romanow's recommendations implemented - even though most other Canadians did. And it's also not a stretch to argue that her policy of benign neglect played a big role in smothering the Romanow baby in its crib.

Better than a Reformer?

Despite McLellan's track record, there are still left-leaning voters in Alberta who will say: better Anne than an Alliance-Conservative candidate. That's the argument that was used to such great effect by McLellan's camp during the federal election when Stockwell Day was used as the boogie-man of choice.

But you know what? Based on her performance over the past few years - and especially her shocking and profoundly disappointing record on health care, the environment and civil liberties - I've become convinced that a back bench Alliance-Conservative MP would actually have been preferable. Why? Because, they likely wouldn't be any more conservative than Anne has been - and, as opposition outsiders, they almost certainly would have done less damage.

In the end, what's the lesson in all this? It's that we should judge politicians on their actions, not on some misty-eyed nostalgia about the past of their party or on the rhetoric of their followers.

By any measure of her actual record, Anne McLellan fails the "progressive" test. She is a (reactionary) wolf in (liberal) sheep's clothing.

Worse than that, her record suggests that the new government under Paul Martin will be one of the most conservative we've seen in Ottawa for years. So brace yourselves everyone - with Paul and Anne in charge we're about to start a rocky ride back to a more conservative future.

Gil McGowan, AFL Executive Staff
January 2004

Running to stand still: How Alberta government policy has led to wage stagnation during a time of prosperity

Albertans are entitled to ask: "What's going on? How can the most productive workers in the country experience stagnant or falling wages in the middle of an economic boom? If we can't improve our real wages during a boom, when can we?"