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Labour Economic Monitor (Fall 2006)

The general picture of the Alberta economy is very positive: sources from the business press to Statistics Canada are celebrating the boom, and the data seem to bear them out. On the other hand, there are some serious questions about how much benefit average working Albertans are actually reaping from all this activity. Wages do not seem to be growing as fast as they should be, and inflation is eating up what gains workers do make.

So are we all getting rich? Apparently not. The story seems to be: huge profits for the corporate sector, and longer hours of work for employees. There's something wrong with this picture, and we will try to figure out what it is in the next edition of Labour Economic Monitor.

The first issue of a new quarterly publication from the Alberta Federation of Labour finds that weekly wages in Alberta are only up 1.4% in 2006, after accounting for inflation. The AFL launched Labour Economic Monitor today, which will track economic indicators and trends in Alberta.

"Everywhere we turn, we are told the boom is causing a spike in wages across Alberta. Business is complaining about the rising cost of labour," says AFL President Gil McGowan. "Yet, the statistics don't seem to be backing that complaint. On average, workers' wages are increasing only slightly ahead of inflation."

According to wage figures from Statistics Canada, in the first quarter of 2006, weekly earnings were up 4.9% over the first quarter of 2005. However, inflation in Alberta is running at 3.5%, meaning that workers are only seeing a 1.4% increase in their real wages. Weekly earnings measures how much a worker takes home at the end of a work week - not how much they are paid for each hour of work.

"Alberta workers have had stagnant wages for the better part of 15 years - all through the 1990s and early 2000s," observes McGowan. "And now at the height of the boom, we would expect workers to catch up a little bit, take advantage of the prosperity through larger wage increases."

"Quite frankly, it is not happening yet. Much of the small increase could be attributable to workers working longer hours and more overtime - rather than an increase in their hourly wage."

McGowan blames the small increase on two things. "First, the cries of labour shortage are overblown. If there was a widespread labour shortage crisis, we would see wages increase significantly. While there are pockets of shortages, on the whole the labour market seems rather stable."

"Second, the benefits of the boom are not working their way down to all working families in Alberta. Once again, large corporations enjoy a huge feast during a boom, and most workers are left with table scraps."

The AFL's new Labour Economic Monitor is intended to offer workers and average Albertans up-to-date economic information and analysis. It will be released quarterly on the AFL website. The first issue can be read here.

"The government and large corporations have access to the most up-to-date data about Alberta's economy to help them make decisions. Until now, working families have had no such information. Labour Economic Monitor is designed for them - to give them some of the same information that their employers' have," says McGowan.

"The AFL wants Alberta workers to receive their fair share of our prosperity. It is long overdue." McGowan concludes.

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For More Information call:

Gil McGowan, AFL President  @  (780) 218-9888 (cell)

When it comes to discussions about the labour force in Alberta, it's hard not to be reminded of the old children's fable, Chicken Little.

No matter who you talk to - in government, business or media circles - they all seem to be saying "the sky is falling."

But is the situation really that bad? Is the future prosperity of Alberta really at risk?

The short answer is: no - at least not yet.

It's true, of course, that high commodity prices have led to unprecedented levels of investment in Alberta. And it's also true that the rapid pace of economic growth has created a very tight labour market.

However, many of the worst predictions about labour shortages are based on questionable assumptions.

Like the assumption the Alberta economy will continue to grow at its current blistering pace; or that workforce participation rates will decline and that current levels of migration to Alberta from other provinces will remain roughly the same.

As with any prediction, overly pessimistic assumptions lead to overly pessimistic conclusions.

Business pundits also hit a sour note when they sound the alarm about wage inflation in Alberta.

After more than twenty years of income stagnation, pardon me for asking an obvious question: aren't wage increases a good thing? What's the point a strong economy if it doesn't bring an improved standard of living?

It's also important to note that higher wages aren't just good for workers. Good wages lure people. So, if employers want to convince more Canadians to take jobs in Alberta, higher wages should be seen as part of the solution, not part of the problem.

Having said all that, while the problem may not be as bad as some of the doom-sayers would have us believe, there still is a problem.

Several large oil companies - most notably Husky Energy - are now musing aloud about building new oil sands upgraders in the U.S., instead of Alberta. And they're pointing to Alberta's tight labour market as the reason.

At the same, time there is no doubt that the booming energy sector has created a problem by "poaching" employees from other parts of the provincial economy.

So how do we build a "Goldilocks" labour market - one that's not too hot, and not too cold? The answer comes in two steps.

First, we have to come to grips with a basic question: is there such a thing as too much growth?

The "labour shortage" crowd assumes that Alberta should keep growing at its current break-neck pace. But do we really need to build all these projects at once?

Certainly most skilled tradesmen would prefer to have twenty years of stable employment rather than seven or eight years of frantic development followed by a jobs bust.

More reasonably paced development would also allow public infrastructure to catch up with growth; it would reduce the energy sector's "poaching" of workers; and it would make it easier to address the environmental concerns associated with oil sands development.

The good news is that the Alberta government has control of policy levers that could make this happen.

For one thing, they could simply stop doling out oil sands leases like they were water.

In addition, the time has clearly come to revisit Alberta's infamous one-percent oil sands royalty. This corporate give-away is over-heating the Alberta economy. And with oil at $70 a barrel, such "investment incentives" are obviously no longer needed.

Given the strong international demand for oil, even if steps were taken to slow the pace of development, the Alberta economy would still remain strong - we'd just be replacing a "runaway freight train" with one that chugs along more happily.

That leads to the second part of the equation.

If the freight train can be brought under control, then we can move past panicky "quick-fix" solutions like dramatically increased use of temporary foreign workers and instead focus on the kind of longer-term solutions that Alberta really needs.

For example, we should be tapping the labour force potential of aboriginal communities; increasing permanent immigration levels; and using government programs and incentives to convince workers to move from high unemployment regions like Newfoundland to low unemployment regions like Alberta.

Most importantly, any serious labour force development plan can't ignore the issue of apprentice training.

We'll never be able to keep up with demand for tradesmen unless employers actually provide jobs for apprentices. And that's the problem - even in Alberta's hot economy where so many employers are crying "labour shortage" - employers are not holding up their end.

According to the Construction Owners Association of Alberta, there are more than 20,000 "trades" employers in the province - but only 11,000 have actually taken on apprentices. This helps explain why less than half of young Alberta apprentices complete their training in the prescribed timeframe.

The perversity of this situation cannot be over-emphasized.

The businessmen who say they can't find skilled workers and who are calling for permission to import thousands of guest workers are often the same ones who helped create the problem by not taking on apprentices. Clearly, this has to change.

In the end, policy makers looking for ways to deal with Alberta's labour market woes need to re-learn the lesson of the Chicken Little fable: don't panic.

What Alberta needs is to carefully apply the brakes on future oil sands development. We also need measured reforms in areas like training and education.

Gil McGowan, AFL President
July 2006

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.

Gil McGowan, President of the Alberta Federation of Labour, October 11, 2005

Good afternoon. Welcome to Alberta and thank you for the opportunity to speak to you today.

I'm here today as a spokesperson for the Alberta Federation of Labour is Alberta. The AFL is Alberta's largest labour organization, representing over 115,000 workers and their families.

As it stands now, only about 10 per cent of our members work under federal jurisdiction. But in many ways the Federal Code sets a bar for provincial codes - so our interest in this review is not narrow.

Before I get into the substance of my remarks, I want to begin by commending you on the extensive and exhaustive process that's been established for this review.

You've taken the broad view. You have allowed for a wide ranging discussion on the role of employment standards in the 21st century. You have reached out to stakeholder groups and formally included them in the process. You haven't rushed. You have taken the time to conduct a truly rigorous and thorough review. And you are in the process of conducting public hearings across this province and across the country.

The federal process stands in marked contrast to what's happening here in Albert. As you probably know, our provincial government just completed a review of our employment standards code - and it could not have been more different from what you're doing.

Instead of the broad view, our review was narrow and careful stage-managed. Instead of consulting with all stakeholders, our government only met with business. Instead of public hearings, we got a hastily thrown-together on-line questionnaire.

Frankly, in comparison to the federal review, our review comes across looking like an amateurish, one-sided, ham-handed embarrassment.

So thank you for taking the time to do your review the right way. You won't hear this said in Calgary often: but at least when it comes to these kinds of reviews, the Alberta government could learn a thing or two from the federal government.

On the subject of expectations and stereotypes, there are a lot of unfair stereotypes about Albertans. We don't all drive pick-up trucks with gun racks in the back; we don't all have pump-jacks in our back yards - and we're not all cut from the same monolithic political cloth.

However, there is one stereotype that unfortunately holds true. We do have some of the worst labour laws in the country.

As a labour activist and president of the AFL, I have seen the effects of poorly written, lop-sided and rarely enforced labour laws first hand. And it's not a pretty sight.

Just in past six months, the Alberta government watered down its Employment Standards Code to allow 12 year olds to work in restaurants; they've signed permits allowing people with disabilities to be paid less than the minimum wage; and they refused to enforce their own rules when it found the a midway company at the Edmonton Klondike Days exhibition violated the Code repeatedly.

The Alberta Employment Standards Code is full of holes; it offers too little protection for workers, and rests on an almost non-existent enforcement regime; and it is widely ignored, even mocked, by employers.

Why am I spending so much time talking about the Alberta Code? Well, because in several important respects, the federal code is not much better.

Take the issue of compliance, for example. According to recent audits, of which I'm sure you are familiar, only 25% of employers under the federal jurisdiction are in compliance with the provisions of Part III. One in four. Here in Alberta, similar audits have never been done - but the results would probably be similar, if not worse.

My question is this: what is the point of having legislated protections if the majority of employers ignore them? And, what is the point of amending and updating those protections if there is no enforcement?

From our perspective, laws and regulations mean nothing if they are not reflected in the day-to-day of real Canadian workers, in real Canadian workplaces.

In order to change this dismal situation, I think it's important to understand how we got here.

To put it simply, over the past 25 years, I think that governments in Canada, at both the provincial and federal levels, have been seduced by the pro-business crowd; they have forgotten why we have labour laws; and they have lost sight the role government needs to play in the labour market.

During the 80s and 90s the employment standards agenda largely became the business agenda. Deregulation replaced rules. Self-regulation and voluntary compliance replaced enforcement. And "flexibility" replaced worker protection as the main policy goal.

But in all these changes we've lost our way.

Labour standards are more than just words on a dusty page. They are an expression of our values - about what we will and won't accept and how we think our fellow citizens should be treated in the workplace.

Labour standards are also a recognition of the inherent power imbalance exists between employers and workers. The employment relationship is not a contract between two equal parties. For reasons of law and basic economics, most of the power rests with the employer.

That's why we have employment standards: to protect the weaker party in the contract, to ensure that the power imbalance cannot be misused to exploitative extremes.

We as a community have a right to express our moral disapproval on certain actions. For example, we have decided that child labour is not appropriate, and so have outlawed it. We have decided people deserve a day of rest each week. We have decided certain days should be days off for everyone.

Labour standards legislation is the vehicle through which the will of the public expresses itself. It is our way to ensuring that workplaces meet the moral and ethical expectations of the community around them.

I have seen nothing in the past 20 years that makes me think that workers are any less in need of protection than they were in previous generations. In fact, I think the opposite is true, with the rise of more precarious and contingent forms of work, I think, in many areas, there is more potential for abuse than in the past.

This review provides an opportunity to turn things around. It provides the federal government with a chance to find its way again and restore its commitment to protecting Canadians in the workplace and upholding our values as a community.

Today, I want to urge the federal government to become a leader in the area of labour standards. You can and should set an example for provinces like Alberta by showing them that you can protect workers without undermining economic prosperity.

While Alberta permits 12-year olds to work, you should prohibit it. While Alberta refuses to offer compassionate leave or family responsibility leave, you should provide it. While Alberta continues to let its minimum wage drag near the bottom of the pack, you should step forward boldly with a strategy for a Living Wage.

And, most importantly, while Alberta continues to run away from enforcing its own laws, you should step up and send the message that the rules must be taken seriously.

If you take strong steps to revitalize federal labour standards, I strongly believe you will quickly be copied. Other provinces will be watching, and when they find out that you can shore up labour standards without negatively affecting business, they will join in.

I have no doubt there will be some initial outcry from employer lobby groups when you try to toughen rules and bolster enforcement. But you need to ask for proof of hardship.

When Alberta recently increased its minimum wage by $1.10 an hour, many employer groups were saying this was too much. The end result? The economy barely felt it. A significant number of workers received a raise and no employer laid off staff, no employer significantly increased prices. The system absorbed it.

When you raise the bar for everyone equally, no competitive disadvantage is created. What happens - miraculously - is that the new requirements quickly become the new norm. I believe this is what will happen with improved labour standards.

Don't be afraid of pro-rated benefits for part time workers. Don't be afraid of allowing workers to refuse overtime. Don't be afraid of increased vacation entitlements. These are practical ideas that reflect Canadian values. Be a leader. Be the example that everyone else looks at.

The federal government has the ability to reinvigorate employment standards. And if they do, millions of Canadians will thank them for it.

Thank you for your time.

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

EDMONTON - In his annual address to the province last night, Alberta Premier Ralph Klein promised to help low-paid workers by increasing the minimum wage.

But anything less than a jump to something close to $8 an hour would still leave Alberta at the bottom of the pack among "have" provinces, says the Alberta Federation of Labour.

"British Columbia, Ontario and Quebec all have minimum wages between $7.45 and $8 an hour," says AFL president Kerry Barrett. "As Canada's wealthiest province, having a minimum wage that falls below that range would, in our view, constitute a policy failure."

Barrett says the Alberta government has a long history of ignoring the interests of low-wage workers. At $5.90 an hour, Alberta has had the distinction of having one the lowest minimum wage in the country for years.

The provincial government has also shown a great reluctance to increase the minimum wage to compensate for increases in the cost of living.

"The minimum wage in Alberta was last increased in 1998. That's seven years without a raise," says Barrett.

"During that time, other provincial governments have raised their minimum wages multiple times. And the cost of living in Alberta has gone up by more than 20 percent. That means we would need a minimum wage of slightly more than $7 an hour just to return to where we were in 1998. So pardon us for not applauding the Premier's promise. It's really not as generous as he wants people to believe."

The difference between Alberta's minimum wage and minimums in other provinces is even starker when you compare it to average provincial hourly wages rates. In most provinces, the minimum wage is about 40 per cent of the average hourly wage rate. But in Alberta, minimum wage workers earn only 31 per cent of the average, the lowest in the country.

"The bottom line is that Alberta is a wealthy province that can afford to pay more," says Barrett. "The fact that we've remained at the bottom of the pile for so long is an indictment of the government and a glaring example for its disregard for people at the lower end of the economic ladder."

If Premier Klein really wants to earn applause, Barrett says he should raise the minimum wage to something over $8 an hour. He should also agree to a mechanism for annual inflation adjustments so the real value of the minimum was is not constantly being eroded. And he should consider a "living wage" procurement policy that would require all contractors doing work with public agencies to pay their employees well.

"He's always talking about Alberta being number. Given our prosperity, there's no reason why we shouldn't be number one in this area as well," says Barrett.

"And contrary to what the government says when it downplays the number of low-wage workers in this province, this would have a big impact. According to their own figures, there are more than 140,000 people in the province working for less than $8 an hour. That's about 8 per cent of the total work force. So a boost in the minimum wage to $8 an hour would help a lot of people. Our only question is: what is this government waiting for?"

For more information call:

Kerry Barrett, AFL President   at 780-720-8945 (cell)  or
Gil McGowan, AFL Communications Director at  780-483-3021 (work)

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.

Real wages (adjusted to constant dollars to correct for inflation) measure what we are actually able to buy with our paycheques. In 1992, when the national economy was emerging from a brutal recession, the average weekly wage in Alberta (in constant 2001 dollars) was $676.79. In 2002, after a decade of "boom times," the figure was just $676.14.

What's important here isn't the minor decline in real wages (about 0.1%), it's that they remained stagnant during a period when they should have been growing.

We live in the richest province in Canada and our economy is creating wealth at a rate that is the envy of other regions. Year after year, we rack up the strongest economic growth and job-creation numbers in the country.

To top things off, Alberta also boasts high levels of labour productivity. According to the provincial government's own calculations : "Alberta's total economic productivity increased at an average annual rate of 1.3% between 1991 and 2001, which was the highest rate in Canada."

Common sense and standard economic theory say that when productivity goes up, so should wages. In the words of former U.S. president John F. Kennedy, a rising tide is supposed to lift all boats.

But that's not happening here in Alberta. The question is: why? Why haven't Alberta's growth and productivity gains translated into increasing real wages, as economic theory tells us they should?

A major part of the answer lies in the labour market policies of the Klein government. Alberta has:

1) The lowest minimum wage in Canada (about ninety cents an hour lower than the national average).

2) Some of the lowest welfare rates in the nation, rates deliberately kept at near-starvation levels to "encourage" welfare recipients to accept any jobs, no matter how low the pay. This policy ensures that minimum wage job vacancies will not go unfilled.

3) The most anti-union labour laws in Canada. The Alberta Labour Relations Code fails to protect the rights of workers who want to join a union. As a result, Alberta has the lowest unionization rate among provinces.

The point is that these policies don't just affect poor people, welfare recipients, or unions - they exert a downward pressure on wages that filters through the entire labour market.

Right-wing pundits and political commentators have convinced many Albertans that allowing the government to attack these "special interests" would somehow benefit the rest of us. But an economy is not a zero-sum game: wage gains won by others don't detract from our well-being. On the contrary, improving wages for one group of workers often means improving wages for others.

When employers and employees negotiate - formally through collective bargaining, or informally as individuals - a number of factors determine the outcome. The wages being paid to other workers in the same labour market are an important one of these factors.

Laws that punish the poor or hamstring unions don't make things better for the rest of us, they help depress everyone's wages. That's the "Alberta Advantage" in a nutshell: energy revenues and a low wage economic policy. When it comes to wages, it turns out the "special interest" group that is being kept down is not some faceless union or welfare mob: it's all of us.

The thing Albertans should be asking themselves is this: are we willing to allow this trend to continue? If we don't improve real wages during the boom times, what will happen when we hit an economic downturn?

Alberta is a wealthy province blessed with abundant natural resources and a highly productive workforce. We don't need or deserve government policies that deliberately victimize the poor and hold down wages.

Tom Fuller is a senior researcher with the Alberta Federation of Labour. His new booklet on wage stagnation in Alberta, entitled Running to Stand Still, was released this week.