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Ontario, Alberta labour policies are putting small business under the gun: Comment

By Dan Kelly

Published in the Financial Post June 12,2017

Sometimes provincial issues become national issues. Take labour legislation, for example. The laws governing wages and workplace rules are under provincial jurisdiction for the vast majority of workers, but there are worrisome trends in two of Canada’s largest provinces that have strongly negative implications for the entire country.

The most high-profile element is the minimum wage, and much has been made about both Alberta and Ontario announcing plans to fast-forward minimum wages to $15/hour, long before inflation would naturally have taken them there. Ontario, which came late to this party, has committed to get to $15 on Jan. 1, 2019 – a 32 per cent increase in just 18 months.

A closer examination of other recent labour policy changes in these jurisdictions clearly shows an agenda driven by big unions, with lots of potential goodies for workers and lots of unanswered questions about how it will all affect current jobs and the creation of new ones.

A wolf in sheep’s clothing

The Fair and Family-Friendly Workplaces Act – a terribly flattering moniker – just passed the Alberta legislature. This deeply flawed and dangerous bill is anything but fair to small businesses, and is destined to send many more Alberta workers into the not-so-friendly world of unemployment.

Some of the lowlights:

  • The most basic cornerstone of democratic processes – the secret ballot vote – will be restricted or eliminated as a requirement to form a union.
  • Flexible overtime arrangements have been disallowed. Time off in lieu of pay will only be allowed if time and a half is granted, which makes it a very expensive work arrangement.
  • Farm workers will now be subject to minimum wage and all elements of the Labour Code. This is a sector that needs flexible work arrangements.

With an economy facing deep structural changes and unemployment rates already at recent highs, the Alberta government felt it was a great time to put even more jobs at risk and make it much harder for smaller firms to create new ones.

Ontario following the leader … to where?

Not to be outdone, Ontario introduced its own ill-advised labour measures to go along with a $15 minimum wage, including:

  • Killing secret ballot voting for union certification in certain sectors
  • More paid vacation for some employees and extra paid leave days for others
  • A suite of changes that will restrict workplace flexibility
  • Hiring nearly 200 new enforcement officers to police the new rules

Ontario’s new changes are even more crassly political, being rammed through the legislature in short order just a year out from an election. After pronouncing that an earlier decision to index the minimum wage to inflation would take the politics out of this policy, the government has moved to put the politics back in by setting its own rate, without any economic study of the consequences.

Setting minimum wage is always a tricky balance for any government. Doing it right requires a careful review of wages, employment levels and the state of the economy. While the vast majority of employers hire at wage rates above or well above minimum wage, several important sectors of the economy, including retail and hospitality, do not have the margins to allow much higher wage levels. These sectors are employers of a large number of young people and other inexperienced workers, many of whom will be hurt when wages rise beyond the affordability of their employers. Even the Alberta Department of Labour’s briefing notes admitted that the $15 hour minimum wage could lead to significant job losses. To the best of our knowledge, the Ontario government didn’t even care to get a briefing on the potential consequences of its move.

How exactly does this provincial issue go national? Already we’ve seen Ontario copycat Alberta’s $15 minimum wage. With the result of the B.C. election remaining uncertain, one can’t help but think that pro-union forces in that province are licking their chops to join the parade. There is no telling who will be next, as governments across the country could look to play Santa Claus with other people’s money.

Not all provinces are taking this plunge, however. The new government in Manitoba has undertaken a much more balanced view of labour policy, by consulting stakeholders and introducing changes that protect worker rights while taking into account the needs of the province’s job creators. Not only did the government there recognize extraordinary circumstances by temporarily freezing the minimum wage in 2016 (they have since indexed it to inflation), they also reintroduced a guarantee to a secret ballot process for union certification that Alberta and Ontario have just taken away. Manitoba has increased the basic personal exemption, helping low-wage workers keep more of their own money – a move that CFIB feels is a much more effective way of boosting living standards for low-wage earners, with many fewer downsides.

Small business owners in Alberta and Ontario are justified in thinking their governments just don’t care about their future, the jobs they create or the support they give their communities. While small employers recognize they are not going to win every battle, seldom do we see governments of any political stripe sell out the economy to win union backing to this degree. But the story isn’t over. Canada has more than a million small employers and I haven’t heard them this angry in some time. Entrepreneurs in Alberta and Ontario are pushing back and, should other provinces join the union-centric party, it can expect a big battle with small business.

This story was originally published in the Financial Post.

June 12, 2017

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