Directorates
·	Director General's Office
·	Data Development
·	Strategic Evaluations
·	Partnership and Continuous Evaluations
Publications
·	Evaluation Reports
·	Evaluation Briefs
·	Labour Market Development Agreement Series
·	Lessons Learned Series
·	Evaluation Tool Kit Series
·	Evaluation Forum Newsletter
·	From Theory To Practice

6.1 Alternatives

The overall conclusion of this review is that the Part III program is of positive value to Canada, albeit not fully realized because of partial compliance. The evaluation covered a wide range of issues related to the administration of Part III and its impact on the labour market, and with respect to future directions, our comments are sensitive to our Terms of Reference for this report. That is, the mandate of the evaluation team was not to re-design Part III of the Code or the current organizational structure of the program. Our work primarily focuses on the administration of the Code and the degree to which the program achieves its intended objectives.

As noted above, the program is falling short of achieving its objectives because of a spiraling level of complaints, and the need to service complaints with limited personpower and financial resources which limit the proactive efforts needed to obtain a good level of compliance. This may not be sufficient for the future. Indeed, for various reasons, HRDC may wish to more effectively address the roots of the problem of non-compliance noted. Some of these reasons are: (1) at the policy level it is undesirable to have a law on the books which is largely ignored. Faced with this dilemma, governments usually make the law more effective, or withdraw the law. The latter seems an unlikely choice in an area as important to the national infrastructure as the Labour Code; and (2) at the economic level, the evidence put forward in this evaluation suggests that the Part III labour standards have positive benefits overall. These benefits should be increased by better employer compliance. Accordingly, the following future directions are highlighted for consideration by HRDC.

Program Redesign to Reduce Levels of Complaints: A first priority for the Labour Program should be to increase compliance and reverse the spiral of complaints. It is essential that program resources for proactive efforts (education, etc.) be dedicated to achieve these objectives for the program. Non-compliance with the Code is partly a result of a lack of resources within the Labour Program to devote to educational and proactive efforts.

Rationale: The current situation should be of significant concern to the Labour Program as the absence of sufficient educational efforts can result in a "spiral effect" in the sense that more violations will occur by reason of lack of understanding of labour standards, thus forcing LAOs to investigate more complaints and increasing the costs of the purely reactive function of the program. The evidence also suggests that the complaint-driven Part III activities may have impacted on other components of the Labour Program in recent years, such as a notable decrease in preventive safety and health (Part II) interventions.

An Option for Re-design: A New Client Education Strategy: The current education efforts of the program were, in the evaluator's assessment, unsystematic and highly limited in reach. Accordingly it would be highly desirable if the Department presented a business case to the Treasury Board for increased resources to be strategically applied in the area of education and pro-activity which should result in longer-run savings. Such a unit could combine, under an NHQ umbrella, a program dedicated solely to information/education. It would include: a national/regional "1-800" number information service, with Internet information, a strong program of mass mailings to employers, distance-audits of employer compliance; development of educational kits/presentations for LAOs; and development of the data bases describing the population of Part III firms. This business case can be made based on the objectives of the program, need for compliance, and positive economic impacts.

Development of a More Comprehensive Audit System for assessing employers found to be in violation of one element of the Code, to ensure that other violations are not ignored would be another way to reduce non-compliance. This direction could be linked to a new performance indicator, which would be a measure of the tendency of firms, once fully audited, not to generate further complaints or violations.

Examining LAO Concerns: A most valuable resource of the program is the practical experience of LAOs. This should be more fully utilized. The survey of Labour Affairs Officers conducted as part of this evaluation has prompted a number of valuable comments and observations which may be worth reviewing by the Labour Program. There is strong evidence to suggest that some of the LAO concerns reported throughout may deserve more attention, particularly their concerns over workload, training and enforcement tools.

Many suggestions they made which should be considered include for example: developing an MOU with Revenue Canada to determine employee status; making holiday pay in complex industries such as trucking be just a percentage of gross pay; developing a national data base on payment order appeal decisions; developing ways to deal with insurance companies on private insurance compensation decisions; having all collective agreements before CLRB reviewed by LAOs to ensure compliance with Part III; improving the Part III poster to include key provision details, and to make it more eye-catching; developing more training for HRCC managers on Part III; and developing presentation packages for LAOs for employer seminars.

A particular concern of LAOs with respect to enforcement was the need to review the procedure for enforcing payment orders and consideration should be given to the establishment of a system of fines and tickets as an alternative to prosecution.

Cooperative Approaches: Cooperative strategies with the Provinces and industry associations for the delivery of some of the services associated with the Code deserve more attention by the Department. This report underlines the importance of improved education and information dissemination, and that this could be consistent with new arrangements with the Provinces and with a much higher level of proactive intervention.

At the same time, the evaluation team shares the views of most stakeholders that privatization of the enforcement function of the program would not work, and would in the final analysis be to the detriment of attaining the important objectives of labour standards. Other alternative approaches should be considered for First Nations, for example, delivery of services through Tribal Councils, and a wide range of related issues should be examined for First Nations, including cultural training for LAOs. Self-regulation through mechanisms such as joint committees should be facilitated, but does not appear to be a high-priority approach to improve program delivery.

New Approaches To Non-Standard Work: Non-standard employment is the fastest growing part of the Canadian labour market. It is widely recognized that Federal and Provincial labour standards are not addressing the needs of this segment of the labour force. The Federal Government should take some leadership with the provinces in this particular area and on the perceived policy gaps which are emerging. The essence of the question is how to extend labour standard protections to non-standard workers who are in every sense really "dependent contractors". A proactive education program with stakeholders is part of the answer.

Consider Eliminating the Long Hours Permits: Finally, the researchers offer one specific suggestion relating to the subject of hours of work. The hours of work provisions of the Code involve a complex system of permits which are resented by employers and at the same time, are not heavily utilized if the evidence from other jurisdictions is relevant. That being the case, other avenues could be explored for governing long hours of work.

One useful option to consider is a complete elimination of the overtime permit system, but the introduction of two other provisions (guaranteeing the right to refuse overtime together with the option of taking time off in lieu of overtime rather than overtime pay) as an alternate means of limiting unusually long hours of work. This direction would be seen by firms as offering them more flexibility and by employees of empowering them relating to their rights to refuse to work overtime hours. Another option would be to impose a second rate (significantly higher) of overtime premium when workers work more than the current ceiling on hours of work .⁸⁸

6.2 Discussion of a Second Phase Evaluation

This evaluation report does not cover all of the important avenues of inquiry of interest in the Part III program. As is common with reports of this nature, other issues and avenues for useful public policy exploration have emerged which are central to the Labour Program's mandate and Part III of the Code. Some such issues are identified here, for a possible second phase of the evaluation which could build on important learning which has occurred in the initial research for the evaluation.

Related issues which could be considered in a second phase of work include:

1. A Review of Best Practices To Obtain Compliance: HRDC could review best practices (i.e. objectives and the achievement of these objectives) in a variety of jurisdictions. An inter-jurisdictional survey (Canada and international) could focus on the question of the degree to which standards have affected competitiveness, efficiency and equity in other jurisdictions/countries.
   
   What can be learned from other jurisdictions about improving compliance with labour standards? Are there any new levers for achieving labour standards objectives? A model for this type of study could be found in the survey of international practices conducted for the Department's 1996 Evaluation of the Canada Pension Plan (Disability Component).
   
   The research could examine what other measures, other than labour standards, could be used to achieve these same objectives. The tax literature might also represent a useful area for examining these issues.

 

2. How is the Code Adapting To the New World Of Work? The report suggested that the Code appears to be "falling behind" changes in the labour market. The changing environment of work clearly has important implications for equity, private efficiency, and with compliance with the objectives of the Code. In the emerging new environment, what is the role for labour standards? What do we do if labour standards cannot reach these newer groups of workers? Should the Code be used to enhance their bargaining power?
   
   There have been very major changes in labour market activity. The supply side changes include demographic shifts, changes in labour force participation, technology and education changes; while the demand side changes include contracting out, changing attitudes by firms regarding hiring of labour, the rapid growth of smaller firms, and the faster increase in the provision of services than the provision of goods. What are the implications of these changes for compliance with objectives of labour standards?
   
   A case study of the trucking industry — with its wide use of alternative work provisions — seems particularly attractive as an approach to these issues.

 

3. Other Equity/Efficiency Issues: HRDC has a significant interest in ensuring that Canada's labour market operates as efficiently and as equitably as possible. But these two worthwhile objectives — efficiency and equity — are often inconsistent with each other. The administration of the Code, in other words, reflects this dynamic tension: key issues to be considered should include the full range of issues such as between jurisdiction harmonization, consideration of internal labour markets of firms as well as broader labour markets, and consistency with international agreements and labour accords (e.g. NAFTA).

 

4. Employee Concerns: The second phase of this evaluation should include a survey of complainants to obtain a better perspective of employees with regards to labour standards and the Labour Program. This area represents a major gap in the evaluation so far, and one which could be usefully filled in a second phase of the evaluation. Development of a study component will be particularly challenging because of the confidentiality issues which surround the complaint process.

 

5. Examination of Costs and International Competitiveness: Part of an expanded work plan should relate to international competitiveness. The responses of the larger, export oriented firms which apparently comply with the Code noted modest costs, but nevertheless expressed the view that the Code may be inhibiting their international competitiveness.
   
   Indeed, labour and environmental standards have in fact increased the awareness level of firms, employees and unions. One reason for this is that the internationalization of business has also resulted in a comparable internationalization of the Canadian labour force.
   
   To meet this concern, the second phase of the evaluation should focus on a number of macroeconomic and international issues not fully dealt with in the first phase of our work. One of the key gaps in our view relates to the linkage of labour standards to the competitiveness and global competition of Canadian firms. This may be of particular interest in the case of the international shipping of grain, where high concerns and higher costs were noted.
   
   Such a sub-study could be a case study of costs and impacts on the grain industry and other sectors, possibly with case studies, with a survey of employers' detailed views of costs (see Technical Note #1 - Planning Report, November 1997), or with a more exact examination of costs and specific Part III provisions (econometric analysis).

 

Footnotes

88	It is generally believed that the current overtime rate does not constitute an effective disincentive to use overtime, considering the higher costs associated with hiring and training new workers.