Submission

Why We Need A Federal Minimum Wage and Other Renewed Employment Standards

Canadian Council on Social Development
309 Cooper Street, 5th Floor
Ottawa, Ontario, Canada
K2P 0G5

Telephone: (613) 236-8977
Fax: (613) 236-2750
E-mail: council@ccsd.ca
Web Site: www.ccsd.ca

The Canadian Council on Social Development welcomes this opportunity to contribute to the review of Part lll of the Canada Labour Code.

Part lll requires urgent revision. It was brought into being almost 40 years ago, before a large part of the current workforce was even born. Its purpose is to establish minimum standards for employees and employers under federal jurisdiction ? which represents 15,000 employers and about 10% of the Canadian workforce, in inter-provincial and international transportation, banking, telecommunications, federal Crown corporations, and some First Nations activities. But the Canada Labour Code's importance extends far beyond the numbers of workers covered. Because it is a federal government statute, and because it covers some workers in every province and territory, workers in all jurisdictions are affected by it, and thus, it can serve as the "best practice" for labour standards across the country.

Workers in the federal jurisdiction should not only be no worse off than workers in provincial jurisdictions, they should be better off after this review, because the standards set here should be the marker for all provinces and territories.

In its present form, the Canada Labour Code clearly does not play this role.

Obviously, the world of 1965 was a very different place than what we find today.

1) The composition of the labour force has dramatically changed: women's participation is greater, the workforce is older and more diverse, and family and relationship structures are more varied than ever before.

2) The dominant paradigm of a standard job has also changed, in keeping with the more-flexible, contingent and precarious job market.

3) The rate of unionization has declined from a high point of 38% in 1981, to around 31% in 2004. In the private sector, this rate is in the 20% range, so the vast majority of workers must rely on employment standards to ensure that they have decent work. Certain groups are even more vulnerable. The rate of unionization among young people (those aged 17 to 24 years) has fallen from 26.4% in 1981 to 13.6% by 2004, and among women in the private sector, the unionization rate is only 13.7%.

3) Increased privatization of public services also contributes to the more precarious nature of work.

4) Canada is now a low-wage country with high rates of poverty. The minimum wage in Canada has dropped in terms of what it represents as a percentage of the average wage ? from 50.3% in 1976 to 40.7% in 2001. Almost 17% of all full-time workers earn less than $10 per hour (Census 2001), and 26% of all workers make less than two-thirds of the median hourly industrial wage.

Poverty is just one outcome of a low-wage economy. In fact, poverty figures were adjusted upwards this year due to statistical problems. As a result, real poverty rates have risen, as have the assumed rates for previous years. The pre-tax LICO figures for all Canadians living in low-income went from 13.7% (old figures) for 2002 to 15.9% in 2003 (new), and the number of poor jumped from 4,216 million in 2002, to the new figure of 4,917 million poor in 2003 ? an increase of 700,000 poor people (SLID 2003). Racialized communities and Aboriginal people made up 17% of the total population in 2001, but they represented 30% of all low-income Canadians (Census 2001).

While many European countries have begun to confront the changes in today's world of work, that is not the case here in Canada. Canadian employers have not been asked to do their fair share in providing "decent work" ? which is the term coined by the International Labour Organization.

For example, minimum wages in all provinces and at the federal level remain far below Western European standards. In Canada, vacation time is meagre compared to the minimum four weeks provided in the European Community. And Canadian hours of work have been stuck at 40 hours per week for decades, while France and Belgium now require 35 and 38 hours respectively. Many European countries have also begun to regulate the field of temporary work by encouraging unionization and setting high standards for the operation of agencies.

In this context, the overall objective of federal labour standards should be twofold. First, federal labour standards should improve the situation of the most vulnerable workers in the federal sector. An overall goal of this review should be to make the ILO objective of "decent work" a reality for Canadians covered by federal standards. Secondly, since more and more workers at all income levels are dependent on employment standards, the federal review should also offer hope to workers in other jurisdictions that Canada can do better and should encourage other jurisdictions to bring about similar standards.

While there are many areas worthy of attention under this Review, the CCSD has focused on the following issues:

(1) Setting a federal minimum wage at a living-wage rate

The Federal Labour Standards Review should reintroduce a federal minimum wage for the federally regulated sector, and the wage should be set at $10 per hour. (The federal government abandoned setting this wage in 1996, and as a result, employees of federally regulated companies across the country now earn different rates.)

A $10 hourly wage would allow a single person in a large city who works full-time for a full year to rise above the poverty line ? in fact, by working 40 hours per week for 52 weeks they would earn $20,800, just slightly above the pre-tax LICO of $20,377.

Surely any citizen who works full-time for a full year should be able to live a life free of poverty?

In the United Kingdom, the recent introduction of a minimum wage is worthy of note. Prior to 1998, the UK had no minimum wage. It was then introduced at a relatively high rate, and has since been raised on a continuing basis. Despite dire predictions to the contrary, however, there was no economic meltdown in the UK, and their unemployment rate has fallen since 1999 and remains low today (down to 4.7% in April 2005). Raising the minimum wage from zero to 4.85 pounds an hour (or just under $11 Canadian, with an increase to 5.05 pounds per hour scheduled for October 2005) has had no measurable negative effect on unemployment. In fact, the last increase in the UK minimum wage rate in October 2004 was estimated to have benefited 1.1 million low-paid workers. The Low Pay Commission, which documents the minimum wage story, has found that in the service sector there was evidence of a "positive one-off effect on productivity."

(2) Ensuring that precarious and contingent work is covered by pro-rated benefits

The Federal Labour Standards must guarantee that all the benefits which accrue to full-time workers will be offered to part-time or temporary workers on a pro-rated basis. This change would also discourage some employers from hiring part-time workers simply to avoid paying the workers benefits.

(3) Setting lower maximum weekly hours of work

The experience of many European countries has shown that by setting a maximum for the number of weekly hours of work, it can help to raise productivity, improve family and social life for the employees, and help with job creation. Setting the federal work hours at a maximum of 37.5 hours per week ? after which overtime rates would apply ? would be an important step in the right direction.

(4) Setting increased minimum vacation days

While the European Union has adopted a minimum of 20 vacation days per year, Canada still trails far behind, with most Canadian workers eligible for only two weeks vacation each year.