New Century, New Risks: Challenges for Social Development in Canada - November 18-19, 2004

Breakout Session 1A: Labour Market Risks

Moderator: Louis Grignon, Strategic Policy and Planning Branch, Human Resources and Skills Development Canada

Michael Smith, McGill University

When looking at policy, it is important to ask not only who is helped, but also who gets hurt, said Michael Smith. There are indicators that are typically treated as if they related to a labour market problem. Scarce and precarious work is often associated with the incidence of involuntary part-time work and temporary employment. However, he offered as a counter-example the spectacular economic success of Ireland over the past 15 years, which has been paralleled by the growth of previously non-existent part-time work. Part-time and temporary work can also be characteristics of a robust labour market, he said. Some indicators of poor labour market performance are inappropriate.

On the discussion of whether it is good to see human capital translated as a way of improving people's variety of outcomes and addressing the problems of inequality, Smith said that the idea is to use education to bring about more equality of opportunity, even if it is not so clear that it brings more equality of outcome.

Andrew Jackson, Canadian Labour Congress

Work is needed on making labour market outcomes more equal, said Andrew Jackson. The problem should be defined in terms of social inclusion and developing skills, capacities, and better jobs. The question is whether to address the issue of low paid jobs through re-distributive measures such as supplementing family incomes, or act directly on the labour market itself. Both come into play, he said.

The discussion tends to be structured around minimum wage. Jackson underlined that minimum wage is an important tool for improving job quality, can have positive impacts on productivity, and force employers to invest in capital skills and improve jobs. However, he noted that collective bargaining can be a much more flexible instrument for negotiating wages and working conditions between employees and employers.

Issues of job quality and wages are not independent of how the society organizes public and social services, Jackson said. Societies make choices to have a relatively high level of taxation and spend it on a high level of public and social services, which also has implications for the structure of employment. If societies move in a direction of more investment in child care and elder care, how they deliver those services has direct implications for the quality of unemployment, he concluded.

Discussion

The employer perspective has been an unexplored issue in the discussion on minimum wages, a participant said. Employers often get trapped in a low productivity and low wage equilibrium, characterized by high turnover, lack of skills investment, and lack of worker commitment. She added that services do not necessarily have to be delivered by the public sector. Intermediary initiatives involving community co-operatives, non-profit organizations, as well as for-profit companies may all contribute to service delivery.

Another participant cautioned that a strategy on social investment in human capital formation cannot focus only on the high end of the labour market. For instance, with the focus on enhancing post-secondary education, it is not clear that there are productivity gains to be had from producing more university graduates. The problem is at the other end of the labour market—investing in human capital formation for the bottom third by improving early childhood, elementary, and secondary education and other skill levels.

A participant noted an apparent debate on whether Canada should have a caring policy with comprehensive services, opportunities, and employment security for workers, or a "neo-Darwinian" policy that emphasizes being as competitive as possible in an age of globalization. The impact of new technologies on productivity, job security, and social services needs to be better examined. For example, intellectual property laws have created a cartel of new knowledge that can inhibit the development of new technologies.

Lifting the bottom third of the labour market cannot be achieved by educational means alone, another participant said. Early childhood education, for example, cannot be effective if children still come from family environments that are economically insecure in terms of housing and food. Moreover, she noted that workers at the bottom third of the labour market can face difficult access to social programs such as employment insurance, because there are few legal supports for these workers to claim their rights and to leave bad, poorly paid jobs.

A participant noted that young people and people with disabilities have difficulty joining the labour market, while workers older than 45 often have trouble re-integrating because they are considered too experienced. Community partnerships and the social economy can be vehicles for addressing the difficulties faced by these atypical workers, he said.

Jackson noted that a mix of models is available for social service delivery: direct public sector delivery, mixed public and private delivery, or delivery via the social economy. However, he noted that unstable relationships and inadequate funding from government can be problematic.

A participant said that an Organisation for Economic Co-operation and Development (OECD) and Statistics Canada literacy study has shown that the determinants for the bottom third of the labour market are not related to percentage of GDP spent on education, but rather tied to the issue of inequality. Education is not a silver bullet for improving the labour market—it is vital to look at a range of actions that reduce inequality and improve conditions for people in the bottom third of income distribution.

There has been much discussion on improving the labour market, commented a participant, but little accountability and outcomes on applying changes to social development policies. Change on the ground is not happening fast enough, she said. The time between discussion and effective action and policymaking must be decreased, and the disconnect between policymakers and front line workers addressed.

A participant challenged the idea that raising the bottom third of the labour market would be a better pay-off in terms of productivity. Raising the bottom third is a matter of social justice, but mixing this idea with the economic discourse is risky. Data show that investment in graduate education can bring a substantial rate of return, but the argument that raising the conditions for the bottom third will lead to higher productivity and rate of return is questionable, since the gains are more social than economic, he said.

"It's not an either/or issue," Jackson responded. He noted a major gap in the human capital agenda, with close to 50 per cent of young people not pursuing post-secondary education. There is a lot of evidence that increasing skills and providing education and skills training opportunities for the bottom third of the job market can have significant productivity pay-offs. Experiences in other countries have shown that quality and productivity in low-wage sectors can be transformed quite dramatically, he added.

A participant noted that discussions and research focussing on low levels of income have not addressed the very high salaries to be found at senior levels in the private sector. Policy discussions should also focus on salary ranges at upper levels, he said. Jackson replied there is no doubt that over the last 15 years economic gains have gone disproportionately to those at the upper level of the labour market. This equality issue would have to be resolved through taxation policy.

A participant commented that people with disabilities face challenges such as a lack of job accommodation, lack of flexible hours, lack of support and services, and inadequate training, which prevent them from participating in the labour market. Community agencies are charged with helping people on the ground, but are continually confronted by funding reductions. The terms and conditions put in place around policies have to be in sync with the way services are delivered at the ground level.

A participant stated that the unemployment rate among university graduates is now close to the rate during the recession in the early 1990s; yet, Canada continues to produce more university graduates every year. University graduates are incurring debt loads approaching $25,000 due to the pious fiction that a university education is an automatic ticket out of poverty. The reality needs to be clarified, he said, because graduates are actually coming out into low-paying jobs.