SUBMISSION TO THE STANDING COMMITEE ON FINANCE AND ECONOMIC AFFAIRS OF THE ONTARIO LEGISLATURE BILL 148

Art Sinclair, VP, Public Policy & Advocacy

SUBMISSION TO THE STANDING COMMITEE ON FINANCE AND ECONOMIC AFFAIRS OF THE ONTARIO LEGISLATURE BILL 148

FAIR WORKPLACES, BETTER JOBS ACT

JULY 18, 2017

The Greater Kitchener Waterloo Chamber of Commerce and Waterloo Region – A Profile

The Greater Kitchener Waterloo Chamber of Commerce serves over 1700 members representing all sectors of the Waterloo Region economy. Our membership includes small, medium, and large employers in one of Canada’s most progressive and innovative regions.

Our economy is among the most diverse in Canada, with concentration across advanced manufacturing, financial services, automotive, post-secondary education and information technology. Industry analysts have frequently cited this diversity as the fundamental strength of Waterloo Region’s globally successful and entrepreneur-driven business sector.

Workforce Development

The labour and workforce development portfolio has been a priority for our organization in on- going relationships with all three levels of government. From 2006 until 2011, we hosted the Waterloo Region Immigrant Employment Network (WRIEN), a community-funded initiative to integrate foreign-trained skilled professionals into the local workforce. The organization was subsequently incorporated, by 2011, within the Waterloo Region Immigration Partnership, a larger community settlement program primarily funded through Immigration, Refugees and Citizenship Canada.

Waterloo Region employers have compiled an exemplary record of collaboration with our excellent local post-secondary institutions on identifying current and future workforce requirements and implementing programs to meet demands. A September 14, 2011 article in The Globe and Mail1 noted that “when it comes to using educational systems as an economic development tool, Canadian cities and regions lag behind Waterloo.”

Our Chamber was also strong advocates for and supporters of provincial and federal infrastructure investments into Conestoga College, Wilfrid Laurier University and the University of Waterloo. In the past decade, over $300 million total has been allocated to Waterloo Region post-secondary institutional infrastructure to support core teaching and research activities.

Bill 148 – The Fair Workplaces Better Jobs Act

Markham-based Minken Employment Lawyers note on their website (minkenemploymentlawyers.com) that employment law generally deals with individual employment contracts in which the employee is not either a member of a union or bound by a collective bargaining agreement. Labour law generally applies to work environments that are governed by the Ontario Labour Relations Act, and in such environments the employee is subject to collective bargaining and is a member of a union.

Public and private employers in all sectors across Waterloo Region have advanced concerns to our organization regarding the proposed changes to the Employment Standards Act and Labour Relations Act through Bill 148. These concerns are primarily related to the implementation schedule for minimum wage increases and changes to the Ontario Labour Relations Act which disrupt the balance between employee and employer interests.

Minimum Wage Increases

Many of the concerns related to minimum wage increases have originated from small businesses across the province. As of December 2015, the Canadian economy totaled 1.17 million employer businesses and 1.14 million or 97.9 percent were small businesses (1-99 paid employees). Small businesses employ over 8.2 million individuals in Canada or 70.5 percent of the total private labour force. Furthermore, small businesses were responsible for 87.7 percent of the net employment change in Canada between 2005 and 2015, or 1.2 million jobs.

These statistics confirm that small businesses are the base of the Waterloo Region, Ontario and national economies and the primary creator of net new jobs.

The foremost concern of employers relates to the current implementation schedule for minimum wage increases. Employers require an expanded time frame for adjusting to a 32 percent escalation beyond the proposed 18 months. No employers are forecasting revenue increases at a similar scale.

As a measure of comparison, since 2010 the minimum wage in Ontario has escalated by 12 percent. Under the current proposal, employers would be required to implement an increase of a further 23 percent in six months, followed by another 11 percent a year later for a total of 32 percent over 18 months.

Also by comparison, Seattle is allowing a 4 year implementation for a 36 percent increase while California is allowing five years for a 50 percent increase for employers with less than 25 employees.

The private sector, most notably small businesses, needs to be functioning at an optimal level for increasing government revenues through taxes and other instruments. Proposed changes to provincial employment statutes should not be implemented at their current schedule and rather re-examined for their larger economic impacts.

Changes to the Ontario Labour Relations Act

A June 21, 2017 bulletin provided by law firm Torys LLP notes that if passed, Bill 148 will have significant implications for employers in Ontario, particularly those who are unionized or subject to the union certification process, including:

–     Allowing unions who can demonstrate that they have the support of at least 20 percent of an organization’s employees to access employee lists and designated contact information;

–     Requiring the Ontario Labour Relations Board (OLRB) to address first contract mediation-arbitration applications dealing with displacement and decertification applications;

–     Empowering the OLRB to conduct votes outside the workplace, including electronically and by telephone;

–     Prohibiting an employer from disciplining or discharging employees without just cause in

the period between certification and the conclusion of a first contact;

–     Providing an alternative process for certification and establishing card based certification for employees in specified sectors (building services, community services, home care and temporary help agencies);

–     Allowing OLRB discretion to restructure bargaining units. Currently a voluntary agreement between a bargaining unit and employer is generally required to change the configuration of bargaining units;

–     Removal of the six-month return-to-work waiting period and instead requiring employers to re-instate employees at the conclusion of a lawful strike or lock-out if designated conditions are met.

Jack Siegel and Jodi Solomon of law firm Blaney McMurtry LLP noted in the firm’s Employment Update June 2017 that an alternate process is proposed in Bill 148 for the certification of unions “whose employees might be seen as harder to organize through a process involving a union certification vote.” The proposal represents a return to organizing rules that have not been in place for over 20 years, with the intention of making union representation more accessible. Furthermore, the provision for allowing access to employee lists for organizing campaigns does have the potential to raise some challenging privacy questions.

Ontario Manufacturing

The Canadian Manufacturers & Exporters’ (CME) and Food and Consumer Products of Canada (FCPC) recently released their report Manufacturing a Competitive Business Environment in Canada.2 The document notes that “global competition to attract new investment in manufacturing is fierce. Companies decide where in the world to locate their operations based on where the economic return will be highest. They look for specific factors in assessing that return – accessibility of markets, profitability, and net input advantage – and the combination of access to raw materials, human resources and other local attributes like transportation infrastructure and logistics.”

Furthermore, among the factors that investors consider, the overall business environment is perhaps the most important. The business environment refers to the prevailing tax and regulatory burden in a jurisdiction, as well as the perceived willingness of governments to partner with the private sector to support growth. This has a direct impact on investment decisions and the ability to operate profitably.

The CME believes the domestic business climate is getting worse, not better. Nearly half of all respondents in a 2016 survey believe the federal government does not support investment and growth across their organizations. That share rises to 60 percent for provincial governments. Most respondents believe that public sector support has in particular grown worse, not better, over the past three years.

Current issues of concern for manufacturers include rising payroll taxes, carbon taxes, and an increasing regulatory burden. While no single factor drives investment away, in aggregate they constitute a “death by a thousand cuts.”

The CME notes that minimum wage increases – including significant ones in Alberta – have a ripple effect through the pay structure of a manufacturing business. While manufacturers have few minimum wage jobs, these changes place upward pressure on all other wages.

In the aforementioned 2016 survey of their members, the CME found the largest concerns for investment into Canada included availability of skilled labour (32 %), labour costs (29%), and overall tax rates (29%).

A 2015 report3 from the Deep Centre for Digital Entrepreneurship and Economic Performance in Waterloo emphasizes the critical need for Canadian manufacturers to prioritize productivity enhancing technology and its application. The focus for public and private stakeholders must be investments into training, re-skilling and other labour-market initiatives aimed at ensuring that those firms who do invest in advanced robotics and automation technologies possess the skilled labour necessary to exploit their potential.

A September 27, 2016 Financial Post article by Toronto-based labour lawyer Howard Levitt noted that if adopted, the proposals contained within the recently released interim report to amend the Labour Relations Act and Employment Standards Act would make the province the most radical left-wing environment for business in the western world, and would go a long way toward ensuring that no foreign business would ever again invest in it.

Mr. Levitt argues that the proposed legislation would lead to increasing insolvencies by marginal employers, which are the root cause of non-payment to employees in the first instance. Short of the government paying these workers on insolvent employers’ behalf, which the government cannot afford, there is no other solution. The balance of power in non-unionized workplaces would also be shifted to employees, including increasing minimum vacation time to three weeks and paid sick leave.

In a June 27, 2017 letter to Premier Wynne, Food and Beverage Ontario (FBO) noted that with respect to the proposed consolidation of bargaining units “many companies have had collective bargaining agreements (CBA) for decades and have made conscious decisions directly with the union for provisions that support a specific regional difference to ensure they are appropriate for the marketplace. This provision (in Bill 148) would render these efforts moot and companies would be less inclined to accommodate specific regional requests, with the fear of that flowing into a broader scope bargaining unit at a later date.”

The proposals around bargaining units also seriously hamper the right and ability of a company to continue its operations in the event of a labour dispute and remove the rights of unionized employees to work within the CBA that was negotiated. The FBO subsequently recommends that current parameters remain as constituted.

The FBO further contends that proposed rules related to the employer providing contact information to the union is a breach of employee rights to privacy and independent decision- making. It will also be disruptive to the industry through on-going certification attempts.

Recommendations

That the Ontario government:

1) Do not proceed with any changes to the Ontario Labour Relations Act until an assessment of the impact on innovation, productivity and investment attraction across the provincial economy is completed;

2) Re-examine the schedule for implementation of any minimum wage increases, in particular the impacts on small businesses such as bankruptcies/closures, layoffs and the current company pay scale with respect to non minimum wage employees;

3) Maintain a balance between employer and employee interests across the Ontario Labour Relations Act.

 

Sources:

The Future of Manufacturing in Ontario. New Technologies, New Challenges and New Opportunities. Deep Centre for Digital Entrepreneurship and Economic Performance. September 2015

Manufacturing a Competitive Business Environment in Canada. Canadian Manufacturers and Exporters. 2017

Canadian Cities need a lesson in academic potential. Nick Rockel. The Globe and Mail. September 14, 2011.