During an earlier era of globalization, at the end of the 19th century, European economies able to open their borders and take advantage of expanding trade were also willing to offer workers protection from the insecurities associated with it. Countries such as England, Switzerland, and Germany introduced laws that forced employers to make workplaces safer and compensate employees injured on the job. They established new rights for workers to bargain collectively and implemented regulations to limit working hours and eliminate child labour.
Today, in Europe and in North America, globalization faces resistance from politicians and workers. For a growing core of the labour force, the current wave of globalization has seen a loss of collective bargaining rights, stagnant earnings, and increased insecurity. It’s in this context that the Ontario government is currently reviewing two key pieces of legislation: the Employment Standards Act and the Labour Relations Act.
The province launched this review in response to a growing sense among Ontarians that workers are not being treated fairly. Federal finance minister Bill Morneau recently cautioned workers to get used to “job churn” and short-term contract work. The 1980s model of permanent full-time jobs, in which terms of employment are negotiated through collective bargaining, is in decline. Temp work and self-employment are on the rise. Having a secure, well-paying job today is no guarantee that you’ll have one tomorrow.
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Government-appointed advisers have done good work so far in assessing the limitations of the Employment Standards and Labour Relations acts, and in identifying ways to correct them. As they point out, both were drafted when many more Ontarians were employed full-time, worked in manufacturing, and were union members. Today, those work forces are a shadow of what they were 30 years ago. In their place, employment has increased in the retail, non-profit, and knowledge sectors, and at smaller (often non-union) workplaces.
The advisers caution that their recommendations need to be sensitive to potential effects on the competitiveness of employers in Ontario. While this is sound advice, history suggests doing too little will result in growing opposition to more open trade, leaving employers worse off. Brexit and the election of Donald Trump are examples of what can happen when governments pay too little attention to the impact of globalization on workers.
New research (some of which I have contributed to along with colleagues at United Way Toronto and York Region) helps us understand how precarious employment negatively affects quality of life beyond the financial strains it can cause. Workers in less secure employment experience more stress at home. They hold back from forming relationships. They are less likely to have children — and those who do find it more difficult to support them. They receive less training than workers in secure employment.
These outcomes will not lead to a prosperous Ontario. Improving employment conditions for these precarious workers must be seen as a necessity if we’re to make our economy more competitive.
Research explains how this might be done. In an economy where more and more workers are bargaining on their own, wage increases have not kept up with productivity. If wages had tracked labour productivity increases since the ’80s, most workers would be earning 25 to 50 per cent more than they do now. Changes to the Employment Standards and Labour Relations acts must help workers negotiate terms of employment that more closely match changes in productivity and eliminate the incentives — such as low wages and minimal benefits — that discourage employers from hiring full-time workers.
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There are many good ideas in the government report, but focusing on two key areas could go a long way toward reducing employment insecurity.
First: restoring collective-bargaining rights to more workers. This will require a radical change in how terms of employment are set. Many of the report’s recommendations are aimed at unions as we know them: direct bargains between an employer and a union representing employees. But as workers increasingly have only a temporary association with any one employer, this model has largely lost its relevance. Sectorial bargaining, similar to the system currently in place in Ontario’s construction sector, would see groups of workers bargaining with groups of employers to establish terms — ones that would apply to all workers in the sector.
People who work for a franchise owner or at small- or medium-sized firms as part of an extended supply chain toil under different circumstances. In such cases, an employer’s capacity to provide decent working conditions is often constrained by the terms of the franchise agreement. Small firms, reliant on larger firms up the supply chain, can also get locked into contracts that force them to squeeze workers to remain profitable. Many of these workers lack the ability to negotiate better terms of employment. One solution is to establish, through labour regulations, higher minimum wages, greater benefit entitlements, and enforcement mechanisms. Another: make those who are parties to contracts between firms jointly liable for the terms of employment of the workers employed through those contracts.
The decisions that emerge from the government review are likely to shape the path our economy takes. We must learn from history and offer workers sufficient protection from the insecurity associated with globalization so that we can pursue the path of greater productivity.
Wayne Lewchuk is a professor at the School of Labour Studies and the Department of Economics at McMaster University.