No need to subsidize business by rolling back labour rights

March 1, 2002

"No pain, no gain" seems to be the preferred cliché of the new provincial government. While this approach may be well and good for Olympic athletes, it's not working as an approach to public policy. A case in point is the government's plan to turn back the clock on employment standards and workers' rights in BC.

The rhetoric surrounding much of the government's announced and anticipated changes to BC's Labour Code, employment standards protections, and workers' compensation regulations is that these labour standards must be rolled back so that BC businesses can better compete in the Pacific Northwest, and so that more new business investment can be attracted.

In other words, workers are going to be taking a hit in the name of "competitiveness" on the basis that their fortunes will somehow be better off in the long-run. Yet, a recent study from the management consulting firm KPMG clearly shows that BC is already the most cost-competitive jurisdiction in the Pacific Northwest.

The KPMG study looked at international comparative business costs in 85 cities in nine highly industrialized countries. It found that Canada is the lowest cost country in which to operate a business, and that BC's seven main cities have a significant cost advantage over all seven of the US West Coast cities included in the study.

The most significant factor affecting "competitiveness" was labour costs. Surveyed labour costs included wages and salaries, statutory benefits and other employer-sponsored benefits. In the overall national labour cost comparisons Canada was the cheapest jurisdiction, ahead of the United Kingdom (2), Italy (3), the Netherlands (4), France (5), Austria (6), the United States (7), Germany (8), and Japan (9).

Similarly, the labour cost comparisons between West Coast cities reveal that all seven BC cities surveyed (Vancouver, Victoria, Chilliwack, Kamloops, Nanaimo, Prince George and Kelowna) have significantly lower overall labour costs than the seven U.S. West Coast cities surveyed (San Jose, CA; Seattle, WA; Riverside - San Bernadino, CA; Sacramento, CA; Las Vegas, NV; San Diego, CA and Portland, OR). The full study can be found at under the headline "Canada leads in global business costs."

These results are in stark contrast to the complaints of BC's business community (and the current government) that supposedly excessive labour standards have kept investment, and therefore jobs, out of the province. A dramatic rollback of BC's labour laws is clearly not justified on the basis of the need for a more cost competitive environment for business.

Rather, the rollback of labour rights serves another, unstated, function. The government's plan will, in effect, subsidize businesses in BC at the expense of workers. The introduction of lower, more "flexible", employment standards regulations began with the new $6 per hour "first job" minimum wage in November 2001. This measure, the first of its kind in Canada, provides a huge wage subsidy of $2 per hour per employee to those employers most likely to hire students, new immigrants and other new entrants to the labour market.

Proposals for new employment standards legislation, to be tabled soon in the legislature, go much further. These changes will include: "focused" (i.e. selective or partial) coverage, and enforcement; delegated or privatized enforcement to employer associations; under the guise of providing increased regulatory "flexibility", longer maximum hours of work; and, the substitution of Employment Standards Act coverage with individual "employment agreements" that employers will be able to impose on workers as a condition of their employment.

The current universally-applicable employment standards legislation, and an effective system of government enforcement, ensure that all unrepresented workers receive equal protection from unscrupulous employers. By establishing a "level playing-field" in the employment of labour, scrupulous employers, who want to treat their employees fairly and respectfully, do not have to face the unfair competition of employers who do not. These minimum standards are now at risk.

This race to the bottom in the name of "competitiveness" is short-sighted and will adversely affect workers in BC. The irony is that the government is blindly pushing these reforms without looking at the facts. BC is already a cost-competitive jurisdiction in terms of labour costs. Changes to the labour code and employment standards will not increase our competitiveness, but will just drive down our standard of living.

David Fairey is a labour economist and labour relations consultant, and a research associate with the BC Office of the Canadian Centre for Policy Alternatives.