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Potential Labour and Employment Standards Reform

 

 

The Brockville & District Chamber of Commerce strongly objects to Potential Labour and Employment Standards Reforms  

Changes would discourage investment, eliminate jobs and diminish economic opportunities in Ontario, especially among small business owners 

 

The Brockville and District Chamber of Commerce, in partnership with the Ontario Chamber of Commerce (OCC) have sent a letter to Premier Kathleen Wynne warning against potential changes to Ontario’s Labour Relations Act (LRA) and the Employment Standards Act (ESA), including the introduction of a $15 minimum wage. The letter is cautioning that these reforms may have unintended consequences impacting job creation and competitiveness, as well discouraging investment in the province. 

 

The potential reforms are coming at a time when costs for consumers and the cost of doing business is high and putting Ontario at a competitive disadvantage. Ontario has experienced slower growth in GDP and job creation than in the past and drastic reforms to labour and employment run the risk of causing serious damage to the future prosperity of the province.  

 

“These sweeping changes could seriously impact job creation and the health of our local economy,” in Brockville, said Pat Markovich, PRESIDENT of the Brockville and District Chamber of Commerce. “We need to get the message out that the proposed changes would discourage investment in Ontario, thereby discouraging investment and diminishing economic opportunities in Ontario. 

 

On issues of non-standard and part-time work, Statistics Canada data shows that part-time work has risen 22 percent since 2003, down from the 36 percent increase in the previous 12-year period. Recent studies show that 76 percent of part-timer workers voluntarily choose part-time work to better accommodate schooling or personal life.   

 

“We are urging Premier Wynne to complete an economic impact analysis of the proposed reforms to limit potential consequences that could seriously jeopardize our future growth,” said Richard Koroscil, Interim-President and CEO, Ontario Chamber of Commerce. “We support reform where and when it is needed, but we caution against change for change’s sake.” 

 

The OCC’s letter reminds the Premier that Ontario's employer community is doing its part to create better jobs and working conditions in the province. Budget 2017 points out that 98% of all new jobs created since the recession have been full time, and 78% have been above-average wage for their respective industries.  

 

The letter notes that the goals of economic growth and improved employee rights are not mutually exclusive. The OCC believes that what supports the competitiveness of Ontario’s economy can also help enhance quality of work. Increased education and enforcement may assist with compliance to Government regulations and can improve worker environments. Regulatory reform that raises costs for business, only to reduce the ability of business to invest in and grow the labour force is counterproductive. 

 

 

Read the OCC’s (Ontario Chamber of Commerce)  letter to Premier Wynne. 

 

 

May 15, 2017


Premier Wynne
Legislative Building
Queen’s Park
Toronto, ON M7A 1A1


Premier Wynne,


I am writing to you with regard to media reports over the weekend of impending changes to the Labour Relations Act (LRA) and the Employment Standards Act (ESA), including the potential increase in minimum wage to $15 an hour.


On behalf of Ontario’s employer community, the Ontario Chamber of Commerce objects in the strongest terms to many of the reforms that are potentially being considered. These sweeping changes will tip our economic balance in a profoundly negative way. We are concerned that these rumoured policy changes would make it more difficult for Ontario businesses to grow and create good jobs. The changes would further restrict the flexibility of part-time and contract employees, diminish transparency and informed employee choice in the union certification process, and institute “paperwork provisions” that will add new layers of red tape to the existing regulatory framework. We remind you that good jobs are the direct result of a strong and growing economy. According to an 85-country analysis, heavier regulation of labor is associated with lower labor force participation and higher unemployment, especially of the young.


Government cannot legislate prosperity. Rather, the implementation of some of the policy options being considered would have the perverse effect of discouraging investment and eliminating jobs, thereby diminishing economic opportunities in Ontario. Politics cannot drive decision-making, evidence must.


Over the last two years, Ontario’s employer community has been a contributing partner to your government’s Changing Workplaces Review. While the labour community has used the Review as an opportunity to advocate for fundamental changes in labour relations, we have moved beyond the position of “status quo” and acknowledged that meaningful reforms that respond to a changing workplace can be adopted if done so responsibly. However, there is the potential for many of these proposed changes to do more to help organized labour than to help the workers themselves.


Despite this two year review, we have no reason to believe that the work that was done by your Special Advisors have been subjected to a structured and publicly reported economic impact analysis. Such broad reforms must be evidence-based. Workplace law reform conducted in absence of an economic risk assessment will discourage investment and compromise the competitiveness of businesses in the province which are already struggling to maintain profitability amidst rising input costs. There is a sense amongst the employer community that politicians are either unaware or significantly underestimating the cumulative financial burden of recent policies that have increased the cost of doing business in
the province.


Employers stress that the resulting cost escalation would act as a direct constraint on their ability to invest in the human and physical capital required to ensure the future prosperity of the province.


We urge you to consider the economic consequences of these policy options. Long-term economic projections for Ontario are for modest growth, as global pressures continue to strain our status as an investment destination of choice, high electricity prices will continue for the foreseeable future, and the pending economic implications associated with the introduction of a new cap and trade system are already being felt. Combined, these add up to an increased cost-of-doing business in Ontario. Small businesses, in particular, are expressing concern about economic viability.


The Economic Context


In Budget 2017, your government acknowledged that business investment spending slowed in 2016, though expects firms to increase investment by 3.1 percent, annually, to 2020 – an amount that would outpace growth in real GDP growth and household spending. We are skeptical of these assumptions as they depend upon business confidence – which has fallen precipitously in recent years according to the Ontario Economic Report – and U.S. demand, which is subject to considerable risk given recent comments by American President Donald Trump.


These reforms would only aggravate the situation. The Ministry of Finance’s forecast of average annual GDP growth in Ontario is only 2.1 percent between 2014 and 2035. This rate of growth is significantly less than the 2.6 percent average from 1982 to 2013. In the same report, the Ministry notes that Ontario’s cost competitiveness has already declined due to considerable growth in unit labour costs. The cost of producing a unit of output in Ontario has increased by 69 percent in the last 13 years. The Ministry estimates that comparable costs in the United States have grown by 28 percent.2 Regrettably, this pressure appears to be contributing to a pronounced slowdown in employment growth. In the 1980s, Ontario added 24.7 percent more jobs. In the 1990s, it created 11.9 percent more jobs. But from 2005 to 2015, employment in Ontario rose just 8.5 percent. Although the recent recession has been a contributing factor to our economic challenges, all three of the periods referenced were hit with recession. In fact, the loss of jobs in 2008-2009 was markedly less than in the 1990-1992 recession.


The Challenge


We need to be honest about the size of the problem that these reforms would be seeking to address, as issues of non-standard work in the economy are often misunderstood and overstated. For example, recent studies show that 76 percent of part-time workers in Canada voluntarily choose part-time work due to factors such as schooling or a need for flexibility in their personal life.


With respect to claims that there has been an unprecedented spike in the number of people holding multiple part-time jobs, the evidence is non-supportive. According to Statistics Canada labour market data, the number of Ontarians working multiple jobs has risen only 22 percent since 2003. This number is down from the 36 percent increase in the previous 12-year period.4 Perhaps surprisingly to some, the share of part-time employment in all jobs actually shrank in 2015 as compared to 25 years ago. This slight drop in part-time work is all the more remarkable because of the growing number of older workers who prefer part-time work. Job tenure in Ontario is another feature of the labour market that undermines claims of precariousness, with tenure increasing steadily over time. By 2015, the average employee in Ontario had worked for the same employer for a record, nearly 9 years. This data indicates that at no time in Ontario’s history have employees in this province enjoyed such stable employment.


While there are workplaces in Ontario that are not meeting basic employment standards, these non-compliant employers are the minority. We are concerned that your government will tackle tailored policy problems with blunt policy instruments. Temporary agency workers, part-time employees, contractors and other contingent and non-standard workers are positive and legitimate parts of the workforce that enable the kind of flexibility that all workers and employers need to balance their economic and
family objectives.


Our Ask


Our ask is simple: spend the coming months appropriately subjecting the proposed reforms in the final report of the Changing Workplaces Review to an economic impact analysis. This analysis should have clear acceptability thresholds, and the reforms implemented should be limited to those that pass such thresholds or are being implemented with a commensurate economic offset measure. We support reform where and when it is needed, but caution against change for change’s sake.


Ontario’s employer community is doing its part. As you point out in Budget 2017, 98 percent of all new jobs since the recession in Ontario have been full time, and 78 percent in above-average wage industries. This positive economic activity by Ontario’s private sector demonstrates a clear commitment to good jobs throughout our province and challenges many recent comments about so-called “precarious” work.


Ultimately, we believe that many of the workplace challenges that you are seeking to address can be solved by improving employer and employee awareness of workplace rights and subsequently redressing violations of those rights. Those businesses that are not complying with Ontario’s labour laws should face serious consequences. We see education and enforcement measures as an important area of common ground for government, employees, and employers.


The goals of economic growth and improved employee rights are not mutually exclusive. What supports the competiveness of Ontario’s economy will help enhance quality of work. At the same time, regulatory reform that raises thresholds only to reduce the ability of business to invest in and grow the labour force is counterproductive.


In the coming weeks and months, we will be a productive partner with government, but we will continue to vigorously defend against public policies that we believe to be harmful to economic growth and job creation in Ontario.


Sincerely,
Richard Koroscil
Interim President & CEO, Ontario Chamber of Commerce


CC
The Ontario Cabinet


Steve Orsini
Secretary of Cabinet


Patrick Brown
Leader, Ontario PC Party


Andrew Horwath
Leader, Ontario NDP

 

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