Issues

Bill C-525, Employees’ Voting Rights Act

Merit Canada believes that whether for electors or workers, a secret ballot is one of the fundamental pillars of a democracy, and that it is impossible to argue otherwise. However, under current rules, a workplace can be unionized if a union provides the Labour Board with cards it claims have been signed by employees representing 50% + 1 of the target workplace. This is a system ripe for intimidation and manipulation, as has been documented in hearings before various Labour Boards across Canada.

Bill C-525 seeks to address this democratic deficit and would require union organizers to get expressions of support from 40% of workers in federally regulated sectors in order to force a vote on union certification. That vote would then be held by secret ballot. If a majority of workers who vote support joining the union, then certification proceeds.

Bill C-525 does not embark on radical new territory. It merely brings federal law in line with several provinces which employ this same system.

A Leger Marketing poll found 80% of workers support secret ballot votes on unionization.

Click here to read full backgrounder.

Work Place Democracy: The Importance of the Fundamental Democratic Right to a Secret Ballot

Introduction:

For most Canadians, the idea of having to vote in an election without secret ballots would be unthinkable, as it would be in any Western democracy. When Canadians vote, whether it is in federal, provincial or municipal elections, they vote with a secret ballot. This is an important right, and it is guarded jealously by Canadians, including with legal protections and prohibitions.

Canadians are rightly shocked when potential violations occur that might infringe upon their right to a secret ballot when they vote.

Yet strangely, when it comes to where Canadians work, the right to secret ballot elections is far too often lost entirely. In several provinces, and in federal jurisdiction, votes can be skipped entirely on important matters like union certification, replaced by the card check system, where workers are required to publicly sign a card and publicly state their position, with no secret ballot procedure in place to ensure the fairness of the voting process.

Canadians wouldn’t allow votes for Members of Parliament or Mayors or even for School Trustees to proceed without a secret ballot. Why then is it ok for union certification votes to be conducted this way?

Click here to read full article.

Small Business Operating Environment

Summary

A host of federal and provincial measures are causing a dramatic and unsustainable increase in small business costs across Canada. Tax changes, carbon taxes, higher labour costs and regulatory burdens are resulting in cascading cost increases for small businesses. This comes at the same time that Canada’s most important trade deal, the North American Free Trade Agreement (NAFTA), is undergoing renegotiation.

The vast majority of companies in the construction sector are small businesses, and small businesses are the backbone of the Canadian economy, employing millions of Canadians in communities across Canada.

The current path is not sustainable. Balance needs to be restored.

Tax Changes

Two major tax changes are impacting small business operating costs.

First, the cancellation of previously scheduled cuts to the small business income tax rate means every small business in Canada will be taking home less money than previously planned once all salaries and bills are paid. The fact that all the major parties in the last election had committed to those tax cuts makes their cancellation particularly disappointing, but more importantly, represents a major and unexpected shift in the operating environment.

Second, in July 2017 the Finance Minister launched a consultation on proposals for tax increases on small businesses. The proposals relate to dividends to family members; saving passive investment income in a corporation; and converting a corporation’s income into capital gains.

Collectively, these proposals represent the biggest change to small business taxation laws in over 35 years. All the changes proposed will result in higher taxes for small business – and that means less money available for hiring and investment. Most of the small business owners that would be affected by these changes are middle class Canadians, who will face significantly higher tax burdens as a result of these proposals.

Other Government Costs to Small Business

The timing of the Federal Government’s proposed small business tax changes is particularly problematic given that it comes at a time when small businesses are facing an array of additional government-imposed costs.

For example, increasing the minimum wage has become a trend across Canada, with Alberta and Ontario leading the pack and British Columbia poised to follow. Such increases put pressure on all wage rates and come on top of increases to Employment Insurance premiums and Canada Pension Plan contributions. Labour is generally the highest input cost for a small business – and increasing that cost repeatedly will affect employment, particularly for youth.

The Federal Government’s commitment to put a price on carbon will also impact business costs.

While the degree to which costs will increase remains to be seen, the uncertainty around the price on carbon continues to dampen the outlook for small business investment.

NAFTA Renegotiation

The uncertainly around the future of NAFTA is another threat to small business in Canada. Merit Canada supports the ongoing efforts of the Federal Government to work with the U.S. to address its NAFTA concerns while preserving the deal as a whole. However, the current uncertainty surrounding the outcome of these negotiations is another critical reason the proposed small business tax changes should be scrapped.

Recommendation

The cost pressures and uncertainties around the small business environment in Canada at the present time require the Federal Government to consider all policy decisions through a small business lens, and not just on an individual basis, but in aggregate. Therefore, as a first step the Government should immediately shelve its proposals to increase small business taxation. Second, the Government should make good on its campaign commitment to lower the small business tax rate in Canada.

About Merit Canada

Merit Canada is the national voice of Canada's eight provincial Open Shop construction associations. Together we represent the companies and workers who build more than 70% of the Industrial, Commercial and Institutional, and Residential construction projects coast to coast. As of June 2011, the Canadian construction sector employed 1.260 million Canadians with 900,000 working in the “open shop” sector. This represents almost 8.6% of Canada’s total labour force, and 33% of the goods-manufacturing sector labour force.

Open Tendering

Summary

Merit Canada members believe in a business environment in which construction contracts are awarded on the basis of corporate merit. Unfortunately, in too many jurisdictions, not all Canadians are allowed to bid on federally funded projects; instead, bidding access is restricted to specific unionized contractors affiliated with the building trades. As a result, approximately seven out of 10 Canadian construction workers are excluded from employment on such projects.

The Federal Government is planning to invest $186 billion in infrastructure over the next 12 years.

Since these funds have been paid for by all Canadians and are meant to create lasting infrastructure projects for the benefit of Canada’s entire economy, all Canadians should have equal access to these job opportunities.

While local jurisdictions should be free to decide how to allocate the funds they raise locally, they must respect the rights of all Canadians when it comes to using funds raised from all Canadians.

Therefore, Merit Canada suggests the Federal Government mandate that all construction projects financed with federal funds must be tendered without any precondition requiring contractors to be signatory to any union or abide by the terms of a specific collective agreement.

Significant Savings Possible for Canadian Taxpayers

Merit Canada members believe that only a business environment in which construction contracts are awarded on the basis of corporate merit ensures that clients receive the best possible service at the best possible price. It does not take a degree in economics to know what happens when 70% of
any industry is barred from bidding: quality goes down and costs go up. Closing competition to important national infrastructure projects unnecessarily increases costs to taxpayers and undermines the long-term recovery of the Canadian economy.

A study conducted by the City of Montreal found closed tendering inflated project costs anywhere from 30-85%. For the City of Hamilton, it was 40%. A Cardus study found that Ontarians are paying 20-30% more for construction projects that are subject to closed tendering.

With the Federal Government planning to invest $186 billion in infrastructure, that potentially represents tens of billions of dollars worth of inflated costs. If that money is used more productively as a result of competition, that means more projects get funded and more Canadians are put to work.

Increased Employment Opportunities for Young Workers

Policies that limit tendering for public works projects effectively create a regulated minimum wage for the construction industry. Regulated minimum wages generally have a negative impact on employment opportunities for young workers with little experience. Since minimum wage regulations needlessly increase the marginal cost of labour, employers are discouraged from hiring additional workers, even during times of peak demand. While this is beneficial to those workers who are already employed, particularly the highly skilled with significant on-the- job experience, it reduces opportunities for job seekers, particularly young people with little experience.

Since one of the objectives of infrastructure spending is to create jobs for Canadians, policies that increase costs to taxpayers while reducing employment opportunities for young Canadians with little work experience undermine the long-term recovery of the Canadian economy.

Recommendation

With crumbling infrastructure across Canada, implementing open tendering would allow for real competition, and that is the only way to ensure respect for taxpayers and the optimal utilization of infrastructure dollars. Therefore, all projects that use any federal funds must be tendered openly, and that policy should apply to all infrastructure agreements, Crown corporations and any other federal mechanisms used to fund infrastructure.

About Merit Canada

Merit Canada is the national voice of Canada's eight provincial Open Shop construction associations. Together we represent the companies and workers who build more than 70% of the Industrial, Commercial and Institutional, and Residential construction projects coast to coast. As of June 2011, the Canadian construction sector employed 1.260 million Canadians with 900,000 working in the “open shop” sector. This represents almost 8.6% of Canada’s total labour force, and 33% of the goods-manufacturing sector labour force.

Click here to see Cardus’ study on Open Tendering.

Job Targeting Funds

Summary

Job targeting funds (JTFs), also known as market enhancement recovery funds (“MERFs”) orstabilization funds (“STABs”), are monies used by unions and unionized employers to disadvantage non-unionized workers and employers when competing for work on potential projects.
JTFs are super funds managed by union leaders that are built through mandatory contributions from members of a union or their employer. A typical JTF works as follows:

1. A JTF is established by a particular union local;
2. The JTF may be funded by a special levy or assessment on working members of the particular union local (a “Member JTF”);
3. The Member JTF special levy or assessment may be calculated as a percentage of wages or may be set at a specific amount per hour;
4. Alternatively, the JTF may be funded by contributions required to be made by particular employers in accordance with agreements between the union and the employer’s bargaining agent (an “Employer JTF”);
5. Both the Member JTF and the Employer JTF are administered by the union local; and
6. Payments are made by the union local out of the JTF, in response to employer applications, to a particular employer in order to subsidize the wages to be paid by that employer to workers in respect of a specific contract or job for which that employer may be competing against a non-unionized employer.

In this way union leaders utilize these massive JTF funds to cross-subsidize workers on jobs where unionized employers have to compete against non-unionized employers for work. JTF payments will indirectly benefit some, but not all, members of a local.

Concerns with JTFs

The use of JTFs raises a number of public policy concerns:

  • Should taxpayer dollars be used as part of this practice, since contributions to JTFs are tax exempt as union dues for the people and companies making the contributions (as well asthe people receiving them)?
  • Is this practice a violation of the Competition Act?
  • Should unionized workers and unionized employers be forced to subsidize the salaries of other workers via mandatory contributions to these funds?
  • Should unionized employers and workers be given a leg up on non-unionized employers and workers when bidding on projects as a result of union leaders subsidizing wages via a JTF?

Merit Canada believes that non-unionized employers and workers should be on a level playing field when competing for work with unionized employers and employees. Job targeting funds give unionized employees and employers an unfair advantage.

Recommendation

The Government and Parliament should examine the use of JTFs and their implications in the marketplace.

The Government can ask the Commissioner of Competition to review JTFs for compliance with the Competition Act. Also, the Government can ask the Canada Revenue Agency for its views on whether contributions to JTFs meet the requirements for a deduction under the Income Tax Act.

Finally, Merit Canada believes that Parliament should scrutinize JTFs by holding hearings on their implications for the construction sector via the House of Commons Industry Committee.

About Merit Canada

Merit Canada is the national voice of Canada's eight provincial Open Shop construction associations. Together we represent the companies and workers who build more than 70% of the Industrial, Commercial and Institutional, and Residential construction projects coast to coast. As of June 2011, the Canadian construction sector employed 1.260 million Canadians with 900,000 working in the “open shop” sector. This represents almost 8.6% of Canada’s total labour force, and 33% of the goods-manufacturing sector labour force.

GET2YES: Support for Major Infrastructure Projects

Summary

GET2YES is a British Columbia-focused campaign led by the Independent Contractors and Businesses Association, which is the voice of the Province’s construction industry and a member of Merit Canada. While the campaign is focused on B.C., its message is applicable across Canada: the need to get major infrastructure projects moving forward, putting people to work and realizing our economic potential.

Many of these projects are focused on the natural resource sector, such as pipelines, LNG facilities and hydroelectric stations, but they also include bridges, ports and housing. Unfortunately, a vocal few are standing in opposition to many of these projects, artificially constraining Canada’s economic growth.

GET2YES is a grassroots campaign to mobilize the silent majority to remind Governments that the public supports major natural resource projects and other infrastructure investments.

Public Support for Responsible Resource Development

Natural resources play a crucial role in our economy and Canada is fortunate to have an abundance of natural wealth, including large reserves of natural gas, minerals and metals, as well as forests that spread across our country. Responsible development utilizes the resources available while mitigating risks and incorporating a high standard of environmental review, ensuring the least amount of harm to the land.

While those opposed to major resource projects tend to get all the media attention, the majority of the public favour responsible resource development. For example, a survey of B.C. residents found 84% support responsible resource development, 72% say natural resource development is good for B.C., and 82% say it can be balanced and mindful of environmental impact.

Infrastructure Investments Deliver Jobs and Economic Growth

In B.C. alone, there are at least seven projects awaiting approval that would translate into tens of thousands of construction jobs and billions in new economic activity, including the Site C project, the Trans Mountain Pipeline expansion, Woodfibre LNG, Pacific Northwest LNG, the George Massey Bridge, capacity growth at the Province’s ports, and responsible housing development.

On housing alone, there are 69,500 housing units awaiting approval in the six large Metro Vancouver municipalities. Building these units would put thousands of people to work while also helping to address the region’s housing shortage.

Economies grow when there is investment, and currently the billions of dollars worth of investment in the projects listed above is stalled. This is a needless constraint on employment and economic growth in the construction sector and across the economy as a whole.

Recommendation

It is time to stop saying no to major infrastructure projects. Governments need to stop listening to the vocal minority and instead act in the interests of the silent majority. We are trying to mobilize the majority, but Governments must do their part as well. Approval processes need to be rigorous, but efficient. When projects are approved, Governments must forcefully stand behind those decisions. More broadly, Governments need to recognize that Canada’s future economic growth and our standard of living require responsible resource and infrastructure development.

About Merit Canada

Merit Canada is the national voice of Canada's eight provincial Open Shop construction associations. Together we represent the companies and workers who build more than 70% of the Industrial, Commercial and Institutional, and Residential construction projects coast to coast. As of June 2011, the Canadian construction sector employed 1.260 million Canadians with 900,000 working in the “open shop” sector. This represents almost 8.6% of Canada’s total labour force, and 33% of the goods-manufacturing sector labour force.

Fair Wages Act

Summary

The federal Fair Wages and Hours of Labour Act was created in the 1930s to regulate the wages and hours of labour for construction workers engaged in projects funded by the Government of Canada.

At the time of its introduction, there were few – if any – laws and regulations at the provincial or federal level protecting the legitimate interests of construction workers.

Today, with strict labour codes at the provincial and territorial levels, such measures are outdated, create unnecessary administrative costs for the Federal Government, infringe on the jurisdiction of the Provinces and Territories, and significantly increase the cost burden on taxpayers without providing commensurate benefit.

Recognizing this, the Federal Government repealed the Act in 2012. As a result, wages and working conditions are determined directly between employers and employees or through collective bargaining processes, as freely chosen by the parties and within the boundaries of the law.

Repealing the Fair Wages and Hours of Labour Act was one of the most important measures to enhance competition, increase efficiency and reduce costs on federally funded projects. However, the Federal Government has since committed to “implement a modern Fair Wages Policy,” as listed in the mandate letter of the Minister of Public Services and Procurement, which would undermine all these benefits.

Wages & Work Conditions Properly Regulated at the Provincial Level

To reduce administrative redundancies and respect Provincial jurisdiction, Federal laws and regulations pertaining to labour should be limited to federally regulated industries. All Provinces and Territories already have laws and regulations pertaining to employment standards, working conditions, labour relations, wages, and hours of labour for non-federally regulated industries.

Merit Canada believes that the Federal Government should continue to respect the legitimate authority of Provincial Legislatures to regulate the construction industry in their jurisdiction without interference by the Federal Government.

The Act created both an unnecessary level of governance and a significant cost for the Canadian taxpayer at the Federal level, which is why it was rightfully repealed.

Reduced Productivity of the Canadian Construction Sector

Regulating wage rates is frequently justified by claims that it increases productivity of workers. However, data from other jurisdictions suggest that productivity under a system of regulated minimum wages for the construction industry is in fact lower than under a system of competitive wages. For example, data from the US Department of Labor suggest that workers in a system of regulated minimum wages in the construction industry are about 4% less productive than their counterparts working under competitive wages.

Increased Costs to the Canadian Taxpayer

Since regulating wage rates at the Federal level duplicates work already done at the Provincial level, the Act created unnecessary costs for the taxpayer. If the Act is restored and a Federal Fair Wage Schedule is set higher than rates in provincial rules, costs to the Canadian taxpayer for federally-funded projects are unnecessarily inflated. As labour costs often amount to as much as 40% of the cost of a construction project, anything that forces those costs up means more money spent on labour and less on actual infrastructure, an important consideration given the infrastructure needs in Canada.

Reduced Employment Opportunities for Young Workers

Regulated minimum wages generally have a negative impact on employment opportunities for young workers with little experience. Since minimum wage regulations needlessly increase the marginal cost of labour, employers are discouraged from hiring additional workers, even during times of peak demand. While this is beneficial to those workers who are already employed, particularly the highly skilled with significant on-the- job experience, it reduces opportunities for job seekers, particularly young people with little experience.

Recommendation

The Government should abandon its proposal to restore the Fair Wages Act. There is no justification for doing so as conditions have obviously changed dramatically over the past 80 years with strict labour codes in place in all Provinces and Territories. Restoring the Act will only increase costs and regulatory burdens while lessening competition.

About Merit Canada

Merit Canada is the national voice of Canada's eight provincial Open Shop construction associations. Together we represent the companies and workers who build more than 70% of the Industrial, Commercial and Institutional, and residential construction projects coast to coast. As of June 2011, the Canadian construction sector employed 1.260 million Canadians with 900,000 working in the “open shop” sector. This represents almost 8.6% of Canada’s total labour force, and 33% of the goods-manufacturing sector labour force.