Labour organizations and unions engagement session: A modern fair wages policy

From: Employment and Social Development Canada

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Context

The Government of Canada spends close to $25 billion every year to procure goods and services through contracts with a large number of suppliers. Approximately 1.9 million employees work for firms that have contracts with the Government of Canada.

In order to leverage these procurement contracts to help improve the lives of Canadians, the Minister of Employment, Workforce Development and Labour was asked by the Prime Minister to work with the Minister of Public Services and Procurement and the President of the Treasury Board on a modern fair wages policy.

Fair wages policies are designed to prevent suppliers from competing for government contracts on the basis of substandard wages. They typically require contractors to pay their employees above a certain threshold, defined as prevailing wages for the occupation in a given region.

There are a number of programs that place requirements on contractors who do business with the federal government, such as the Federal Contractors Program, which requires firms to seek to achieve and maintain a representative workforce, and the Procurement Strategy for Aboriginal Business, which aims to assist Indigenous business development. There are also a number of provinces, territories and cities with fair wages policies in place.

The federal government had a fair wages policy, the Fair Wages and Hours of Labour Act, which covered contractors and subcontractors in the construction, remodeling, repair or demolition industries. This legislation was repealed in 2014.

What the research tells us so far

Overall, compared to the total working population, employees of firms with Government of Canada contracts tend to earn higher wages and are more likely to be unionized, have retirement benefits, and work full time and year round. For example, in the construction industry, these employees earn on average $65,534 per year, as compared with an industry average of $59,560 per year. The table below provides an overall snapshot of employees working for firms that have contracts with the Government of Canada, compared with the total working population.

Table 1: Job Characteristics of employees working for firms that have contracts with the Government of Canada, compared with the total working population
Job characteristic Employees of firms with government contracts Total working population
Average annual wage ($) 60,662 54,177
Working full time (%)* 84.4 64.3
Working year round (%)* 64.3 55.7
Represented by a union (%)* 43.7 31.7
Have a registered pension plan (%)* 46.0 28.3

Source: 2018 Labour Program analysis of Statistics Canada data.

*Percentages in these rows reflect data from employees working for the subset of firms with Government Canada contracts with contracts of at least three years’ duration. This subset accounts for approximately 900,000 of the 1.9 million employees of firms with Government of Canada contracts.

There are 10 industries (out of 20 total) in which employees of firms with Government of Canada contracts are paid on average below the prevailing wage; in 7 of these industries, employees of firms with government contracts earn, on average, $50,000 per year or more. There are also 14 occupations (out of 40 total) in which employees of firms with Government of Canada contracts are paid on average below the prevailing wage; in 12 of these occupations, employees of firms with government contracts earn, on average, $50,000 per year or more. See Annex A for details.

A limitation to this analysis is that it uses national averages. It is therefore possible that employees in certain subsectors or regions have a different experience, which is not captured by the data. In addition, the data does not include information about wages paid by subcontractors involved with Government of Canada contracts.

Questions for discussion

We would like to focus today’s discussion on the questions below. Following today’s discussion, we would also welcome your written responses to these questions, as well as to the additional questions listed at the end of this document. Written submissions can be sent to the fair wages inbox. Please send us your written submissions by February 21, 2019.

  1. Are you aware of examples of unionized firms being undercut in bidding for Government of Canada contracts by non-unionized firms paying less than prevailing wages?
  2. Are you aware of examples of subcontractors (domestic and/or offshore) paying less than prevailing wages?
  3. If the Government of Canada was to implement a fair wages policy, what industries or occupations should be covered it? Should exemptions be made in certain cases?

Annex A

Wages by industry

This table shows average annual wages of employees of firms with Government of Canada contracts, compared with the total working population, by industry group.

Table 2: Wages by industry
Industry group Employees of firms with government contracts (estimate)* Average wages: employees of firms with government contracts Average wages: Total working population Difference ($) Difference (%)
Management of companies and enterprises 2,330 78,699 114,772 -36,073 -31
Finance and insurance 199,745 61,362 87,077 -25,715 -30
Mining, quarrying, and oil and gas extraction 8,480 88,634 125,366 -36,732 -29
Real estate and rental and leasing 18,635 43,873 55,390 -11,517 -21
Educational services 185,320 51,755 55,385 -3,630 -7
Utilities 28,115 94,423 100,012 -5,589 -6
Administrative and support, waste management and remediation services 76,300 33,680 35,587 -1,907 -5
Wholesale trade 111,105 67,456 68,962 -1,506 -2
Transportation and warehousing 137,245 55,213 56,181 -968 -2
Other services (except public administration) 23,435 39,968 40,083 -115 0
Professional, scientific and technical services 153,595 70,720 70,288 432 1
Public administration 428,500 69,151 67,494 1,657 2
Information and cultural industries 87,995 71,864 68,268 3,596 5
Arts, entertainment and recreation 12,960 32,100 29,480 2,620 9
Manufacturing 171,200 66,564 59,560 7,004 12
Construction 53,165 65,534 57,807 7,727 13
Health care and social assistance 186,965 54,261 47,179 7,082 15
Retail trade 47,570 40,332 33,339 6,993 21
Agriculture, forestry, fishing and hunting 6,330 42,766 35,019 7,747 22
Accommodation and food services 52,315 25,122 19,127 5,995 31

Source: 2018 Labour Program analysis of Statistics Canada data.

% Difference = dollar difference divided by average wage of total working population in a given industry.

*Not all of these employees work directly on Government contracts, and therefore not all would benefit from a fair wages policy.

Wages by occupation

This table shows average annual wages of employees of firms with Government of Canada contracts, compared with the total working population, broken down by occupation group.

Table 3: Wages by occupation
Occupation group Employees of firms with government contracts (estimate)* Average wages: Employees of firms with government contracts Average wages: Total working population Difference ($) Difference (%)
Professional occupations in business and finance 126,685 69,349 88,892 -19,543 -22
Senior management occupations 16,640 151,672 186,175 -34,503 -19
Supervisors and technical occupations in natural resources, agriculture and related production 2,980 69,652 80,583 -10,931 -14
Professional occupations in education services 99,430 56,319 64,465 -8,146 -13
Occupations in front-line public protection services 55,520 77,786 88,768 -10,982 -12
Professional occupations in health (except nursing) 22,080 68,923 77,866 -8,943 -11
Processing, manufacturing and utilities supervisors and central control operators 13,860 78,232 88,303 -10,071 -11
Harvesting, landscaping and natural resources labourers 4,725 22,263 24,640 -2,377 -10
Retail sales supervisors and specialized sales occupations 48,200 59,570 63,676 -4,106 -6
Specialized middle management occupations 141,635 94,505 100,338 -5,833 -6
Middle management occupations in trades, transportation, production and utilities 27,095 86,906 91,352 -4,446 -5
Professional occupations in natural and applied sciences 164,765 85,003 88,949 -3,946 -4
Professional occupations in law and social, community and government services 94,390 75,248 75,316 -68 0
Transport and heavy equipment operation and related maintenance occupations 52,660 46,829 46,836 -7 0
Technical occupations in art, culture, recreation and sport 16,680 33,468 32,239 1,229 4
Trades helpers, construction labourers and related occupations 9,195 41,227 39,312 1,915 5
Technical occupations related to natural and applied sciences 112,150 70,728 67,065 3,663 5
Workers in natural resources, agriculture and related production 3,130 31,695 29,459 2,236 8
Administrative and financial supervisors and administrative occupations 157,700 54,943 49,831 5,112 10
Other installers, repairers and servicers and material handlers 22,140 43,703 39,592 4,111 10
Processing and manufacturing machine operators and related production workers 19,215 47,840 43,237 4,603 11
Maintenance and equipment operation trades 47,135 75,010 66,969 8,041 12
Professional occupations in nursing 54,020 74,293 65,985 8,308 13
Finance, insurance and related business administrative occupations 15,745 57,092 50,290 6,802 14
Labourers in processing, manufacturing and utilities 16,580 35,755 31,050 4,705 15
Technical occupations in health 30,495 55,858 47,426 8,432 18
Office support occupations 113,155 43,348 36,787 6,561 18
Distribution, tracking and scheduling co-ordination occupations 74,805 51,922 43,926 7,996 18
Sales support occupations 11,325 18,626 15,505 3,121 20
Professional occupations in art and culture 14,980 60,452 50,105 10,347 21
Service support and other service occupations, n.e.c. 62,985 26,366 21,379 4,987 23
Industrial, electrical and construction trades 52,185 73,879 59,205 14,674 25
Assisting occupations in support of health services 20,125 40,649 32,553 8,096 25
Middle management occupations in retail and wholesale trade and customer services 33,010 85,269 65,942 19,327 29
Service representatives and other customer and personal services occupations 109,185 36,613 28,028 8,585 31
Assemblers in manufacturing 23,980 58,400 44,162 14,238 32
Paraprofessional occupations in legal, social, community and education services 16,865 49,115 35,137 13,978 40
Service supervisors and specialized service occupations 20,650 38,201 26,462 11,739 44
Sales representatives and salespersons - Wholesale and retail trade 37,180 49,633 31,980 17,653 55
Care providers and educational, legal and public protection support occupations 26,035 56,657 29,416 27,241 93

Source: 2018 Labour Program analysis of Statistics Canada data.

% Difference = dollar difference divided by average wage of total working population in a given occupation.

*Not all of these employees work directly on Government contracts, and therefore not all would benefit from a fair wages policy.

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