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

From: Employment and Social Development Canada

On this page

• Context
• What the research tells us so far
• Questions for discussion
• Annex A

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 This legislation was repealed in 2014.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.

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.

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.