Monday, November 18, 2024

Solving the Productivity Problem (Part Two)

Hint to employers: an increase in wages does not mean a corresponding increase in the pace of work

By Andrew Regnerus, Ontario Construction Coordinator

In the previous issue of the Guide, I argued that workers have less influence on productivity and shouldn’t be blamed when Statistics Canada tells us that Canada’s output per capita lags behind that of the US and all other G7 countries. For labour’s small part in the equation, CLAC is taking concrete steps.

But what do we say to those bothersome employers who demand an increase in workers’ productivity equal to their raise in collective bargaining?

Unions bargain to pace their members’ wages with inflation. Without a raise to offset inflation, workers suffer a loss of buying power. While not an exact science, union representatives negotiate so that wages can buy the same things as last year.

Employers cannot really think, therefore, that a 4.75 percent wage increase should come with an equal 4.75 percent increase to the pace of work. After all, they are aware of rising costs of other inputs in their business, such as raw materials, utility bills, rent, etc. They know that they can increase their selling price for goods and services by a similar 4.75 percent to offset these rising costs.

An employer’s demand for higher labour output is a tactic to lower workers’ hopes of a wage increase. That is patently unfair as we know that workers are almost helpless in combatting the more influential determinants of lower or higher productivity.

What are these factors? Ana Pereira, a business reporter for the Toronto Star, includes the Bank of Canada’s aggressive hiking of interest rates to control inflation as a significant force behind Canada’s economic lag. Another cause is population growth. When the population increases by one million people in a year and the GDP doesn’t increase in proportion, our productivity factor diminishes.

At a macro level, “labour productivity measures how efficient a country is at using domestic resources, including an educated workforce, machinery, and technology, to produce goods and services,” Pereira writes. “This doesn’t necessarily mean that Americans work harder than Canadians, but rather, that they are better at leveraging equipment and production processes to power the economy.”

The economy is complex. While it doesn’t take care of itself, it is beyond what workers can impact by using more muscle and taking shorter breaks!

Competition is a factor, too. Healthy competition drives good economic outcomes. Monopolies in industry reduce competition.

Consider sectors like telecom and the banking industry that are heavily regulated and bear a high cost of new entrants in those markets. These conditions deter investment, because innovation isn’t needed in a monopoly.

This applies to labour, too. CLAC has always held that competition among different labour relations models is good for innovation, and union choice is good for workers and the economy. Monopolies in labour do the opposite. With no choice, there is no need for innovation and no rivalry to spur on better service for unionized workers.

Solving the Productivity Problem (Part Two)

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