A. The Rise of Precarious Work
Over the past several decades there has been a significant increase in part-time, temporary and casual forms of work. This type of work lacks security and has limited benefits. This phenomenon has been a contributing factor in the rising rates of income inequality in many OECD countries, as well as a contributor to social unrest in some. While some workers in higher wage categories have benefited by the flexibility brought on by these changes, workers at the lower end of the wage and skill spectrum are struggling in insecure employment to make a decent wage. The nature of precarious work has also been affected by the global migration of workers that provide challenges to many countries including Canada.
Although the changing nature of work and related migration of workers have been developing for several decades, the global economic crisis has brought it into sharper focus. Canada’s economic position may have weathered the economic downturn better than many other countries. Nevertheless, Canada faces large deficits, lower revenues, high unemployment and low economic projections. The current state of the economy is affecting businesses and therefore jobs. Governments are seeking to reduce deficits while at the same time continuing to stimulate business and create jobs. Against this backdrop, initiatives to improve supports for vulnerable workers are not only imperative but must be feasible and cost-effective.
In this project, the LCO is considering the impact of the law on workers engaged in precarious forms of work (“vulnerable workers”). Both “precarious work” and “vulnerable worker” are defined in the LCO’s Background Paper:
Precarious work is characterized by lack of continuity, low wages, lack of benefits and possibly greater risk of injury and ill health…Measures of precariousness are level of earnings, level of employer-provided benefits, degree of regulatory protection and degree of control or influence within the labour process…The major types of precarious work are self-employment, part-time (steady and intermittent) and temporary.….
It has been said that “the sector in which workers are employed, the size of the enterprise in which they work, the non-standard nature of their employment contract and their demographic circumstances are markers that help to identify them as ‘vulnerable’”. In this paper, vulnerable workers are those whose work can be described as “precarious” and whose vulnerability is underlined by their “social location” (that is, by their ethnicity, sex, ability and immigration status).
Therefore, vulnerability in this context refers not to the workers themselves but to the situation facing them, both in their work environment and in other aspects of their lives such as their health, their families, their ability to participate in their community and their integration into Ontario life.
Among the characteristics of precarity identified in the description above, earning low wages is key. For example, a high wage self-employed person working contract to contract (such as a consultant) would not be considered a “vulnerable worker”. On the other hand, the project is concerned with the increasing numbers of working poor in Canada (3.6% of the overall working population in 1996, rising to 5% in 2008), many of whom work in precarious conditions. Low wage jobs often have few, if any, benefits, such as extended medical benefits.
When coupled with low wages, job insecurity is also one of the important features of precarious employment. The fear of losing one’s job may arise from industry-wide phenomena such as automation of the workforce or economic pressures. Temporary foreign workers are precariously employed where their fear of being sent back to their home country prevents them from exercising legal protections to which they are entitled; they are afraid that their job is not “secure” even within the limited work period of foreign worker programs.
This group of workers experiencing low income combined with other measures of precarity has been labelled the “precariat” by Guy Standing who describes them as a growing social-economic class:
…in many countries, at least a quarter of the adult population is in the precariat. This is not just a matter of having insecure employment, of being in jobs of limited duration and with minimal labour protection, although all this is widespread. It is being in a status that offers no sense of career, no sense of secure occupational identity and few, if any, entitlements to the state and enterprise benefits that several generations of those who saw themselves as belonging to the industrial proletariat or the salariat had come to expect as their due.
The LCO’s consultation process in this project reinforced themes surrounding vulnerable workers and precarious work, as identified by many commentators, including: i) a lack of knowledge by both employers and employees of employee rights and employer responsibilities; ii) the lack of an expeditious method of complaint resolution; iii) barriers to the enforcement of workers’ rights; and iv) the need for more broadly applicable basic minimum employment rights. There is significant concern, in particular, about the lack of representation for workers or workers’ “voice” among those in precarious work. There is awareness of the changing nature of work, but some question as to whether the existing regulatory regime is responsive to this change.
For employers, the standard employment relationship may no longer be the normative model for jobs, but many workers are still searching for stable, well-paid, permanent jobs with benefits.
The transformation that is taking place in the world of work is dynamic and even experts are uncertain where it will land. Governments, businesses, community agencies and unions each have a role to play to reach out to vulnerable workers who are finding themselves left behind. This Interim Report will outline the extent of the problem, who it affects and how, and will suggest steps for the short and long-term that can be taken to respond to the needs of vulnerable workers.
B. The Economic Backdrop
In their paper commissioned for the LCO, Noack and Vosko found remarkable stability in the overall structure of the Ontario labour force during the period from 1999-2009. The distribution of certain forms of employment (self-employed and part-time) remained unchanged, leading them to conclude that Ontario is experiencing “persistent precarity”. However, looking more broadly over the last few decades, it appears that precarious forms of employment are on the rise. This section describes some of the pressures being experienced in the economy and labour market that contribute to this rise in precarious employment.
Ontario’s labour market is influenced by economic trends which have transformed the way business is carried out. Globalization and free trade have resulted in the creation of global markets. Increasingly, Ontario businesses must compete with emerging economies which have the advantage of lower wage labour and relatively few regulatory controls. Furthermore, the technological revolution that has occurred over the past three decades has resulted in sharply reduced communications and transportation costs. For example, in the LCO’s consultations, Ontario vegetable farmers reported competing with producers in Central and South American countries in addition to their traditional competitors in California.
These trends, accompanied by the global recession in 2007, have exerted a heavy pressure on businesses to set lower consumer prices which, in turn, have caused businesses to restructure their workforce as a cost-cutting strategy. Maintaining a flexible workforce allows businesses to quickly respond to competitive pressures. Flexibility is achieved by relying on more temporary or part-time employees and hiring fewer full-time permanent employees. In some cases, employers may offer job-sharing arrangements to existing employees in order to prevent lay-offs. Or businesses may outsource some functions altogether, thereby reducing the overall size of their workforce but increasing their reliance on self-employed contract workers (often former employees). The result has been the fissuring of the labour market. The increase in smaller, fragmented workplaces means that there are fewer in-house opportunities for employees to advance, leaving them stuck in entry-level positions.
The information revolution and dramatic technological advances of the last 30 years, as well as the gradual shift from a manufacturing-based economy to one that is services-based, have also affected the labour market. Automation in the workplace has reduced the overall demand for workers and the remaining demand is increasingly for more highly-educated/highly-skilled workers. According to Harry Arthurs in Fairness at Work, more than 70% of new jobs require post-secondary education, 25% require a university degree and only 6% of jobs do not require a high school certificate. The result is a relatively smaller pool of jobs available to vulnerable workers and decreased job security for unskilled workers. Canadian immigration policy has reacted to this development by prioritizing the immigration of high-skilled workers.
The mix of workers in Canada’s labour market has also been affected by the global trend in international migration. Part of this trend is the increased movement of “guest workers”. Many of these are unskilled workers from third world countries who migrate looking for work that pays a higher wage than is available domestically. Industrialized countries including Canada are grappling with an aging population and a workforce no longer willing to undertake difficult and often low-paying jobs such as agricultural work and care-giving. In order to fill these labour needs, these countries have modified their immigration policies to allow temporary entry to guest workers.
The increased proportions of entry-level jobs at one end of Ontario’s labour market spectrum and knowledge jobs at the other end of the spectrum have tended to squeeze out the middle-level jobs. This phenomenon has been labelled the “hourglass economy” and it has contributed to a polarization not only of occupations and incomes but, also, to a social polarization.
These developments have also impacted unionization rates. Managerial and professional jobs make up a growing proportion of the labour market and these jobs are less frequently unionized. It is also speculated that the smaller size of firms resulting from the fissuring of the labour market has made it more difficult to organize workers.
Labour market conditions, the changing workforce and the increase in precarious work have all contributed to a significant rise in income inequality in Canada over the past 20 years. Over this period, the richest group of Canadians increased their share of total national income relative to that of poor and middle-income Canadians. Part of the problem is a growing disparity in wages paid to the top 10% of earners relative to those paid to the bottom 10% of earners. However, earnings inequality also depends upon the type of jobs that people hold and their work arrangements. For example, women workers represent a larger percentage of the workforce than they did 20 years ago. But women are more likely to work part-time and earn lower wages. Similarly, increases in self-employment relative to standard employment relationships may play some role in rising inequality because the self-employed also tend to be concentrated in the lower income groups. Although globalization and technological advancements have brought increased productivity and opportunities, these benefits have been disproportionately enjoyed by high-skilled workers rather than low or unskilled workers.
Although it is clear that income inequality has been rising in Canada, the broad implications of this phenomenon for society are less clear. Some argue that inequality affects the well-being of all levels of society, not only the poor. According to Richard Wilkinson, more equal societies have better social relations. Communities are stronger and there are higher levels of trust and lower levels of homicide, hostility and discrimination. In addition, less equal societies have lower than average heal