Upgrading Ontario’s fair wage policy: how to build better construction jobs
Modernizing Ontario’s fair wage policy would help to ensure fair competition on public construction tendering, says Josh Mandryk
Last fall, MPPs from all three parties in the Ontario legislature acknowledged the importance of ensuring fair competition on public construction tendering in the heated debates surrounding the ill-fated Fairness and Competitiveness in Ontario’s Construction Industry Act, 2013, better known as the EllisDon Bill.
Much can be said of the democratic and labour relations failings of the bill, which would have statutorily revoked the collective bargaining rights of workers of one of Ontario’s largest general contractors.
But that’s another story.
More important is that the EllisDon Bill – while the wrong approach for doing so – recognized the importance of ensuring fair competition on public construction tendering, particularly with the rise of large, non-union multi-national construction giants bidding on public construction projects in Ontario.
Some 460,000 people – 6.5% of Ontario’s employed labour force – work in the construction industry. As the government attempts to promote fair competition in the construction industry, it’s crucial that public policy response doesn’t leave these workers behind.
Legislatively overriding collective bargaining rights was the wrong route to a level playing field, but modernizing Ontario’s fair wage policy could be a path forward.
Fair wage policies establish a floor for employee compensation when government contracts are awarded on a low-bid basis. The goal is to prevent a downward spiral in wages and benefits.
They are common in the construction industry, where the unique characteristics of construction employment make the industry particularly vulnerable to destructive forms of competition. By taking wages out of the equation, fair wage policies promote positive competition based on efficiencies and quality project management, rather than just cheap labour.
Almost 20 years have passed since the 1995 enactment of Ontario’s current fair wage policy. The act has only seen one change, when a newly elected Harris government repealed the requirements for regular rate updates. As a result, Ontario’s fair wage schedules are severely outdated. Another problem is that the current policy applies only to traditional procurement, and not to the increasing number of projects delivered through public-private partnerships.
The good news is that fair wage policies are in place in municipalities across Ontario, including the City of Toronto, which just updated its policy last December.
Now is the time for Ontario to modernize its policy to reflect today’s labour market reality and to prevent cheap labour strategies.
In addition to promoting positive competition, a modern fair wage policy would support other important policy objectives, such as improving apprenticeship outcomes and enhancing worker safety.
How is this the case?
Fair wage policies are strongly associated with improved apprenticeship outcomes. One American study on the impact of fair wage policy repeal found that when controlling for the economic cycle, unemployment rates and regional differences in the availability of training, construction training fell by 40% in the nine states which repealed their policies. Another study comparing Missouri with four other states in the Great Plains region found that apprenticeships in the four states without fair wage policies declined by 51% during the study period, whereas they increased by 26.9% in Missouri.
Fair wage policies are also associated with improved health and safety outcomes. A study of injury rates for plumbers and pipe fitters found that occupational injuries rose by 15% in states whose fair wage policies had been repealed. Another study examined injury rates for the entire construction workforce and found that the presence of a fair wage policy was associated with an 8.25% decline in total injury rates.
While opponents of fair wage policies often argue they are too expensive, most recent studies conclude that they do not increase overall construction costs. This is likely due to improvements in productivity and compression of profit margins.
Modernizing Ontario’s fair wage policy would create the level playing field and positive competition between contractors we need to ensure our public assets are built in keeping with the values we share, including decent labour standards.
A modernized fair wage policy is, quite simply, smart policy and an antidote to cheap labour strategies. It’s time for an upgrade.