THE STANDING SENATE COMMITTEE ON SOCIAL AFFAIRS, SCIENCE AND TECHNOLOGY
EVIDENCE
OTTAWA, Thursday, November 22, 2018
The Standing Senate Committee on Social Affairs, Science and Technology is meeting today, at 10:30 a.m., publicly, to continue its study of the subject matter of those elements contained in Divisions 8, 15, 16, and 21 of Part 4 of Bill C-86, A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018, and other measures, and in camera, to study a draft agenda (future business).
Senator Chantal Petitclerc (Chair) in the chair.
[Translation]
The Chair: Welcome to the Standing Senate Committee on Social Affairs, Science and Technology. My name is Chantal Petitclerc, senator from Quebec, and it is my pleasure to chair this meeting.
[English]
Before turning the floor over to our witnesses, I would ask my colleagues to please introduce themselves.
Senator Seidman: Judith Seidman, from Montreal, Quebec, and deputy chair of the committee.
Senator Eaton: Good morning. Nicky Eaton, Ontario. Thank you for coming.
Senator Ravalia: Good morning and welcome. Mohamed Ravalia, Newfoundland and Labrador.
[Translation]
Senator Mégie: Marie-Françoise Mégie, from Quebec.
[English]
Senator Dasko: Donna Dasko from Toronto, Ontario.
Senator Omidvar: Ratna Omidvar from Toronto, Ontario.
[Translation]
The Chair: Today we are continuing our study of the content of divisions 8, 15, 16, and 21 of part 4 of Bill C-86, A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018, and other measures.
[English]
I would now like to introduce our witnesses.
[Translation]
With us this morning from the Quebec Employers’ Council, via video conference, is Ms. Norma Kozhaya, Vice-President of Research and Chief Economist.
[English]
From the Canadian Federation of Independent Business, we have Monique Moreau, Vice President, National Affairs; and Emilie Hayes, Policy Analyst.
[Translation]
Welcome to this committee.
[English]
You’ll have seven minutes for your opening remarks.
[Translation]
We are going to start with you, Ms. Kozhaya, by video conference.
Norma Kozhaya, Vice-President, Research and Chief Economist, Quebec Employers Council: Hello. Thank you for asking me to speak on behalf of the Quebec Employers’ Council with regard to certain sections of Bill C-86.
First, I would like to say a few words about the Quebec Employers’ Council. Our council represents most large companies in Quebec, and many industry organizations, and represents, both directly and indirectly, more than 70,000 employers of all sizes—large, medium and small employers—from the public and private sectors.
I would like to start by saying that for employers, having work-life balance, and more generally a private life, is essential for having happier and more productive workers. Employers recognize this more and more and are generally trying to accommodate their workers. Four out of five employers offer work-life measures of one type or another. My remarks today reflect our perspective that labour standards should try to maintain a certain balance between the needs and expectations of employers and those of workers.
Employers all face different realities and, in our opinion, we have to recognize these realities to favour harmonious working relations, a buoyant labour market and economic growth that is conducive to social progress. In a more competitive global market, as you know, where employers are facing labour shortages—which was not the case in the past—this is particularly true in Quebec. We have to avoid increasing the financial and administrative burden on companies and offer them the flexibility to adapt to these new realities.
The Labour Code represents a floor limit, mainly minimal standards that have to be respected, regardless of the bargaining power of workers. It is important to remember that employers in Quebec, and in Canada in general, particularly those under federal jurisdiction, offer more than what is called for by law. When they do not offer more than is required by law, this is because they are unable to do so, either for financial reasons, for example because of profit margins, or for operational reasons.
It is important to establish minimum standards, but at the same time, we must ensure that well-intended changes with laudable goals do not have undesirable consequences. We must ensure that, in the end, the legal framework does not increase the competitiveness gap for Canadian employers and does not create major operational challenges, as in Quebec or Ontario, where this type of framework exists. I remind you that such changes may ultimately disadvantage the very workers we want to help, as well as future workers.
I would like to address a few specific aspects of the bill. Of course, I will not address everything, because many changes are proposed in this bill. I will mainly focus on division 15, which pertains to the Labour Code, to raise certain issues that present greater challenges for employers.
First, there are issues related to working hours, such as breaks, rest periods and work schedules. These changes significantly reduce the flexibility sought by many companies with considerable needs as to their employees’ availability, especially during labour shortages. They reduce employers’ flexibility in this regard, particularly in terms of advance notice of work schedules. Therefore, the 96-hour notice issue does not take into account the nature of the company’s needs, the type of business activity and external factors that may be relevant to the importance of the timely availability of employees. In some instances, the very survival of companies is at stake. It is more a question of taking into account the reality of companies that have to deal with unexpected legal holidays that are increasing in number, and customer traffic that may fluctuate and be unpredictable.
The exceptions in this bill are far too limited. The employer ought to be able to invoke operational needs and the nature of the employee’s duties to postpone or cancel a break or rest period. The bill refers to the notion of threats, or serious interference with the normal functioning of the employer’s establishment. In our opinion, this is overly restrictive, and this concept must be broadened to allow more flexibility.
Among the other provisions, the issues related to salary and to equal pay represent noble objectives. However, it is important to know that the salary depends on a number of other factors, and that there are a whole series of working conditions associated with different job statuses, which were negotiated in good faith to take into account the company’s own organizational criteria. So, they are looking at one aspect, but they are not looking at the whole range of measures related to compensation and working conditions as negotiated.
These provisions, if adopted, may end up forcing employers to re-open their current collective agreements and renegotiate them, which may cause labour conflicts. Indirectly, this may mean that fewer students, interns, and part-time employees are hired.
The question of equal pay is related to the question of placement agencies, and the same arguments apply when it comes to the discrepancy which is not necessarily reflected in the nature of the work, but in the experience, efficiency and commitment to the company that should be recognized.
Furthermore, another issue is that of the disclosure of salaries. It is important to remember that unionized workers’ salaries and the pay scales of companies whose employees are not unionized are confidential. Disclosing them could lead to a risk in terms of competition. How can a placement agency manage its employees who work for different employers offering different pay? Placement agencies can represent an advantage for workers who have less experience, and for students.
Another important aspect is the addition of new forms of leave, including paid leave, which leads to a substantial increase in costs, but also issues related to managing absences. Eliminating the requirement of having six months’ experience before having access to some leave is also a problem. In many sectors of activity, employees with less than six months’ experience fill in for regular employees. It is especially important to avoid accumulating personal leave, which is provided for under the law, compared to the leave that is already offered by many employers.
Other points of contention include, briefly, expanding the definition of health professional and the question of contract transfers during the period of employment. We can come back to that aspect during the question period. Thank you very much.
The Chair: Thank you.
We will continue with Ms. Moreau.
[English]
Monique Moreau, Vice President, National Affairs, Canadian Federation of Independent Business: Thank you for the opportunity to be here today, senators. You should have a slide deck in front of you that I will walk you through during the next few minutes.
As you may know, CFIB is a not-for-profit, non-partisan organization representing more than 110,000 small- and medium-sized businesses across Canada. Our members collectively employ more than 1.25 million Canadians, and small businesses across the country represent about $75 billion, or nearly half, of Canada’s GDP. They represent businesses in all sectors of the economy and are found in every region of the country.
As you may be aware, we take our direction solely from our membership through a variety of surveys, which makes us a bit different from other organizations. We know that business owners are too busy to come to committees such as these, for example, so we go directly to them for feedback through the survey process. As well, our field force of approximately 220 district managers, as we call them, knock on the door of approximately 4,000 small businesses a week. This provides us with an opportunity to understand the realities of running a business at a grassroots level.
Today I’m here to highlight some of the concerns businesses have shared with us regarding the amendments made to the Canada Labour Code under Part 4 of this bill. We recognize that most small- and medium-sized businesses are provincially regulated. However, changes to federal labour standards can have an impact on thousands of SMEs directly in sectors like aviation and transportation and can affect thousands more if followed by other Canadian jurisdictions. It is in this context that I make my remarks today.
On slide 3, you’ll see that I’ve identified some context for where small businesses are operating today in Canada. They’re facing some challenges, including trade uncertainties with the U.S. and CPP increases starting next year. They have been dealing with some of the small business tax changes in the last year. Four provinces are dealing with new carbon taxes starting in April and, of course, there are the growing labour shortages identified across the country as highlighted by a previous witness.
I’d also like to show you on slide 4 a bit about the state of the economy. As you see, one of the surveys we conduct is our monthly business barometer, and our latest barometer from the month of October shows that small business confidence has dropped by one point to finish the month at 60.5, which is about a point less than September and August. Ideally, we want to see this index between 65 and 70 when the economy is growing at its full potential. If anyone expected a resolution of a trade agreement to reinvigorate small business optimism in Canada, it didn’t happen, at least in the immediate short term.
Speaking on slide 5 to business shortages of labour, you’ll see that small businesses across Canada are facing a growing shortage of labour. Our research has revealed that the vacancy rate for SMEs is at an all-time high of 3.1 per cent, meaning that almost 400,000 jobs have been left unfilled for four months or longer. As a result of this tight labour market, small businesses are doing all they can to ensure that they attract and retain workers. It is because of this fact that CFIB surveys have consistently shown a willingness by small businesses to pursue, on an informal basis, flexible work conversations with their employees and try to meet the needs of their employees as best they can.
Many business owners will tell you that their employees are like family. In some instances, they are family members, as they work closely together in the mom and pop shops that Canadians know in their small communities, but they also tend to try and appreciate their employees as family members themselves.
I’d like to talk a bit about what kind of flexible work opportunities business owners are providing to their employees in Canada. On slide 6, you’ll see some of the measures that employers have offered to their employees. Ninety-four per cent have offered time off from the workplace to deal with personal issues. Ninety-three per cent provide flexibility in scheduling vacation. Over half provide a flexible work schedule, for example, providing a compressed work week. Half precisely allow workers to bank extra hours for later time off, so working overtime to earn time off later. Forty-two per cent have allowed employees to voluntarily reduce work time and salary, for example, shifting from full-time to part-time work. Others, where possible, allow their employees to work from home.
I will note for senators that this is despite any legislation forcing them to do so. This is just what they do for their employees because they appreciate the work, and they need them, desperately.
On slide 7, we addressed some of the experiences employers have had for personal emergency leave days, Division 15 Subdivision A of the bill. This data is from Ontario, but it gives us a good sense of the experience business owners feel or have when they’ve been dealing with these days. Nearly 70 per cent of members identified a negative impact on their business when dealing with personal emergency leave days. That may be from having to deal with last minute departures, but generally business owners know how to cope with that. It’s the paperwork, red tape and the cost associated with providing now paid leave to employees.
On slide 8, I’m speaking to the elimination of minimum length of service requirements, Division 15 Subdivision B of the bill. This has implications for small employers, particularly for those with less than 20 employees. In tight labour markets, filling job vacations is difficult. Allowing business owners to hire someone, only to have them leave shortly thereafter for maternity leave, for example, does bring implications to the business owner and impacts their productivity.
Prior to this legislation being drafted, we had a vet tech experience. A member of ours who is a veterinarian in Alberta had four veterinary technicians, and they all happened to be female. In the course of two years, all four of them took varying maternity leaves. Those are exciting moments for young families and business owners as well, but it means in the course of a two-year period, in rural Alberta, they are trying to staff those positions with great difficulty. That was in a period of economy two years ago when we were not facing the tight labour shortages we are right now.
I thought I would also share the experience of a retail member in Ontario. You have a quote on slide 9, which I’ll read briefly:
I have 2 employees that have worked for me over 10 years and one employee did 2 back to back maternity leaves and the other did 3 maternity leaves over a 4 year period. I’m a small business and this hurt my business very much and caused a lot of stress and issues for the other employees. I even had 3 employees quit because of the issues and one have a breakdown and had to take six months off due to stress and then quit. A one year maternity leave may be good for [those on] maternity leave but for everyone else it’s very, very hard and extremely stressful.
Again, there is support for these exciting moments in an employee’s life, but it does have impact on business owners. That is where we have some concerns regarding elimination of minimum length of service requirements.
On equal pay for casual, part-time, seasonal and temporary employees, business owners, of course, understand the intentions behind the proposed measures to equalize compensation levels. Keep in mind that the average number of employees for a small business is 11, and this legislation proposes compliance starting at businesses with 10 or more employees, so it will have a big and broad impact.
What we’re asking here is that should this legislation go forward, that the government consider an “education before enforcement” approach. If business owners are struggling to cope with adapting to the paperwork and ensuring that they are getting the comparisons required for equal pay in place, that they get a bit of help from government and that it’s very clear. When this legislation went ahead in Ontario, even the labour ministry was unable to answer some of the questions that business owners had when they were calling in for advice. We want to make it as easy as possible for business owners to comply with legislation when we’re changing it.
I’ll conclude with a summary of the recommendations we’re highlighting here today. I’d ask senators to recall the economic context in which business owners are currently operating in Canada: tight labour market, increased taxes starting next year. Small business owners are already working closely with their employees to ensure a flexible workplace, and they are trying their best to manage their relationships with employees in an informal way. To that end, we ask that the government consider providing small employers with greater flexibility to manage their relationships directly and to consider the impact of personal emergency leave days on the smallest of businesses. Perhaps one solution might be setting a threshold of 50 employees or more for that to participate. We ask the government to consider simplifying requirements to ensure better compliance and reporting by small businesses, knowing that they understand the intentions behind equal pay measures but they need time and capacity to comply with some of the paperwork and requirements behind that.
With that, I will conclude my presentation.
[Translation]
Please note that I am also able to answer your questions in French, if need be.
The Chair: Thank you very much to our witnesses for their opening remarks. It is now time to move on to questions.
[English]
Senator Seidman: Thank you both very much for your presentations. Perhaps I’ll put my question out there, and I might ask Ms. Kozhaya to respond first, since you’re on video. We don’t want to take any chances of losing you.
You both mentioned the new reality of shortage of labour. This is a growing reality and a growing problem in this country, and small- and medium-sized businesses need the ability to respond to that. I’d like to start with a very general question about this and ask you if these changes to the Labour Code will help or impede your ability to deal with this new reality of labour shortages.
Ms. Kozhaya: Of course, they will impede the ability of employers to respond to labour shortages.
[Translation]
There are more absences and more holidays. Sometimes the leave is planned, and other times it is unplanned. The use of replacement workers, whether temporary, part-time, or from employment agencies, will now be more difficult. It will be more expensive and more difficult.
The other aspect relates to employers who say they are currently competing to attract and retain workers. To do so, they want to stand out through the working conditions they offer, and since a higher threshold is imposed on everyone, their ability to offer more is reduced. Today, as already mentioned, many offer more advantageous conditions than those set out in labour standards; sometimes, it is because workers are younger or older and must be accommodated differently. Where a threshold is imposed on all sectors and companies, regardless of their reality, their ability to adapt is further reduced.
[English]
Ms. Moreau: I would echo the sentiments of the witness prior. Essentially, anything that impedes hiring will make it more difficult to resolve these tight labour market shortages. It’s interesting. We tend to cycle through these periods. We were in this when I started at the CFIB about seven years ago, and we did see members turning toward the Temporary Foreign Worker Program and trying to integrate new immigrants into their businesses and hiring contract employees, for example. Uncertainty can be tricky for a business owner, so anything that impedes their ability to hire an employee will cause difficulty in their business. We have seen impacts financially and in productivity, for example, when they’re short-staffed, if they’re taking people off the line to train.
A key component of this is that training by a small business is more time-consuming. They don’t have a whole course you can send an employee off to and then come back and be up to speed. We know that business owners spend about $9 billion a year on informal training, and that’s the kind of training you would imagine someone starting to work at a new job would be receiving. It is an important component of this, and doing that costs time and money, so having to start over again does have an impact.
Senator Seidman: We’re aware there was a consultation period, I believe, prior to this legislation being drafted, and we heard yesterday from witness testimony that people and groups were asked to submit briefs. I’m wondering if the Conseil du patronat du Québec and if the federation submitted briefs in the consultation period. I know they were thematic, or at least that’s what we heard yesterday. You weren’t necessarily submitting recommendations, but you were writing about particular themes. Did you highlight these particular issues that are so important for small- and medium-sized businesses in your brief?
[Translation]
Ms. Kozhaya: For our part, we did not have an opportunity to express our views on the changes. However, on the provincial side, in Quebec, we did more or less the same kind of consultations, and a bill along the same lines, containing many simular elements, was introduced. The bill was passed last June and since then we have been receiving calls from our members, large and small. For smaller companies, it poses additional challenges, but the same is true for large companies, because some considerations affect them more specifically.
How can we adapt and how can entrepreneurs manage all of this in a practical and concrete way? It should be noted, as already mentioned, that if we look at the measures individually, they appear relevant and harmless. However, when we add up all of the provisions and issues—absences, leave, vacation, and equal pay—the changes become more problematic, unfortunately, and reduce flexibility.
Allow me to say, regarding this consultation, that I do not know how many organizations representing employers have been consulted or heard, compared to organizations representing workers.
[English]
Senator Ravalia: My first question is for Ms. Kozhaya. You alluded to the fact that four out of five employers offered personal and family leave. For the one in five of employers who did not offer this, did this fall into a particular demographic, or was it a particular trade or type of employment that impacted the fact that this particular group did not offer this type of leave?
Ms. Kozhaya: I don’t necessarily have the information. I don’t think it is a particular type of employer or sector. I think in different sectors, companies have different realities. Sometimes, also, even though they don’t offer conditions, they might offer higher wages or other conditions. Unfortunately, I don’t have more specific details on this one out of five who doesn’t.
Senator Ravalia: That’s very helpful. There wasn’t a particular demographic that you noticed with respect to that.
The second question I had was for Ms. Moreau. You talked about the challenges for small businesses and interplayed that with the business barometer index. Of the five points that you mentioned, are there one or two in particular that you feel impacted businesses? I know in Newfoundland and Labrador, there was significant discussion about the small business tax changes and the impact that had on morale and productivity and the bottom line for a number of small mom-and-pop type operations. If you were to categorize those five factors, are there some that you feel had a greater impact than others?
Ms. Moreau: Certainly, it’s really about trying to remind legislators such as yourselves that none of these policies come in a vacuum. It’s not only your government, but with provincial governments and municipal governments that business owners are trying to comply with legislation and are feeling the impact of changes. Anything that impacts a business’s bottom line or speaks to cost is probably going to be the most concerning to them. When we ask them what their biggest priorities are, it’s always taxes and then regulations. I think, based on that, CPP increases, small business tax changes and carbon taxes in those provinces now facing the carbon backstop will certainly be part of their concerns.
Senator Ravalia: We’ve had several speakers earlier allude to the shortage of workers, particularly professionals and others. Does your group, as a whole, look at any proactive measures for recruiting individuals from overseas or other markets? Does that cost you a significant amount of money? Do the employers have a say in how that operates?
Ms. Moreau: Certainly we’re supportive of innovative ways to help employers find employees. One pilot program that’s actually taking place in Atlantic Canada right now allows an employer to find an employee from overseas and bring them back to their business. They start immediately, and they get Canadian citizenship within six months. These are the kinds of initiatives we are supportive of.
Generally, when small businesses take the time to train someone in their business and integrate them into the community, they want to keep them there. They want to stay. Our suggestion with the Temporary Foreign Worker Program and other potential pilot programs like that is that there be a pathway to citizenship. We’re suggesting something called the introduction to Canada visa. Currently, when a temporary foreign worker comes, they are trained, stay for two years, and then we send them home. If they’ve integrated themselves into the community and they are filling that gap of employment, then it’s something that we think makes sense for them to be at least offered the option to stay if they so choose.
Senator Ravalia: I know in Newfoundland and Labrador, we also offer a provincial sponsor program that can expedite that process.
Ms. Moreau: Your province is not alone, senator. Others do that as well. Quebec, in particular, does a good job of that. In some instances, it makes more sense for the province to take that on as the programs have been designed, but certainly we’re mindful of immigration as one solution to this.
Senator Ravalia: Thank you very much.
[Translation]
Senator Mégie: I think you had already begun to say more about that. I am addressing both of you, Ms. Moreau and Ms. Kozhaya. I am mainly concerned about the impact you think the act will have on collective agreements that are already in place. Although the collective agreement offers something, people will tend to lean toward the law, which offers better advantages. How do you think you will work with all of that so that the situation suits everyone?
Ms. Kozhaya: Thank you for the question. It’s a very important question, which is at the heart of the issues with this bill. Our understanding is that the collective agreement should prevail because it is an agreement. Collective agreements were negotiated to introduce a range of working conditions and take into account the reality of the business in question and of its workers. They are negotiated in good faith. Of course, the collective agreement includes a range of working conditions such as wages and benefits, pension plans and work schedules. The collective agreement should have precedence. The law must not add to what already exists and create an accumulation of components.
In cases where the collective agreement may offer different conditions that could be inferior with regard to certain specific provisions, we should at the very least be able to wait for the collective agreement to expire and renegotiate it in order to adapt it, if need be, to the new law.
At this time, I believe there are also enterprises or activities that are exempt or not subject to the law. I think they should be, to the extent that the same justification applies.
In certain cases, unfortunately, we can expect labour conflicts when the collective agreement contains conditions that are above and beyond what is contained in labour standards. What is contained in the standards has improved considerably, and it is reasonable to think that unions will be asking for more. If the enterprise cannot offer more, this may translate into labour conflicts.
Ms. Moreau: My answer will be very brief, because most of our members are not unionized, and so the part of the act that applies to collective agreements does not really concern us. Thank you.
Senator Eaton: Madam, you are talking about minimum standards.
[English]
You have talked about the effects across Canada. Do either one of you foresee job losses because les normes minimales have been overtaken? I think, as you were explaining, when every industry has a collective agreement, it’s very specific to that business and it takes into account what the business needs and what the employees need. Do you foresee that there will be job losses in small business sectors and in the larger ones that have collective agreements? If people aren’t fired or lose their jobs, they will certainly not be hiring.
Ms. Moreau: It’s always hard to predict these kinds of things. One thing the CFIB does well is we survey our members frequently, through which we get a sense of the impacts. That’s something that perhaps in three or six months’ time we will know. We do know from other legislation and other examples — provincially in Ontario they went through this — that the impacts are significant. Two thirds of our members identified that it had a negative impact on their business.
Senator Eaton: Yes, it was called a job killer.
Ms. Moreau: Certainly terminology had a role to play there, but anything that impedes a business owner from hiring an employee or from keeping them may result in job loss, there is no doubt. We have to be mindful of that for sure.
[Translation]
Ms. Kozhaya: Yes, for our part also, of course, the labour shortage may attenuate the results somewhat, but many members, large employers particularly, have told us that the impact will probably be job losses and more automation.
[English]
Automation is already on the way. In some places, it was too expensive. Now, given that labour costs will increase substantially, maybe automation will be more affordable and more interesting at this time.
Some employers have actually signalled very clearly that the impact would be job losses in some cases because, like anything, when it costs you more, you try to use less. It will cost much more to hire workers and eventually replace them, and it will be more complicated to replace these vacancies. Unfortunately, in some cases, it would be the most vulnerable people who can be replaced more easily. It might actually result in job losses and more automation.
Another thing is not only directly related to jobs, but several employers have told us that now they’re hiring, let’s say, replacement workers to accommodate full-time employees for vacations, so now they would be less able to accommodate employees. We could also expect that prices in some cases will go up, so the consumer will also feel the impact of this.
Senator Eaton: Thank you.
Ms. Moreau: On the business barometer, one of the handouts that you received, if you look at Figure 8, perhaps a more precise answer to your question, senator, is that the shortage of skilled labour and the shortage of unskilled or semi-skilled labour are the two highest limitations on sales and production growth.
Senator Eaton: Is automation something that small business looks at? Is it appropriate to some small businesses?
Ms. Moreau: I think for probably more the medium businesses. Of course, it would depend. You’re not going to automate your local dry cleaner or restaurant, for example, although I know they have sushi robots and things like that now. It’s coming. Perhaps I’ll have to find a better example. But certainly I think for the smallest of businesses, the kinds that fill our main streets, our communities and the areas where we live, I think it will be many years before we start to see that.
Senator Eaton: Thank you.
Senator Omidvar: Thank you to the three of you for being here.
My question is for both panelists to respond as they see fit. I’m going to ask your response to a working hypothesis, which is this: Good working conditions lead to happier workers and result in higher productivity and retention.
Ms. Kozhaya: I totally agree, and that’s why I mentioned that four out of five employers offer some kind of benefits above what is required by labour standards. In some cases, it is more difficult. Maybe the margin of profit is lower. Maybe they need just in time. Very honestly, I think that employers who do not offer good conditions will disappear because of the labour shortage and the aging population. However, the question is that some companies and sectors have different realities. Imposing some standards — mur à mur, as we say in French — doesn’t necessarily help employees.
But you’re absolutely right, and I totally agree that good conditions make employers more productive because their employees are happier, more engaged to that employer.
Ms. Moreau: I think your hypothesis is a good one, senator, and I think so many Canadians work for small businesses because they tend to lead on these issues. They are able to build those relationships and provide flexibility. They do that because it’s good for their business and good for their employees. It’s not necessarily due to legislation.
Senator Omidvar: I heard you both use the word “flexibility,” and I have heard you both use the word “standardization” — flexibility versus standardization. Flexibility is definitely good because it gives, in this case, small businesses the capacity to shift and change. On the other hand, flexibility also allows institutions — in this case, let’s stick with small businesses — the capacity to possibly exploit the weakest of the weakest. Standardization is an effort for the protection of workers.
The Labour Code has not been updated since, I don’t know, 1960. This is bringing the Labour Code in line with the reality of work today. There are more people in more contract jobs. There is precarious work. There is no job security. Those are all trends that we have heard about time and again. You’ve talked about labour shortages. We know there are jobs that are going unfilled because the working conditions may not be the right set to attract Canadians and keep them. These are all issues we have to struggle with. Could you respond to that set of questions, if you can?
[Translation]
Ms. Kozhaya: Yes, quite so. We also believe that businesses must be competitive, but if working conditions become too onerous and are not reflected in worker productivity, the business will not be profitable, especially businesses that compete internationally. Of course when costs increase, the business can increase its prices to remain profitable, or it risks closing down. However, it won’t function at a loss, and things could reach a point where it cannot increase its prices anymore, because if it does so, there will no longer be any demand, either domestically or offshore, in the case of businesses that export and compete on the world stage.
That is why that balance requires interesting working conditions, especially in the context of a labour shortage, in order to attract workers. However, there is a limit and that is why working conditions do not only include wages but a range of compensation measures. Necessity rules, and the businesses that have more specific needs and can do so will offer more interesting conditions, but those that cannot keep up with the pace will simply disappear, because they will no longer be able to compete and survive.
[English]
Ms. Moreau: In terms of standardization, of course, laws need to be updated when they’re as old as the Labour Code. We appreciate that. Generally, most small businesses have the best of intentions, and they are trying to compete with all the other regulations that government has imposed on them at all levels of government. It’s important to give them some learning curve and time to comply. Unfortunately, when legislation is imposed, if the government itself doesn’t understand it in terms of the officials who are responding to questions, that creates further confusion. We have lived that experience as an organization. Generally, they tend to come out with a bit of a hammer or a big fist as opposed to saying, “We understand you’re making a best effort. You need to correct. Next time, do it this way.” When you talk about heads of enforcement, which is also part of the bill, and big monetary penalties, these are things that give business owners pause, certainly.
Briefly on modernization, a lot of the changes we have seen today were suggested in the Arthurs report in the 1990s; so it begs the question of whether we are changing to keep up with today? Are the recommendations evergreen? These are things we need to reflect on. What were the purposes behind these recommendations in the first place? Do they really apply to the small business community in Canada?
Senator Dasko: Thank you, all of you, for being here today.
Just as a clarification, Ms. Moreau, on your membership, the median of your annual revenues would be just below a million, when I look at this chart.
Ms. Moreau: Yes. Generally we don’t ask that question frequently of our membership, so that is going to be a picture in time, of course.
Senator Dasko: Around that. A million or less.
Ms. Moreau: That’s probably more on the medium size of business.
Senator Dasko: You mentioned a passing reference to contract employees. Do these provisions affect the ability of companies to use contract employees? Do they make it easier or more difficult for that kind of process in terms of hiring? I don’t know whether contract employees are a realistic option for many companies, but does it affect that in any way?
Ms. Moreau: It’s a hornet’s nest of an answer. Distinguishing between when an employee is an employee and when they are a contractor is a whole schmozzle with the Revenue Agency, if I can use that term. That causes issues for business owners.
We do have data that asks why business owners hire independent contractors, and they identify reasons like easier access to greater expertise and competency and easier to adjust to changes in demand. Admittedly, there is less paperwork and red tape. Part of it is that independent contractors are now, in our knowledge economy, the ones with the information. They tend to dip in and out of businesses. That’s why they choose that line of work. That’s an entirely different scope than a part-time worker in a minimum-wage job who is not getting benefits and not getting a contract renewed. In most instances, the kind of independent contractors we’re talking about are the ones who have specified expertise that come into a business to help them for a short period of time.
Senator Dasko: These provisions would not affect that in any way?
Ms. Moreau: If they’re determined to be contractors. The difficulty can be down the line you get audited and it turns out you had an employee, and that is a whole other can of worms that ends up being very costly for business owners.
Senator Dasko: I would ask both witnesses, in terms of the provisions of the code, which one is the most difficult for your members? Which is the one you would say that you really want, that this is really important? Which one of these is the most problematic, would you say?
[Translation]
Ms. Kozhaya: It’s difficult to say because it’s really the accumulation of all of the provisions. For instance, in some sectors, the 96-hour advance notice will cause the most problems: in other sectors it will be the additional leave. I think there has to be some flexibility somewhere. As I mentioned, there are certain exceptions for various cases, such as a serious threat to the employer’s establishment. I think it is restrictive and so the concept has to be broadened to take the issues into account.
I believe it is the work schedules and the exceptions that are restrictive, as well as the matter of wage parity, because the measures do not recognize working conditions and all of the reasons involved. Other provisions are still problematic, but I think those are the two that come up most often. It also depends on the sectors involved as some of them may be more sensitive to one element than another.
[English]
Ms. Moreau: The previous witness was very open in her answer, which we would support. Again, it’s very difficult to pick one. In fact, if it was just one, it might give business owners time to adapt and they would modify. Again, it’s sectoral. For example, a restaurant will have great difficulty with the notice period, for example. I had to sort of pick and choose within my seven minutes, so we didn’t get far into that. That will be a difficulty.
Senator Dasko: The minimum.
Ms. Moreau: The minimum amount of notice you need to receive before changing shifts around the 96 hours. If you think of it in the context of how it will make my job harder, I think that will be the difficulty for business owners. Things like that will be complicated. Certainly, we know in Ontario when they looked at the pay leave, that was causing difficulty for some business owners. Again, it will be sectoral-based. It’s going to be all of the measures together that are going to create the difficulty. That is, again, where we will come back to the notion of education before enforcement. What can government do if they go ahead with this legislation to support the business community and ensure that they will get it right? Are they able to come up with measures? Is it a long rollout period? Are they able to say they’ll give a 12-month exception to businesses under 20 employees to get them up to speed? These are the kinds of tools government has available to them, and I would encourage you to think about using them.
Senator Dasko: I believe you said earlier, Ms. Moreau, that this actually will not affect most of your members because this is federal code.
Ms. Moreau: That’s right.
Senator Dasko: I’m looking at 42,000 members in Ontario, which is of great interest to me, of course. Do you expect the provinces to follow suit?
Ms. Moreau: That’s why we’re here. With initiatives like this, especially when it comes in a tidy package where legislation is passed, they can, for lack of a better term, take it off the shelf and impose it in a province or cut and paste. We’ve seen that happen. Good ideas spread, but so do bad ideas. That’s a concern for us.
We do have members that operate federally regulated businesses. They’re just not in great numbers.
Senator Dasko: So you’re not sure whether this is going to —
Ms. Moreau: We have a few small airlines up north that will be impacted. Of course, nothing is stopping a province, once the bill is passed, from saying they’re going to implement it as well.
Senator Dasko: Or they can say no, they’re not implementing it.
Ms. Moreau: Absolutely. Or the status quo. It remains to be seen. We know a lot of these measures were already in Ontario’s Bill 148 that has now been taken off the table and they quickly cropped up in this legislation. This is what I mean. They move around.
Senator Dasko: Thank you.
Senator Munson: Thanks very much for being here.
I have three quick questions to Ms. Moreau. On your summary of recommendations, one talked about providing small employers with greater flexibility. What is that greater flexibility and who should be providing it? The government, through legislation? What do you mean by greater flexibility to manage the relationship?
Ms. Moreau: Thank you for the question, senator. Essentially, what we’re saying here is that if some of these measures are going to go ahead, perhaps you exempt the smallest of businesses, which we define as under 25.
Senator Munson: To 74?
Ms. Moreau: Yes.
Senator Munson: Then, on the threshold on personal emergency leave, what would be the threshold be in your estimation?
Ms. Moreau: Currently, it’s at 10. That’s why I highlighted in a previous slide that the vast majority of our members have 11 employees as an average.
Senator Munson: You want it lower?
Ms. Moreau: We want to increase it. We’re suggesting up to 50.
Senator Munson: Fifteen?
Ms. Moreau: Fifty. It would capture the vast amount of our small businesses in Canada.
Senator Munson: On the maternity leave, the story here is a happy story for those employees who are having babies and starting a life and a family, but there’s a lot of stress. I have a simple question: How do you get around that in this kind of environment? This is the ebb and flow of everyday life and working. What kind of requirements would make everybody feel less stressful in that environment you just described?
Ms. Moreau: There are many policy options, and perhaps a longer conversation would be necessary to try and get at that.
To your point, some of this is just life. Whatever we can do to allow business owners to easily hire in an inexpensive way to replace those individuals, to create attractive jobs and be able to do so easily, I think, will go a long way to alleviating some of the stress business owners feel when they are having multiple leaves for a variety of reasons. We picked maternity leave because it was on the list, but people leave for all kinds of reasons. They need to support their families for other reasons or they have ailing and aging parents that need support. The vast majority of business owners do what they can to accommodate their employees in those times. It’s when there are legislated minimums that require employers to accommodate very quickly that things get difficult for them.
Senator Munson: Your federation has certainly had good verbal — I won’t say fistfights — with the federal government, but you’ve been there and your group has had standing there for years and years. Is the government getting in the way of what you would consider good business practices that are already in place? Are they over-managing and over-legislating to try to help out? I think the question was asked before. How do you feel about government in this?
Ms. Moreau: I’m going to frame this in the context of regulations. It’s very difficult, when you have the pen in your hand, to put it down. Small businesses are trying to run their business every day, and more and more regulations keep getting added to the book. Some of these are very important. We’re not quibbling with health and safety regulations or environmental standards. Those are there for a reason.
One of the things we champion as an organization is reducing red tape. We’ve been beating that dead horse, so to speak, for about a decade. We’re about to celebrate our tenth Red Tape Awareness Week here in January. It’s encouraging governments at all levels to consider, when they add regulations, the impact that has, not only on the business community but ultimately to the economy. It can be small things from measuring every time a piece of legislation says you “must” or “shall,” to timing how long it takes people to fill out forms or how often they have to do that. There are things that business owners are usually doing at the end of a long day. We survey our members and most recently, on the Canada Post strike, I was watching the survey results roll in, and they came in at all hours, at midnight and 2 o’clock in the morning. I have small children, so I was able to notice these trends in real time. It illustrated to me again that business owners are only getting those opportunities after they’ve worked a full day. When you’re legislating and regulating without thinking about the holistic impact these regulations have on small businesses, it certainly adds up.
Senator Munson: Thanks very much.
[Translation]
The Chair: I don’t know if you had anything to add on this, Ms. Kozhaya?
Ms. Kozhaya: Yes, briefly, to answer the senator’s question. We believe in the importance of minimum standards and seeing to it that they are respected, and sanctioning those who do not comply. However, it’s still a matter of balance in the minimum requirements that are negotiated in good faith between the parties and the government. There is a limit to what can be done in negotiations that involve a full range of working conditions. However, as we said, if the government wants to change the rules of the game in midstream, that is a concern.
[English]
The Chair: If our guests are willing to stay a little bit longer, we have time for a quick second round.
Senator Seidman: Thank you both very much. You’ve both spoken to the burden related to changes in the labour code for small- and medium-sized businesses. They’re both financial and bureaucratic in the sense of paperwork, education programs and things of that ilk.
I’m going to turn around the question that Senator Dasko asked you. Instead of trying to find the one thing in this legislation that could be the worst, I’d like to ask you if you have one recommendation to leave with us. Our committee will be sending observations in the form of a report to the Finance Committee, which will be considering amendments. All things considered, you’re saying things that are pretty significant. Perhaps you could leave us with a single recommendation as to some way to remedy — if not remedy then ameliorate — the situation for small- and medium-sized businesses. Perhaps I could begin with you, Ms. Kozhaya.
[Translation]
Ms. Kozhaya: I would say that is not easy, but you have to put yourself in the shoes of an employer and imagine how he sees things. As I said before, it’s probably the introduction of operational issues in the exceptions. Often this involves the applicability of provisions and their implications. For SMEs this is a big challenge, there are also large businesses. For those businesses, there are continuous operations that cannot be interrupted, or require a work time availability, whether we are talking about transportation, the manufacturing sector, or various other areas. The operations have to be able to go on seamlessly.
I want to remind you that these are generally unionized businesses where there were collective agreements that were negotiated several years ago which evolved over time. We have to see what works in those agreements and ensure that there isn’t an accumulation and that we don’t add elements that go beyond those agreements. It won’t be easy but it’s important.
[English]
Ms. Moreau: Perhaps it’s not so much an element of the legislation, but consider impact analysis. Economic impact analysis, particularly, would go a long way to giving you a sense of what these measures would cost the economy when implemented and the impact they would be having on small and large businesses, for that matter as well. At a time when we are trying to compete with our U.S. neighbour and other countries, that might be an element worth considering.
Second, I’d leave with a policy that allows business owners to comply to the best of their ability, so that there is support built in for compliance and what that looks like. We have lots of ideas on that, should that come to pass.
Senator Seidman: To follow up on that, Ms. Moreau, are you saying that perhaps there should be some built-in impact analysis following the enactment of the legislation that the government should be obligated to follow through on, or some kind of data collection to look at the positive and negative impacts that the changes in the labour code could create?
Ms. Moreau: You could do it after, but I would certainly think the benefit would be doing it before, to see what the impact is before these implications come through. We’re always a big fan of measuring to give a sense of what the cost has been. You have some of these tools, maybe not economic analysis, but there is the small business lens, for example, and regulatory impact analysis that would otherwise give a sense of some of the impact to the small business community, at least.
Senator Seidman: Good. Thank you.
Senator Omidvar: This follows up the discussion around impact assessment. In many pieces of legislation that we see, there is often a built-in review after five years. There is no such stipulation in this act. Would you recommend that the act be reviewed in five years? Otherwise, we have the 1960s and the Arthurs report. It’s 2018, and now we’re making progress.
Ms. Moreau: I think you’ve answered your own question, senator. The best way to do it is to build it in so we don’t let decades go by before making adjustments again.
Senator Omidvar: Thank you.
The Chair: Ms. Kozhaya, do you agree with that?
[Translation]
Ms. Kozhaya: That is an advantage. By the same token, we have to avoid uncertainty because we must of course see the results. Moreover, it is important that there be impact studies. If this creates more uncertainty, it can also create other issues.
The Chair: Thank you very much. I think all of our colleagues who wanted to ask questions have done so. I would like to extend our warmest thanks to our guests. You were very generous with your time and gave us quality answers that will be very useful to us.
[English]
I ask that honourable senators stay for a few minutes. We will suspend the meeting and return for a brief in camera session.
(The committee continued in camera.)