Fighting for a Better Future - United...

United Steelworkers National Policy Conference Toronto, 27-29 April 2010 Build ng

for tomorrow’s jobs

Fighting for a Better Future

Steelworkers’ Fight for a Better Future and a Better Canada

1BUILDING ...for tomorrow’s jobs • USW National Policy Conference 2010

Since our 2007 policy conference, Steelworkers and other Canadian workers have faced a drop in economic output not seen during our lifetime, leading to dramatic increases in layoffs and plant shutdowns. Many observers are calling this crisis the Great Recession. Economic danger signs appeared in 2007; by Fall of 2008, we were firmly in the grip of a devastating economic slump, characterized by sharply falling output, declining capacity utilization, negative returns on investment and mounting job losses in the real economy in sectors that actually produce goods and services. In addition, there was a sudden, sharp financial crisis resulting from the collapse of a massive speculative bubble.

Together, these developments resulted in a devastating drop in worldwide trade and employment. The World Trade Organization says global trade fell by about 12 per cent in 2009, while the International Labour Organization says 27 million workers lost their jobs.

The crisis in the real economy had roots in an

overheated residential home-construction sector. American economist Nuriel Roubini estimates that home building drove as much as 45 per cent of all job creation in the U.S. during the boom of 2002 to 2007. Massive demand for housing – new housing starts peaked at over 2.2 million units in 2005, compared to about 550,000 last year – was driven by low interest rates, historically high home prices and cheap, easy mortgages. The construction boom in turn drove demand for a wide range of other products – building materials, heavy equipment, appliances, subdivision construction and services, vehicles, furnaces and ducts, electrical fixtures and wiring – as well as financial services like mortgages and insurance.

In Canada, while foreign direct investment abroad rose by over 56 per cent from 2004 to 2008 and the Toronto stock market boomed, domestic investment in manufacturing fell steadily, declining each year from 2002 to 2008. The massive increase in corporate profits clearly did little to build Canadian competitiveness or improve living standards for most Canadians.


Working people around the world want answers and leadership in the aftermath of the worst economic crisis since the Great Depression. United Steelworkers are determined to provide both.

Union members need to understand what happened when the economy melted down in 2008 and why it happened. And USW wants working people to know not just what happened but also who is responsible and what steps are needed to turn things around. Armed with facts about the crisis, its effects on our jobs and its impact on our communities, Steelworkers can stand up and fight for a better future and a better Canada.

The Real Economy – Crisis on Main Street

BUILDING ...for tomorrow’s jobs • USW National Policy Conference 2010


2

Meanwhile, unemployment fell during the boom, but many workers saw their real wages stagnate or even fall. Working families were faced with the paradox of increasing poverty in the midst of vast wealth, rising costs despite declining incomes. To maintain their living standards or to just stay afloat, growing numbers began working longer hours, working multiple jobs or borrowed and mortgaged themselves deeper into debt.

This situation was made worse by the impact of all those apparently cheap mortgages, especially in the United States. While subprime mortgages and other forms of easy credit came with initial low interest rates, many soon “reset” at higher rates. A growing number of families soon found they couldn’t afford their new mortgages. Coupled with higher interest rates after about mid-2004, as central banks began to worry about inflation, a growing number of families began facing default and foreclosure.

Soon, many subprime lenders were also in trouble due to declining markets, while banks

were in trouble due to the rising cost of a growing number of non-performing, unprofitable loans. The result was a slump in the housing sector and by 2007 builders were cutting back on new housing starts. This in turn affected their suppliers, whose orders were significantly driven by housing sector demand. By 2007, output in home construction, building products and several other sectors had already stalled.

Real value-added in U.S. manufacturing stalled in 2007, falling by 2.8 per cent by the end of 2008, while unemployment in U.S. manufacturing grew by 31 per cent from September 2007 to September 2008. Steel production in the U.S. fell 6.8 per cent in 2008 for instance, with almost 50,000 steel and metal-sector workers laid off.

The resulting growth in layoffs spread the effects of the slump even wider into the auto and manufacturing sectors. It also exacerbated the foreclosure crisis by increasing the number of families unable to make their mortgage payments.



The Financial Sector – Crisis on Bay Street and Wall Street But the situation was in fact far worse. In addition to the banking crisis brought on by growing levels of default, many financial institutions had taken millions of those cheap, easy mortgages and “bundled” them into securities, which they then sold to banks, corporations and investment houses. Vast quantities of the billions of dollars in profits generated during the boom were now held as so-called “mortgage-backed securities” whose value depended on speculators’ faith that they continued to represent sound investments.

In the boom, many speculators and financial institutions dealing in these mortgage-backed assets profited handsomely. But as the markets for them began to collapse – a situation made even shakier because so many were purchased with borrowed cash – it didn’t take long for some major lenders to fear they would never get their money back from these highly leveraged speculators. When some called in their loans, it wasn’t long before the entire financial bubble collapsed under its own weight. By 2008, panic was taking hold on Wall Street, Bay Street and other financial centres. A number of major financial houses crashed. Others survived only because they were bailed out or backstopped by governments using billions of dollars in taxpayers’ money.

The crisis in the real economy was now combined with a severe financial crisis. Financial speculation had helped further drive down the real economy by undermining the credit system. Faith in mortgage-backed assets was destroyed. And because they were so widely held by corporations that had poured into them vast quantities of the profits made earlier in the decade, banks couldn’t tell which borrowers were solvent and which weren’t. In Canada, business loans by chartered

banks fell by over 11 per cent from October 2008 to January 2010. Banks just stopped lending and sat on billions of dollars in deposits and companies stopped investing or spending despite historically low interest rates. The slumping real economy became even worse.

Impact of the CrisisThe combined impact of a financial crisis and an economic crisis was devastating:

ϐϐ Canada’s GDP peaked at $1.32 trillion in the fourth quarter of 2007 and remained at that level through the third quarter of 2008. By the second quarter of 2009 it dropped by 3.5 per cent to a low of $1.28 trillion. While it has since rebounded to $1.30 trillion, we might be $19 billion above the trough but we’re also $28 billion below the peak. Meanwhile, manufacturing output fell by over 17 per cent from 2007 to 2009. By August 2009, Canadian steel output had fallen 52 per cent year-on-year and 12.5 per cent from July. In 2008, Canadian steel production fell 3.8 per cent.

ϐϐ Corporate profits collapsed, with 2009 profits a third below 2008. But while profits have partially recovered – companies gen-erated 9 per cent more profit in the fourth quarter than in the third – with massive amounts of capacity still idled, corporate Canada still has little reason or appetite for investment: spending on plant and equip-ment fell by 2.3 per cent in the fourth quarter.

ϐϐ Output plummeted; nearly a third of indus-trial capacity was unused in the third quar-ter of 2009; even more plants were silent in key sectors like forestry and manufacturing.

ϐϐ Unemployment was up by over 506,000 from November 2007 to November 2008,



4

from 5.9 per cent to 8.5 per cent. Most observers expect high unemployment well into 2010.

ϐϐ The decline in manufacturing employment was especially severe. Between the peak of unemployment in October 2008 and Au-gust 2009, manufacturing shed, on average, over 19,400 jobs a month. Since then, says Statistics Canada, the pace of manufactur-ing job loss has slowed, but we’re still losing an average of 2,100 manufacturing jobs a month, while many corporations continue to invest outside Canada.

Although many corporations are making profits, some are sitting on them rather than investing in job creation. And they won’t invest until profits rise. Banks have assets but won’t lend them. Workers sit idle and no one will hire them. Meanwhile, huge amounts of corporate Canada’s

profits are still being invested offshore, spent on luxury goods, ventured on the money markets or simply hoarded in bank accounts:

ϐϐ From the fourth quarter of 2008 to the same period in 2009, domestic invest-ment was below zero but Canadian firms increased direct investment abroad by over 10 per cent.

ϐϐ Average compensation for Canada’s 100 highest-paid CEOs was over $7.3 million in 2008, compared to the average Canadian’s income of $42,305. By 1:06 p.m. on January 4 – the year’s first working day – an aver-age CEO pockets as much as an average worker makes in an entire year, says the Canadian Centre for Policy Alternatives. These 100 highest-paid CEOs made 174 times as much as Canadians earning the average income.

Beginning of downturn

Manufacturing Employment in Canada

Source: Statistics Canada, Labour Force Survey, seasonally adjusted data



ϐϐ Canadian Business magazine’s RICH 100 ranks Canada’s wealthiest persons; it shows that there were two new billionaires in Canada last year – 55 in 2009, 53 in 2008 – while their total net worth hit $172.7 billion, up from $165.1 billion in 2008.

ϐϐ The Toronto Stock Exchange had a record-breaking 2009. Financings raised were $60.0 billion, easily exceeding the old record of $47.6 billion in 2007. Last year’s trad-ing volume was 118.5 billion shares, more than 2008’s record of 109.2 billion. There were also record transactions, 191.3 million trades compared to 2008’s old record of 182.9 million.

ϐϐ Mercedes-Benz Canada sold a record-breaking 2011 vehicles in February, its best February ever. The luxury auto maker posted an increase of 28.9 per cent from February of last year while for the year, 2009 sales were up by 31 per cent.

ϐϐ The Real Estate Board of Greater Vancou-ver recorded 30 home sales at over $5 million compared to 26 in 2008. A heated real estate market is also lifting luxury-home sales in Toronto, says a report by Coldwell Banker Terrequity Realty.

ϐϐ The Bank of Canada doesn’t keep the same statistics on bank reserves that the U.S. does but U.S. banks’ “excess reserves” – holdings over and above legal requirements – have surged as banks sit on funds they can’t lend profitably or won’t lend.

Government ResponseIn Canada, the federal government’s response to the crisis has consistently failed working families. In fact, Stephen Harper’s Conservatives have repeatedly reinforced the suspicion that they don’t really care about unemployed Canadians.

Prime Minister Harper’s initial response to the financial meltdown was to suggest Canadians, many of whom had just lost much of their savings, go back into the stock market to pick up “bargains”! While quietly ordering bailouts for banks, the Conservatives initially refused to bring in a stimulus budget; they were only forced into it at the threat of being turfed from office.

Even with the threat of defeat in Parliament, the Harper government’s commitment to stimulus spending was tepid. They committed proportionately far less than the Obama government did in the U.S.; by February, Harper’s Conservatives had actually spent less than half of what they committed in January 2009. Harper and Minister of Finance Jim Flaherty tabled a restraint budget for working families; they care more about the deficit than fighting unemployment although they ordered even more corporate tax cuts, mostly benefitting oil companies and banks.

Under the Harper Conservatives, a growing proportion of Canadian industries have been taken over by foreign corporations, while others have been hollowed out due to offshore investment. Companies increasingly use the threat of job loss to frighten workers, stymie unions, cut wages and undermine working conditions and safety standards. Meanwhile, the federal government has failed to use its powers under the Investment Canada Act to ensure that foreign companies such as Vale Inco live up to the commitments they made when they purchased Canadian firms.

The Harper government has also failed Canadians in the area of trade policy and trade agreements. In 2006, Harper threw away Canada’s sure wins in the lumber dispute with the U.S. and then negotiated a sweetheart deal with President George Bush. The result was job loss for Canadian workers and falling competitiveness for Canadian mills because companies invested in the U.S. or exported raw logs to avoid paying the new 15 per cent border tax on Canadian lumber.



6

Although Harper railed against U.S. “Buy American” policies, Canadian exporters in fact found the U.S. the only bright spot in global trade: Canada had a 14 per cent rise in exports to the U.S. in the second half of 2009 due to Obama stimulus spending, even though exports to the rest of the world actually fell. Nonetheless, Harper refuses to match the U.S. policies with “Buy Canadian” procurement policies which would ensure more Canadian jobs from our government’s stimulus spending. And he wants a trade deal with the viciously anti-worker Colombian government instead of fair trade agreements that protect workers and the environment.

Meanwhile, the federal Liberals continue to flounder. They tell workers one thing, Bay Street another. Liberal leader Michael Ignatieff initially promised to defeat Harper unless he reformed Employment Insurance (EI); then he backed down, abandoning the unemployed. Now he too echoes Bay Street, calling on Harper to reduce the deficit instead of fighting unemployment.

In the face of the crisis, the federal New Democrats forced Harper to improve EI benefits. The NDP has consistently called for measures to help Canadians deal with the recession: more stimulus spending, “Buy Canadian” policies, more job creation, plans for a greener economy and spending on social services and infrastructure. In Ottawa, the Bloc Québécois has also championed EI improvements and other progressive policies.

Successive Liberal and Conservative governments cut corporate taxes at the same time they reduced services to Canadians. The Organization for Economic Co-operation and Development

(OECD), a Paris-based association of 29 major industrialized nations, notes that, “While across the OECD, tax-burden changes have tended to favour low-wage earners, Canada is among a minority of countries where tax reforms have resulted in higher-earning employees benefitting (more) from significantly higher tax reductions

than those in the middle or bottom part of the earnings range.”

Both Conservatives and Liberals make the same excuse for service cuts: the deficit. But is the deficit really such a huge problem? In 2000, the government was paying more than

4 per cent of GDP as interest on the national debt. Despite the hysteria surrounding current deficits, Finance Canada says debt-servicing costs will only increase from 2 per cent of GDP today to 2.1 per cent in 2014-15! But federal program spending as a share of GDP fell much more, from 21 per cent in 1983 to 13 per cent in 2009. In 2001, our government spent about 49 per cent of GDP. By 2009, that fell to 38.5 per cent, which equals an annual loss of $152 billion in services.

Right-leaning provincial governments have also let down unemployed Canadians. While thousands of British Columbians remain out of work, Premier Gordon Campbell’s Liberals brought in an austerity budget that offered no help to the unemployed and cut hundreds of millions of dollars in public spending. Campbell’s only stimulus plan was the Olympics; now that they’re over, B.C. taxpayers are stuck with the bill – with little to show for it and still-high unemployment.

In Quebec, the Liberal government of Premier Jean Charest is facilitating the creeping privatization of health care, for example by

Canada is among a minority of countries where

tax reforms have resulted in higher-earning

employees benefitting (more) from significantly

higher tax reductions than those in the middle

or bottom part of the earnings range.

Organization for Economic Co-operation and Development



allowing private clinics to perform about 50 surgical procedures previously done only in public hospitals.

Ontario has lost 205,000 jobs and provincial unemployment is expected to hit 9.9 per cent this year. But instead of a strong stimulus budget, Premier Dalton McGuinty’s Liberals also want to cut public spending. The Liberals recently closed

job action centres across Northern Ontario. Both Ontario and B.C. plan to harmonize their sales tax with Ottawa, a misguided policy that takes cash away from working families and threatens to deepen the recession by reducing household spending.

By contrast, the NDP government of Nova Scotia recently initiated a deal to reopen the idled



8

Trenton Works plant, where Steelworkers will now build support towers and rotor blades for wind turbines.

In short, corporate managers, financiers, bankers and right-wing politicians want to continue the “trickle-down” programs and policies that helped bring on the savage economic and financial crises. In addition, many governments have used taxpayers’ money to bail out banks and corporations. One example is the Harper government’s $75 billion-dollar bank bailout, announced just days before the October 2008 federal election. The bank bailout received virtually no media scrutiny; its budgetary implications were barely considered by mainstream economists or the media and now those same banks are reporting massive profits.

Worn-out, Old-fashioned PoliciesMeanwhile, workers have been left pretty much on their own to face the worst unemployment since the 1930s, made worse by falling wages and higher debt loads. Human Resources and Skills Development Minister Diane Finley even justified not raising EI payments because, “We don’t want to make it lucrative for them (the unemployed) to stay home and get paid for it.”

Unfortunately, these are the same worn-out, old-fashioned neoliberal policies that helped wreck our economy. They guided the deregulation, downloading and massive shifts in income that led to the crisis. We now see just how misguided



they are; continuing them will simply make things worse. Yet those same right-wing commentators, politicians and economists continue to claim that cutting taxes for corporations and the rich, limiting government spending and reducing public services will create investment and stimulate job creation. And they seize on every sign of slight improvement to argue it’s time to stop stimulus spending and slash public services.

In fact, it’s more obvious than ever that these neoliberal policies are dangerous, misguided and unhealthy. Despite all these corporate tax cuts and other benefits for the wealthy and privileged, investment in the real economy has stagnated in the past decade. Today, many corporations and wealthy individuals are hoarding their money or spending on luxuries, diverting capital out of production, throwing it into stock markets or going offshore. Meanwhile, government inaction on jobs, stimulus and infrastructure drives our economy deeper into recession, creating more hardships for working families and communities, worsening Canada’s social problems.

The negative effects of unemployment go well beyond lost income, Many communities are reeling from job loss and plant closures, with effects that will be felt for years. The Centre for Studies in Living Standards reports that, “Roughly 60 per cent of the newly unemployed, compared to about 40 per cent in recent years, receive regular EI benefits, reflecting the concentration of employment losses among long-term, full-time employees,” in sectors such as the auto industry, manufacturing and forestry. These workers often live in communities where those sectors offer the only good-paying jobs available. Plant closures and job loss contribute to community decline, social problems and poverty, the CSLS warns, “Based

on the experience of the recession of the early 1990s, we should expect an increase of about 4 percentage points in the after-tax poverty rate, which would reach 13.2 per cent in 2010.”

Toward a Better CanadaCanadians deserve better. That’s why Steelworkers have pushed for policies and programs that benefit and support working families. Through lobbying, political action and support for union-friendly political parties,

especially the NDP, we have fought for:

ϐϐ “Buy Canadian” policies to generate Canadian manufacturing and resource-sector jobs;

ϐϐ Fair trade agreements that protect Canadian workers from low-

wage police states like China that dump subsidized, substandard products in our markets. We should level the global playing field by demanding our trading partners raise labour standards, stop currency manipulation, reduce carbon emissions and improve environmental protection;

ϐϐ Urgent job creation, including stimulus spending on renewed infrastructure and green technologies like wind turbines, solar panels, tidal turbines, rapid transit, high-speed trains and light rail;

ϐϐ Enhanced social services, childcare, health care and elder care;

ϐϐ Measures to restore fairness to the tax system, especially income tax and corporate taxes;

ϐϐ Spending in key sectors like auto, basic

By contrast, the NDP government of

Nova Scotia recently initiated a deal

to reopen the idled Trenton Works

plant, where Steelworkers will now

build support towers and rotor blades.

for wind turbines.



10

steel, rail, forestry and others that are es-pecially vulnerable to global competition so that we stay competitive globally;

ϐϐ Policies that ensure that corporations only gain access to our raw materials if they cre-ate jobs and do more value-added process-ing;

ϐϐ Better labour laws, including workplace protections, improved health and safety standards and opportunities to organize new union members, which would not only increase workers’ bargaining power but also allow them to increase their sagging incomes without borrowing or working themselves into the ground, thus increasing

consumer spending and driving the recov-ery;

ϐϐ Protecting income support programs like the Canadian Pension Plan and EI, which also maintains family income, helps workers in the crisis and reduces its impacts, and

ϐϐ Expanded affordable housing options such as co-ops, rent-to-income units and social housing.

“Stop just writing letters” New Strategies, Ideas and SolutionsBut we must do much more. Recently, United



Steelworkers International President Leo Gerard urged union members to “stop just writing letters” to politicians and governments: it’s time to get active in our workplaces, our communities and the political arena. “This is our time,” says Leo – but only if we take an active stance and turn current popular anger at corporate greed and the failure of neoliberal ideas into real gains for working people.

Unions are a major part of the solution. When unions win more pay, better benefits and improved working and living conditions, we also help redistribute income, lifting the economy out of recession and increasing consumer spending. And our fight for safer, more secure, healthier and more prosperous communities benefits all Canadians.

Tommy Douglas, the former premier of Saskatchewan, NDP leader, leader in the fight for Medicare and the people’s choice as “Greatest Canadian Ever” said after the Second World War it was time for, “a new Canada – free from unemployment, insecurity and want.” But, he asked: “Who is going to give us this new Canada? Is it the same people who dragged us through 10 years of depression? Do you think the same policies and the same economic system which produced the depression before the war can prevent one after the war?”

Tommy urged working people to fight for new strategies, ideas and solutions to Canada’s problems. He was right: workers, unions and their political allies fought for income support programs like CPP, unemployment insurance and Medicare, as well as economic policies that aimed for full employment. They demanded that economic growth must be matched by higher wages and growing prosperity for all Canadians. Today, we need to defend and improve these quality programs for people and build others such as childcare and quality elder care. We must force corporations and governments to create the jobs that will truly end the Great Recession.

Governments should also reform labour laws, raise sagging minimum wages and enforce pay-equity policies. And we need to deal with serious social problems such as poverty, homelessness, crime and addiction.

We must also ensure that a reasonable share of corporate profits are reinvested in the industries in which they were produced, not spent on luxuries or shipped out of the country. We need policies that share the wealth we create, not allow greedy individuals to hoard it. We need to use our resources to develop our own communities and build Canadian industries, not just export raw and unprocessed commodities. We need to improve our skills, train more apprentices and ensure educational opportunities for Canadian workers and young people, not ship jobs to foreign sweatshops or low-wage export platforms. We need to provide all Canadians with the basics of life, as well as opportunities to build a secure and prosperous future, not create more misery and poverty in the midst of plenty. We need fair taxes, not an even more unequal distribution of wealth. We need strong, effective unions that can rely on fair, reasonable labour laws to represent our members, win good collective agreements and organize the unorganized.

Ours is, and will remain, a market economy. But as former NDP leader Ed Broadbent says, markets on their own won’t bring fairness and prosperity. Nor can we get them on our own. That’s why it’s time for an activist government that works to ensure fairness for workers, our families and our communities. To do this we must build coalitions in our communities, engage in campaigns, support and elect union-friendly and supportive politicians and work with our neighbours for real social and economic change.

In short, Steelworkers and other Canadian workers have to start fighting back against the neoliberal policies that hold us back. It’s time to fight for a better future and a better Canada.

Ken Neumann, National Director for Canada United Steelworkers

234 Eglinton Ave. E. , 8th floorToronto, ON

M4P 1K7

416-487-1571 www.usw.ca

<SRU>

Date post:	27-Mar-2018
Category:	Documents
Upload:	phamquynh
View:	218 times
Download:	4 times

Fighting for a Better Future - United...

Documents