Living Without Fear

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Living Without Fear:

Improving economic well-

being and securing a better

future for all Canadians

NUPGE • OTTAWA • MAY 2010

An AlternAtive economic StrAtegy

PArT ThrEE iN A SEriES ON ThE EcONOMic criSiS



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Let’s think this through … together

Part OneThe Next EconomyPulished Novemer 2009

Part TwoWe Are The Way Out

Pulished Feruary 2010

Part ThreeLiving Without FearPulished April 2010



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Living Without Fear

An Alternative Economic Strategy

Part Three in a Series on

the Economic Crisis

impovng eonom well-beng and seung

a bette futue fo all canadans

Natonal Unon of Publ and Geneal Employees

Ottawa • MAY 2010



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ContentsForeword y James Clancy / 7

Introduction / 11

Section One: Measuring what matters / 17

Section Two: The ailure o market-oriented policy / 27

Section Three: Reducing inequalities / 35

Section Four: Securing our uture / 43

Conclusion / 53



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ForewordSINCE DECEMbER 2008, Canadians have een living through a gloal economiccrisis o unprecedented proportions. As economic conditions worsened acrossCanada throughout 2009, the National Union o Pulic and General Employees(NUPGE) was anxious to get out and meet with Canadians across the country.We wanted to hear rst hand rom Canadians aout the eects o this historiccrisis on their lives and communities. We also wanted to know what Canadians

thought went wrong and what, as a country, we should do next.

Throughout the spring and summer o 2009 we held 26 town hall meetingsacross the country. In Octoer 2009, we pulished a ooklet summarizing thesentiments, ideas and insights we heard rom people. The ooklet is called THE

NEXT ECOMONY , and it is Part One o a three-part series aout the economiccrisis.

Predictaly, while we were consulting Canadians, the nancial elites were usyspreading myths aout the causes o the crisis. They want to defect the lameaway rom their role in causing the system to come apart at the seams. Theywant to prevent any real change and just return to usiness as usual. That’s why,in Feruary 2010, we pulished Part Two in our economic series called WE ARE

THE WAY OUT. It tackles the iggest myths head-on and spotlights our hiddentruths aout the crisis.



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The economic crisis has resulted in hardship, jo loss and stress orhundreds o thousands o Canadian amilies. but it is also sowing theseeds or new thinking on how we organize our economy and measure

progress. The Gross Domestic Product (GDP) and its various proxies – rateso growth, expansion, recovery – have ecome the de acto measure o howwell our economy and country is doing. Yet, it is a meaningless igure. Ittells us next to nothing aout progress and how the economy actuallyaects people’s lives and their communities.

The GDP is simply a measure o the total amount o goods and services sold.It measures how much money is eing spent. It does not measure progress or

well-eing. That is ecause the GDP makes no distinction whatsoever etweenthe desirale and undesirale, etween costs and enets, etween equitale orinequitale, or etween sustainale and unsustainale.

For example, i you chop down a orest, GDP goes up. I you get in a carcrash and everyone is taken away y amulances, GDP goes up. I youhave a actory that is polluting a river, that adds to the GDP – and i peopledownriver start getting sick and require doctors, lawyers and hospitals,you’ve just created a GDP windall.

At the same time, the GDP completely ignores crucial activities which have ahuge and measurale impact on well-eing, such as: unctions perormed yparents in the household; the value o unpaid child care; the amount o leisuretime amilies have; the state o our natural environment; the quality o jos; theoverall health o the population; the amount o political engagement; and thelevel o equality, compassion and companionship in our society.

Our consultations throughout 2009 clearly revealed that Canadians considereconomic lie to e aout a lot more than just money. They eel the currenteconomic indicators are out o touch with the things they value most, the thingsthat make lie worthwhile. They want our measurements o progress to go eyondthe simple calculation o prices and quantity o goods and services sold. Theyurged us to help start a pulic conversation aout how well human needs areeing met, and what is eing let out.



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That’s what we’ve tried to do in Part Three o our economic series. LIVING

WITHOUT FEAR: AN ALTERNATE ECONOMIC STRATEGY has our sections. First,we look at what we measure, and why it matters or the uture. The goals

we set infuence what we do, and how we rate our perormance as a society.When we measure the wrong thing, we do the wrong thing. Second, we look athow government economic strategies have ailed Canadians. In attempting toimprove productivity, we have created injustices. Third, we look at how reducinginequalities can improve social health in Canada, and why aiding the vulneralemust e a concern or everyody. Fourth, we set out the challenges we must tacklein improving access to good jos – an essential part o estalishing economicwell-eing and comating ear and insecurity. In the conclusion we look at what

choices we need to make to create a genuine economy o well-eing and enaleall o us to live and work without ear o the uture.

We intend to e at the oreront o those arguing or new economic goals, deendingCanadian values and contriuting new ideas or making Canada a etter placeor everyone. Working together, we can create a consensus in Canada aout theneed or a more holistic way to measure progress – one that accounts or morethan just the exchange o money (such as the GDP) and takes into account theull range o social, health, environmental and economic concerns o Canadians.

The task has never een more ormidale. The need has never een greater. Itwill take the eort o each o us. All together now!

James Clancy

National President



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IntroductionLEGISLATORS FACE the judgement o inormed pulic opinionevery day and have to answer to the people in regular elections.They need to e reminded constantly that livelihoods arewhat matter to people. Well-eing and security require citizenparticipation in politics. In a democracy, vigilance is needed

to ensure people’s needs are placed rst. Jos, incomes andaccess to pulic services are the important concerns orcitizens. What happens in the workplace aects amily lie,health and every aspect o the quality o lie.

Citizen well-eing, the health o our society and improvingthe overall quality o lie are o major importance to thememership o the National Union, just as to all Canadians.

With a memership o 340,000, the size o a Canadianmetropolitan region, such as Victoria, b.C. (the 15th largest),our union stands out among Canadian organizations o anykind. Through our provincial aliate unions we are a majorvoice in politics and pulic policy across the country. Withinthe road context o social and economic policy, we make ourvoice heard in Ottawa, and provincial capitals on ehal o



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our memership. Aroad, we are linked to other laour odiesthrough Pulic Services International, and ollow deates andenter discussions o economic and social programs around

the world.

When the economic crisis was on the horizon we issued areport called MAKING PUBLIC SERVICES A PRIORITY . It calledor increased pulic investment spending to counteract aall in private investment, consumption, and exports thatwere threatening prosperity and well-eing. While ederalgovernment spending was maintained, the important role o

pulic investment in providing or economic and social well-eing is not yet well enough understood y governments inCanada.

As the crisis hit Canadians, we wanted to know whatpeople thought caused the downturn, and what needed toe done. The National Union organized 26 pulic meetingsacross Canada, so that citizens could engage with the issuessurrounding the crisis and dialogue with each other. The town

hall tour was called: Cut Me a Slice: A People’s Response to theEconomic Crisis. As we reported ack in our pulication, THENEXT ECONOMY , Canadians care aout community and socialvalues and want them expressed in government policy. Ourcitizens see democracy as a way o dening what is right andwrong (justice) and what is good and ad (values). Canadiansexpect governments to act on their ehal, and to refect theideals people hold dear, uilding a society ree o injustices,

where all can participate equally.

In this report we uild on themes raised y our memers, andwhat we heard in pulic orums. Calling or more economicgrowth is not good enough. Employment creation needs toe the priority, not an aterthought. We need to address theinjustices that characterize too much o daily lie, and aect



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ar too many people. As an overall goal, Canadians wantgovernments to do more to promote economic well-eing.

Canadians look to their workplace to provide them with economicsecurity. Making a contriution to the community throughtheir jo is important as well. Improving jo prospects and thequality o working lie goes a long way to comating ear andinsecurity. Canadians want to eel ree to pursue their dreams,including pursuing a chosen occupation, enjoying a supportivework environment, and knowing that what the community trulyvalues, is the asis or government strategies.

In this pulication we lay out how we can improve economicwell-eing y rejecting policies that have ailed, y reducinginequalities and through improving our working lives. Likeothers, we are interested in the uture o our country, andwant to express what we heard through pulic consultations:Canadians want to secure a etter uture or all. Livingwithout ear means surviving and fourishing in the ace o major challenges. What NUPGE has heard rom Canadians

convinces us that we can do a lot etter than we have eendoing. Making progress requires that we think ahead careullyto tomorrow and eyond. We need to lay out our goals andadopt a road economic strategy or securing a etter uture.The paths we have een ollowing have led us the wrong way.

LIVING WITHOUT FEAR: AN ALTERNATIVE ECONOMICSTRATEGY has our sections. First, we look at what we measure,

and why it matters or the uture. The goals we set infuencewhat we do, and how we rate our perormance as a society.When we measure the wrong thing, we do the wrong thing.

Second, we look at how government economic strategies haveailed Canadians. In attempting to improve productivity, wehave created injustices.



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Third, we look at how reducing inequalities can improvesocial health in Canada and why aiding the vulnerale muste a concern or everyody.

Fourth, we set out the challenges we must tackle in improvingaccess to good jos. In the conclusion we look at what choiceswe need to make or us to e ale to live and work withoutear o the uture.

At NUPGE we intend to e at the oreront o those arguingor new goals, deending Canadian values and contriuting

ideas or making Canada a etter place or all its citizens andresidents.



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SECTION ONE

Measuring what matters

HISTORICALLY, WE HAVE seen that measures such as infationor decit reduction get assigned priority and end up driving

pulic policy. In the process other concerns such as reducingunemployment get tossed away. In the 1980s, governmentsought into the idea o a “natural” rate o unemployment, arate consistent with low infation. The 1985 Macdonald RoyalCommission estimated the natural rate as alling within arange o 7.5 percent and 9.0 percent! This then ecame a targetrate or unemployment. Little wonder that uttons appeared,“I am not unemployed, I am ghting infation”. Unemployed

workers were victims o delierate action y government tocreate unemployment.

When Canada decided to put the ght against infation rst,we paid a higher price than anything gained. Using sky-highinterest rates (up into the 16-19 percent range) to controlconsumer prices had the consequence o adding illions



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o dollars to pulic det. Money that could have een usedto provide education, health care, transport, protect theenvironment, and promote amateur sports, recreation, andcultural activities went into interest payments on the det.

Governments could have set a new direction or monetarypolicy. Instead o ordering central ankers to reduce interestrates, governments reacted y cutting spending on neededprograms, and making lives worse or people.

Overall the ght against infation reduced GDP growth. When$10 o every $100 o GDP is lost due to a 10 percent infation

rate, that is a ad result. but when we slow the economydown to ght infation, and have to give up $90 o GDP growth, just to save the $10 lost to infation, you have to question thewisdom o making infation reduction the over-riding priorityor society.

In March 2010, as we entered the second decade o the newcentury, the Governor o the bank o Canada was still claiminghis only mandate was to meet a two percent infation target. Yet,

Canadians ace an uncertain economic uture, characterizedy jo losses, exhaustion o employment insurance enets,inadequate welare, rising inequalities and cuts to pulicservices. Not only does the uture look more rightening, thepresent has ecome leak or those whose unemploymentinsurance has run out or those denied enets despite havingpaid premiums.

Canada lost over 400,000 jos in the economic downturn o 2008-09. Dealing with this jos decit needs to take priority.The Act creating the bank o Canada stated its goal was toact “in the est interests o the economic lie o the nation”.The Governor o the bank cannot e allowed to narrow hisparliamentary mandate ecause he wants us to elievemeasuring infation overrides everything else.

Governmentsreacted by

cutting spending on neededprograms, andmaking lives

worse for people.



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It is important to recognize that measurement is not just aquestion o collecting numers aout unemployment, thedecit or infation. It is rst a question o deciding what

matters to us as a society, and what we can expect in a reeand democratic society rom our government. I we are goingto attach importance to an economic measure, we have torecognize it infuences our economic and social health. Whenwe measure the wrong things, we do the wrong things.

We need to agree rst that what we are measuring is whatwe value as citizens, and what we expect to see rom pulicpolicy. When what is eing measured does not (or no longer)represents what citizens are looking or rom the uture, it istime to change what is eing measured.

For years economic growth, measured as the rate o increasein output or GDP, has een a prime goal or policy makers,and infuenced pulic opinion. Our idea o what we should eaiming or as a country is still guided y the monthly, quarterly,and annual releases o GDP gures. Overall income growth

matters, ut how the income gets distriuted matters more.GDP per person does not tell us who is getting the increase inincomes, and thereore can e misleading.

GDP growth is linked to employment creation. It has eenshown, or example, that each percentage point decline inunemployment leads to a one to three percentage increasein GDP. In other words, i we want to increase GDP we need

to create jos. Thinking o positive GDP growth as a goodoutcome, ecause it increases employment, makes sense.However, the improvement in well-eing comes rom morepeople working, not the GDP growth statistics. Work ringsthe enets o well-eing. For individuals, jos add othsujective enets o eeling competent and autonomous, aswell as the material enets o income.

When we measurethe wrong

things, we do thewrong things.



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The Human Development Index

Former Prime Minister Jean Chrétien used to rag aout

Canada eing the est country in the world: “we are numerone”. The ormer prime minister was not just exaggerating.In 1990, the United Nations Development Programme (UNDP)had adopted an important new way o measuring economicand social perormance: the Human Development Index(HDI). Its amitious purpose was to rank the perormance o countries across the world. Canada came out on top o thescale, or a seven year period in the 1990s.

The UNDP was ounded in the 1960s to promote economicdevelopment across the world. Three decades later, the UNDPwanted to correct the shortcomings o the traditional methodor measuring economic growth, GDP per capita. GDP was ameasure o output (production o goods and services). TheUNDP wanted to roaden the denition to capture economicsuccess more ully. In addition to GDP per capita (which is themost important component o the HDI), the UNDP decided to

include average lie expectancy, and adult literacy (years o schooling was added in 1994) to create a composite or overallindex. Development was more than growth in output perperson, the new HDI measure said to the world.

The HDI gained world attention when it was launched.It had the acking o Memer States o the UN. Leadingauthorities, such as Harvard economist Amartya Sen, were

instrumental in its creation. Canadian ministers and ocialswere particularly pleased when Canada topped the HDI scale.Impartial oservers noted our perormance on adult literacywas the actor that put us narrowly ahead o the NorthernEuropean states and our literacy gures were uncommonlyhigh. Unortunately, the Canadian ranking ell rom the topplace due, in part, to policy decisions made y the Chrétien

Unfortunately,the Canadian

ranking fell fromthe top place.



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Lieral government slowing economic growth. In act Canada’sposition has stayed urther down the scale or over a decade,under oth Lieral and Conservative regimes in Ottawa.

It is not easy to develop a comprehensive measure o economicand social well-eing. The UNDP thought it was important to try,and was not araid to comine quite dierent aspirations. Somenational ojectives are not controversial. Seeing citizens enjoylong lie or instance, or having access to learning and adequateliteracy skills, are goals worth pursing anywhere, and always.Longevity measures overall health indirectly. A society wherepeople die early indicates that people suer more ill health asamilies or individuals. Literacy and school enrolment measureeducation and also the capacity to ollow and participate inpulic lie. No wonder the UNDP chose to include these importantmeasures o well-eing in its HDI index.

Canadians need enchmarks in order to judge our overallperormance as a society. As Canada is a complex society, wehave adopted a wide variety o economic and social measures.

It would e nice to have a single composite measure, suchas the HDI, that would give us a ull picture o our lives,utno one measure is likely to e satisactory. The UNDP oundit necessary to create two additional composite indices, oneto measure gender empowerment, and another to measurepoverty.

Most Canadians care how output is eing distriuted as

incomes and how work gets divided up in producing GDP. I economic growth means some get very rich and the rest o us lose ground or stay in the same place, what is the pointo more growth? Thinking that more production is good oreveryone needs to e rejected. Overall, production needs toe linked to creating more equality. When environmentalistssay GDP as a measure o output exerts too much infuence

Production needsto be linked to

creating moreequality.



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How do youmeasure the

productivityperformance ofa teacher or aprison guard?

over government policy, they have a point. What we need issustainale growth, not growth or its own sake.

France Debates Well-Being

In 2008, Nicolas Sarkozy, the current President o France(and a Conservative), asked a group o experts headed y theAmerican economist, Noel prize winner Joseph Stiglitz, tocome up with a new set o measures o economic and socialperormance. The 2009 report, prepared y a prestigious teamdrawn rom around the world that included Amartya Sen o Harvard, ocused on three topics:

• GDP as a measure o perormance,• Quality o lie, and• Sustainaility.

The report pointed out GDP only measured what was producedor sale in the national market. Markets had ecome more

complex, and dicult to measure. In the manuacturingsector, parts or goods were produced in more than onecountry, assemled into nal products elsewhere, and thensold in many markets. It was hard to say where a car hadeen produced, when much o the content was spread aroundvarious countries.

As well, GDP ailed to capture the structural shits rom the

production o goods towards more provision o servicesthat had taken place in the advanced countries. Servicesoutput cannot e measured with anything like the precisiono manuacturing. How do you measure the productivityperormance o a teacher or a prison guard? Importantly, GDPignores non-market activities. Child care or meals done romthe home are not valued or example.



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The reportadmits that

we knowmore aboutmeasuring productionthan well-being.

Machinery, tools, uildings, roads, airplanes, trucks, andequipment o all kinds wear out. but this “depreciation”o capital goods is not evaluated, overstating current GDP.

Capital goods need to e upgraded. Natural resources getused up in production, ut the cost o replacing them whenthey are gone is ignored y the national accounts that makeup GDP.

The French government agreed that we need to attachmore importance to quality o lie and re-think what wemeasure. The report admits that we know more aoutmeasuring production than well-eing. but it insistedwe have to develop measures o what matters to people.Instead o thinking o the economy as production, weneed to think aout human capailities. Education,health, and the sum total o our non-material personalresources are the economic and social outcomes thatneed our attention.

The report is not araid to call or “roust, reliale measures

o social connections, political voice, and insecurity thatcan e shown to predict lie satisaction” though these arenot at all easy to quantiy.

The Stiglitz report to the French President wants governmentsto measure the impact on economic well-eing o currentactivities or uture generations. Instead o giving ree reign toorces that avour more investment rom whatever source, and

or whatever reason, why not rst ask what the investmentwill do to our aility to live a etter lie? Do we want to havemore consumption today or do we preer etter conditions orteaching children to do mathematics? A society that decidesto give more space to young mathematicians makes dierentspending plans than one that decides to avour more currentconsumption goods.



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We need to take the costs and enets that are “external” to thedirect cost o the market transaction seriously. The secondaryeects, or as economists call them “externalities” o education,

are not the same as those o operating actories and producingconsumer products. The direct cost o the pulic expenditureo education is what GDP measures. It misses the enets o education or society rom having educated people providingus with needed services in a host o areas. Similarly, the saleprice o the consumer goods does not measure the damagedone to the environment through air and water pollution o operating the actories.

Jobs Matter Most

Our society is made up o people doing paid work or a living,looking or paid work, retired rom paid work, or dependenton those with paid work. Paid work denes who we are asindividuals. Without access to well paid work, or generousretirement income, people suer income deprivation, and

every indignity that accompanies not having much money.It ollows that or most Canadians the signicant measureso economic well-eing are amily income and the rates o employment and unemployment.

Logic dictates that the main goal o a society should e a jo or all who want to work. but even that important goalis not enough to sustain amily income, and promote well-

eing. People need access to well paying jos, with generousemployment enets attached. Part-time jos, and otherprecarious employment such as those “sel-employed” or lacko etter opportunities, are included in ocial employment,ut the reality is most people want ull-time work. All wantto e paid good wages and salaries, and receive employmentenets.

Paid work defines

who we are asindividuals.



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Layos ruin lives. Declines in manuacturing employmentover the years have devastated amilies. People who lose josin a downturn nd unemployment enets expire eore the

jo market turns around. Part-time or seasonal workers otendo not qualiy or so-called employment insurance and ndthemselves destitute on welare.

Government policies lie ehind our “ojective” measureso success, and our “sujective” sense o well-eing. Whatmeasures get singled out as important have an impact onwhat governments choose to do. So, what a country decides tohighlight as good perormance needs to e widely understoodand accepted, ecause it constitutes a goal or all o us.Aritrary measures o perormance can lead to ad decisionsand do great damage.

As workers Canadians have een etrayed y governmentpolicies. As we see in the next section, y even conventionalmeasures such as productivity, we are perorming poorly.

Logic dictatesthat the main

goal of asociety should bea job for all whowant to work.



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SECTION TWO

The Failureof market-oriented policies

IN THE 1960S, the Canadian ederal system adopted theprinciple that across Canada comparale pulic services

should e availale to all Canadians, irrespective o provincialincome. Otherwise, a region with one-hal o the income o Ontario, would end up with a health care and an educationsystem that had only one-hal o the resources availale toresidents o Ontario. The system o equalization paymentsand the cost-sharing arrangement negotiated to give eectto this principle implied that the ederal government wouldraise money to e spent in areas o provincial jurisdiction.

This “ederal spending power” created the Canadian welarestate; withdrawal rom the cost-sharing programmes in the1990s signalled its withering away. The current Conservativegovernment has een quite clear that it intends to give up theederal spending power and let the provinces pay or whateversocial policy they can aord. This would e in character with



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its mistrust o the enets o government spending, and elie that people are etter o when they end or themselves inthe market place.

Welfare for Canadians

From 1963 to 1968 our major welare state measures wereadopted during the lie o two Lieral minority governments(supported y the NDP). Using the ederal spending power,we estalished the Canada (and Queec) Pension Plans,Medicare and through the Canada Assistance Plan (CAP), anational saety net. These were set up alongside, what wasto ecome in the 1970s, a comprehensive unemploymentinsurance programme, and the existing small, universalamily allowance.

In the 1995 ederal udget the agreements etween the ederalgovernment and the provinces, painstakingly negotiated over

many years to uild our welare state, were tossed out. Thereason given was decit and det reduction. The non-statedpurpose was to reduce wages in order to “improve” the laourmarket, and promote productivity gains.

Along with the 1988 ree trade agreement negotiated underthe Conservatives, the 1995 Lieral udget was the centrepieceo a two decade strategy championed y Canadian usinessto improve productivity. The idea was to remove “non-marketarriers” to productivity enhancement y cutting governmentspending. Reducing corporate taxes, introducing de-regulation,signing ree trade deals, and pursuing privatization were allpart o the same productivity package. In the language o “newpulic management”, governments were not elected just topass laws; they had a mandate to “make” markets.

The agreementsbetween

the federal government andthe provinces,were tossed out.



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The Productivity Slump

Andrew Sharpe o the Canadian Centre or the Study o Living

Standards has careully tracked and analyzed the marketenhancement measures introduced in Canada. He has shownthat Canada has gone very ar in promoting lieralization o markets. He concludes we have achieved very little.

Our productivity perormance is still very weak, compared toother countries, and to our past record. I, over the past twodecades, usiness riendly policies have een adopted acrossthe oard in Ottawa, and the provinces, without improving

our productivity perormance, why do governments not getthe message? Recently, the Governor o the bank o Canadapointed the nger at usiness leaders, saying they haveailed to invest despite the adoption o generous tax creditsand usiness tax cuts. but the culprits are governments thatcontinue to pursue policies that ail Canadians.

Sharpe has summarized the measures that have ailed to

produce etter productivity: infation targeting (1991); zero-decit philosophy and policy (mid-1990s); ederal det-to-GDP ratio target o 25 percent over 10 years (1994); plans tohold program spending to elow economic growth (on-going);Canada-U.S. Free Trade Agreement (1989); North American FreeTrade Agreement (1994); Foreign Investment Review Agency(1985) replaced y investor-riendly Investment Canada(later merged into Industry Canada); ederal privatizationo Crown corporations, including CN, Petro-Canada, NAVCanada, Air Canada, Telesat, de Havilland, and Canadair;deregulation, including air transport, electricity, roadtransport, and telecommunications; Goods and Services Tax(GST) replaces the Manuacturers’ Sales Tax (1991); reductionsin the statutory ederal corporate tax rate rom 37.8 percentin 1980 to 19.5 percent in 2008, to go down to 15 percent y

Governmentscontinue to

pursue policiesthat fail Canadians.



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2012; reduced direct research and development perormed ygovernment; attempts to eliminate inter-provincial arriersto the movement o goods and people; laour-law regime that

discourages unionization in emerging sectors, resulting in asignicant decline in private sector union density.

Re-Thinking Productivity

Productivity measures output against the main inputs that areused to produce output: laour, capital and technology. Outputper hour worked is one common measure. More sophisticated

analysis is used to arrive at “multi-actor” measures thatinclude capital and technology as inputs into production, aswell as laour.

It is important to recognize the limitations o the concept o productivity. It is a ackward looking measure – it tells us howwe are doing. It cannot tell us why we are doing poorly, orwhat we need to do in order to do well.

Though it is not well known, as American sociologistFred block showed through his research, productivityanalysis was irst developed y American trade unionsas a tool or collective argaining. When laournegotiators sat down with employers to talk salary andremuneration they wanted to e ale to identiy howmuch more had een produced per worker since the lastcontract.

Unions wanted to e ale to show what the company hadgained in order to argain a wage and salary increase in linewith the real growth. Thus, productivity was “invented” soas to give collective argaining a ocus on the contriutiono laour to production.

It isimportant to

recognize thelimitations ofthe concept ofproductivity.



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Trade unions were used to dealing with companies thatreused to give a ull accounting o income and expenses, andwere always pleading poverty despite evidence to the contrary

availale to the workers. Developing the productivity measurewas a way o determining the gains to e shared etweenworkers and shareholders.

Productivity analysis takes or granted the distriution o income, and the ownership and control over the productionprocess. It assumes that what people earn they deserve, andwhat companies own elong in their hands. Taking theseacts to e a given makes sense rom a pure social science

perspective and is part o what is needed to complete theanalysis.

but it turns out the distriution o income is vitally importantto productivity, as is the ownership (and orm o organization)o production. Privately held companies are dierent rom co-operatives. U.S. owned companies have their own corporatecultures. Wholly oreign owned companies in major sectors o

the economy do not make the same contriution to Canadianlie as Crown corporations, pulicly traded corporations, oreven private Canadian companies.

Yet our government policies avour the implantation o moreoreign companies, inhiit the growth o co-operatives, andtry to eliminate Crown corporations.

The availaility and quality o government services arevery important to productivity as well. Countries with welldeveloped governmental inrastructure, educational andsocial services rank higher in productivity perormancethan nations with less government spending. Yet exponentso productivity oten equate improvement with cutacks togovernment.

The availabilityand quality

of governmentservices are veryimportant toproductivity.





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reducing wages and salaries. Instead o thinking o incomeas important or the standard o living o Canadians, salariesand wages were renamed “unit laour costs”. Canadians were

told alsely that to compete internationally, wage concessionsand pulic sector compression were necessary.

One ig result o the eorts to make the Canadian economymore market riendly was to increase income inequality.Inequality o income is the most important actor explainingsocial health. In an eort to help Canadian usiness do whatthey said was necessary or Canada, Canadian governmentsmade lie worse or all Canadians.

Canadiangovernments

made lifeworse for all Canadians.



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SECTION THREE

Reducing inequalities

THE WORLD HEALTH Organization convened a Commissionon the Social Determinants o Health which produced a majorreport on what to do aout inequities in health around theworld. Commissioner Monique bégin, a ormer CanadianMinister o Health, was quoted: “The truth is that our countryis so wealthy that it manages to mask the reality o ood anksin our cities, o unacceptale housing (one in ve), o youngInuit adults with very high suicide rates”. The starting pointor improving well-eing is surely ringing all the necessaryresources to ear on eliminating economic hardships andsocial exclusion.

As a society, improving human well-eing means decidingwhat we want to see, and agreeing to do something to makeit happen. Just as importantly, when we know what we do not



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want to see or each other, we have to correct it. From thisperspective, economic well-eing means looking to improveliving conditions or the most vulnerale.

The late Hyman Minsky, a noted economist, laid out whatto do when nancial panics (which he saw as endemic in aprot driven economy) created ad times or people. In oomtimes people invest money and expect to see ever increasingreturns. When the ust comes, new spending stops and theeconomy gets stuck, with no recovery in sight. Minsky arguedthat the est way to stop a slowdown was to put money in thehands o people who would spend every penny, those at the

ottom o the income scale. Anything extra they receive intranser payments gets spent in the community.

Growing Inequalities

Canada had a serious downturn in 1981, and another one in

1990, eore the current great recession o 2008-2009. Whatwe learned rom the other two was that people who losttheir jos, and succeeded in nding other work, ell down theincome scale. Five years ater eing let go, average earningsor those who eventually ound work slid y aout 30 percent,according to Statistics Canada estimates. As well, unemployedmanuacturing workers had diculty nding new work. Thereis every reason to elieve something similar will happen tothe victims o the 2008-09 recession as well.

Proaly the most important thing we have learned inrecent years aout pulic policy is that our social health isdetermined y the degree o economic equality that exists.The gap etween the rich and the poor shows more than justwho are the “have-nots”and who are the “have-yachts” – it

Our social healthis determined by

the degree ofeconomic equalitythat exists.



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Countries withlower levels of

inequality scoremuch betteron measures ofsocial health.

determines social health, including the prevalence o mentalillness and overall ill health among citizens.

In their important ook The Spirit Level: Why More Equal SocietiesMost Always Do Better, Richard Wilkinson and Kate Pickettdemonstrate through extensive statistical comparisonshow inequalities create social stress, and how the resultinganxieties hurt people across the income scale. Suchunwelcome social conditions as violence (domestic and crimerelated), alcoholism, oesity, drug addiction, school drop-outrates, and chronic diseases like diaetes are more common incountries that are more unequal. Countries with lower levels

o inequality, Sweden and Japan or instance, score muchetter on these measures o social health.

Objective and Subjective Well-Being

Theorists o well-eing say our jos and incomes infuence

how we eel aout ourselves, and aout others. When wego to work, we meet our needs or shelter, ood, clothing,recreation, and so on, ut we also are looking or sel-esteem,companionship, pleasure, satisaction, a sense o achievementand more. These values are not captured y traditionalindicators used y governments, such as GDP per capita orthe HDI.

However, “ojective” measures such as GDP or the HDI do help

us understand why some nations rate etter on a “sujective”scale when citizens are asked aout how satised they arewith their lives. Income, longevity, education, and literacyare associated with society health, and psychological well-eing, ut they matter or individuals as well. Homelesspeople, without means o support, are not just materially



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Creating solidarity

within a societyturns out to bemore importantthan any othersingle factorin explaining economic well-being.

deprived; they are also going to suer severe damage to theiremotional health. The Canadian Mental Health Association

has een telling governments or decades that the cost o unemployment can e measured in increases in suicide,amily reakdown, divorce, and indicators o what we nowcall social health.

The social scientists who collected the inormation showingthe link etween equality and social health have alsoconrmed some widely held truths. The golden rule (do untoothers as you would have others do unto you) tells us not to

allow some to do with a lot less than others.

In the trade union movement we know the value o solidarity:it is etter to share the good times, and to ght togetherthrough the ad times. Creating solidarity within a societyy reducing the gap etween rich and poor, turns out to emore important than any other single actor in explainingeconomic well-eing. In the name o improving productivity,

governments aandoned most o the policies that osteredsolidarity. Rising inequalities were the result. The supposedproductivity “cure” was incuating the inequality disease.

The Social Wage and Well-Being

Estalishing a social wage or those retired rom the workorce,

those whose circumstances limit their access to paid work,and those with special needs, such as parents, students, andpeople with physical or related diculties with participatingin the workplace, has een an important part o social well-eing, at least since World War II. Indeed we measure how wellsocieties are doing y looking at how generously governments



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When someCanadians lose

their accessto paid work,for whateverreason, it isall Canadiansthat suffer.

provide or people acing special challenges through socialspending programmes.

With research showing eyond any reasonale measureo dout that inequalities within societies cause prolemsor every memer o society, and not just those who suerthe most inequalities, there is no excuse or not attackinginequalities through re-distriuting income. When someCanadians lose their access to paid work, or whatever reason,it is all Canadians that suer. Recognizing this, and actingupon it, is the most important step we can take as a societytowards improving our economic well-eing.

For years Canadian economic well-eing has een measuredy economists rom the Canadian Centre or the Study o Living Standards (CSLS). Indeed its work was cited approvinglyy the French Presidential Commission. According to the CSLSindex o economic and social well-eing, ecause o poorperormance on measures o equality and economic security,Canada could do no etter than ninth place among 14 OECD

countries surveyed (the U.S. was 13th

).

When the CSLS rst roached the idea o an economic measureo well-eing that would include items such as unpaidwork in calculating well-eing, the ederal government wassupportive. The ederal department, now known as HumanResources Skill Development Canada (HRSDC), gave them asmall grant.

When the index was calculated it ound that cuts tounemployment insurance had led to a decrease in Canadianwell-eing. Instead o paying attention to the work, thegovernment withdrew its grant. Today, to its discredit, HRSDCdoes not include measures o inequality on its wesite lookingat well-eing.



40

In 2005, the Pemina Institute in Alerta calculated a GenuineProgress Indicator (GPI) or the province. It ound that as GDProse, the GPI ell. No wonder. Touting Canada as an energy

superpower cannot change the environmental impact o therace to develop the tar sands o Northern Alerta.

A new initiative is underway under the leadership o RoyRomanow (ormer Premier o Saskatchewan) and Moniquebégin (ormer ederal health minister) to ring greaterunderstanding to the concept o economic well-eing.Amitiously the intent is to create an Index o Canadian Well-

being that could receive general acceptance.



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SECTION FOUR

Securing Our Future

JOb PROSPECTS are weak in Canada, and employment goalsare nowhere to e seen. There is a pressing need to evaluatethe uture o paid work in this country. We know that a largenumer o Canadians are headed or retirement. We also knowthat many people cannot aord to retire. Canada needs toadopt a jos strategy. The solution eing oered – the marketsolution – is not working.

Canada now has a population o nearly 34 million people. O the 27.2 million Canadians over the age o 15, less than one-hal held a ull-time jo in 2008. O the 16.8 million who wereworking or pay in Novemer o 2008, 22 percent had a part-time jo. Over one million part-time workers (aout one inthree) were looking or a ull-time jo.

C d h



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Canada has never adopted

full employmentas a goal .

When we add the ocially unemployed in 2008 (aout 1.5million) to the 1.1 million part-time workers looking or ull-time work, we see that 2.6 million Canadians were unemployedor underemployed. The 2008-09 recession kicked 400,000people out o work and increased “ocial” unemployment toeight percent. And, the eight percent does not include thosewho have given up looking or jos ecause paid work hasdried up. Adding these “discouraged” workers is needed to getan idea o the current dimensions o unemployment.

Surprisingly, Canada has never adopted ull employmentas a goal. In Northern Europe, ull employment has een

an accepted national enchmark or governments andusiness, not just trade unions. In Canada, ater the war, animportant white paper did talk aout maintaining high levelso employment. This was achieved riefy in the mid-1960swhen unemployment dipped to just over three percent.

Lots o people ace serious arriers to employment. AoriginalCanadians, immigrants and people with disailities are less

likely to nd work. Young people aged 15-24 and workers overthe age o 54 have higher unemployment rates. People with lesseducation have higher unemployment rates than universitygraduates (our percent in 2006). Trained teachers have thelowest unemployment rate o any occupation according tocensus data rom 2006.

Each year sees a lot o jo turnover. A sort o musical chairs getsplayed out, as companies go ust, or downsize and lay people

o. New ventures start up, and people get hired, or conditionsimprove, and companies rehire. The important thing is that jo searches take place in an economic environment whereinvestment decisions are eing made aout what is going toe done. Unortunately, in the usual state o aairs, no laourody gets to participate in those decisions.

W k ith t



45

Governments continuously susidize usiness investmentthrough tax policy, ut do not require companies to hire oreven train workers. banks play a leading role in determiningwho gets the money needed to start a usiness, and whogets told their credit is no longer any good. banks have thepowers they have ecause successive ederal governmentshave granted ankers those powers. Yet no eorts aremade y government to link ank lending to employmentgoals.

The employment outlook, as seen in 2006 y Human Resourcesand Social Development Canada (HRSDC), assumes the bank

o Canada will e ale to match supply and demand orlaour through macro-economic measures. It projects marketequilirium as the numer o new workers declines and thenumer o jo openings keeps pace. There is little reason toecome complacent ecause o the HRSDC analysis.

Historically more people have een looking or work thanthere were jos to e had. Workers without jos, or workers

in precarious jos, are a recurring prolem that has not eenxed. Canada has consistently ailed to adopt appropriate ullemployment strategies comining macro-economic policyand sector specic strategies. In the last 65 years Canadahas had economic growth in spurts. Recessions have eencommon, with three severe ones in the last 30 years (1981,1990-92, 2008-09).

believers in supply and demand assume that the supply o

workers and the demand or workers can e equilirated yfuctuations in wages and salaries. However, since workers arenot commodities, and wages and salaries are set y historicalnorms, and y negotiation (and not y fexile rates o pay)the “market solution” o letting wages align jos with workersholds out no promise.

Workers withoutjobs, or workers

in precariousjobs, are arecurring problemthat has notbeen fixed.



Pretending wel j i di i b d i di i k



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Pretending weare about to

have a skillsshortage,or huge jobvacancies, dueto an aging population is

largely fearmongering.

largest jurisdictions. bad economic conditions may keeppeople who hold a jo rom leaving it. In any event, it woulde a huge mistake to imagine that retirements can do our joplanning or us.

Populations age slowly, just as people do. The changes eingprojected as a result o the ay oom generation reachingretirement age can e easily over-stated. Pretending we areaout to have a skills shortage, or huge jo vacancies, due to anaging population is largely ear mongering. It draws attentionaway rom the need to create jos now or the unemployed,upgrade the skills o workers on the jo, and plan a uture

or the new entrants to the laour market. We need to knowwhere our jos are going to come rom, and how many we aregoing to need, in order or everyone who wants ull-time workto nd a jo, let alone in their chosen eld.

Looking ahead to the uture o the Canadian workplace, entailstaking account o occupations, and what happens withinoccupational groupings. Statistics Canada and HRSDC haveestalished a matrix assigning jo descriptions classied yoccupation or the Canadian workorce. Data is availale rom2006, and the matrix is updated with each census, so the nextrevision comes in 2011.

The roadest classication divides the workplace into 10occupations:

1. Management Occupations business.2. Finance and Administrative Occupations.

3. Natural and Applied Sciences and Related Occupations.4. Health Occupations.5. Occupations in Social Science, Education, Government

Service and Religion.6. Occupations in Art, Culture, Recreation and Sport.7. Sales and Service Occupations.

There is every 8 Trades Transport and Equipment Operators and



48

There is everyreason to believe

that servicesemploymentrepresentsthe future.

8. Trades, Transport and Equipment Operators andRelated Occupations.

9. Occupations Unique to Primary Industry.10. Occupations Unique to Processing, Manuacturing and

Utilities.

The matrix then reaks these down into more detaileddescriptions o jo categories within road occupations. Thedata collection is done in collaoration with occupationalassociations. These groups are a source o specializedknowledge aout Canadian workplaces.

Those interested in trying to orecast jo requirements or theuture need to pay close attention to what these associationshave to say. The asis or the jos plan or the uture needs toe developed in partnership with occupational associationsand laour organizations. Policies on retirement, training, jo-sharing, parental leave, employment equity, and new hiresneed to e worked out in consultation with knowledgealepeople on the ground.

Looking at recent survey inormation aout employmentcan only give us road ideas o where Canada is headed.From Statistics Canada inormation, we see what have eenthe growth occupations, and where employment has alleno. Using Novemer 2008 data we can see that servicesaccount or 11 million o Canadian jos. In the susequentrecession, over one year, we lost over 100,000 services jos.There is every reason to elieve that services employment

represents the uture. For more and more Canadians,manuacturing employment represents the past. Ourrecent jo losses in manuacturing are the continuation o a trend. Over the last 60 years the percentage o peopleemployed making goods has allen rom etter than one inour to less than one in eight.

Putting Economic Strategy



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Puttingemployment

first requiresthat we investin educationof all types.

Economic Strategy

The current approach to the economy is to avour tar sandsdevelopment and tout Canada as an energy superpower.Growth in employment in the energy sector has eenvery rapid, ut overall remains small. billions o dollars ininvestment represents less than 250,000 sector specic jos.Canada as a military nation is also an important element inConservative policy. Military spending has increased asterthan other types o spending. Again illions o dollars arespent and any resulting Canadian employment is accidental.

Under Pierre Trudeau, the Canadian government talkedaout an economic strategy linking natural resources tomanuacturing. Instead o exporting raw materials, we wouldupgrade and transorm natural products and add valuethrough manuacturing. The policy was aandoned. The ghtagainst infation, and the 1981 recession, postponed industrialplanning or the uture indenitely.

Putting employment rst requires that we invest in educationo all types. People need to e ree to develop their innatetalents, and pursue careers and occupations o their choice.Whether it is a Ph.D candidate or an apprentice che, peopleneed institutional and nancial support rom government.Providing adequate ursaries and training allowances toyoung people and adult jo seekers is a necessary part o anyemployment strategy.

Putting investment and jo creation together is the onlylong term solution to unemployment and poor economicperormance. Estalishing jos and investment tales or themain sectors o the economy is needed. Indicative planningy government, in conjunction with laour organizations,occupational associations, and usiness is the est way to go.

Revisions to ederal government strategy have gone in the



50

Revisions to ederal government strategy have gone in thedirection o o-loading nancial responsiilities to theprovinces or improving education, health, recreation, cultureand all manner o direct services. The idea o improving

human capailities through new spending in these areas thengets crushed when the economic outlook changes or theworse. Every time a recession hits, provincial governmentsannounce austerity programs, cut services and attack pulicemployees y cutting jos, reezing wages and eliminatingenets. The nancial prolems are caused y the recession,ut the responses only make things worse.

We do not need urther reductions in corporate taxes, ormisguided attempts to ring down infation through highinterest rates, or cuts to government spending. What isneeded is planning or employment. How long does it taketo understand that when the unemployment rate is lowgovernments do not ace decits? When governments makecuts to pulic spending they weaken the economy and get inthe way o recovery.



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ConclusionTHE EMPLOYMENT outlook or Canada depends on what goalswe adopt. The current long-standing ree-market scenario o removing arriers to “equilirium” in the laour market hasailed as an employment strategy, and has created inequalitieswhich endanger our health as a society and as individuals, aswe have seen.

A second scenario can e envisaged o using governmentpolicy to create employment opportunities directly. A ullemployment strategy could e developed ased on soundmacro-economic principles o meeting overall demandor goods and services. This scenario envisages allowingexisting industries to take the economic lead, taxing themully, and using expanded governments as active agents to

ack-up market ailures, and promote economic well-eingpragmatically over time. Strategic social spending wouldreduce inequality, and promote etter economic well-eing.This scenario corresponds to traditional European socialdemocracy. It can e made to work in Canada. The mainchallenge with this strategy is securing support rom the

companies operating in Canada. Leading corporations are



54

oten oreign owned and uninterested in eing part o aCanadian economic strategy. Asentee landlords never dowant to join willingly in national endeavours.

A third scenario would see ull employment integratedinto a larger plan to achieve economic well-eing, as parto green strategy, that rejected GDP growth as a goal, andinstead looked at uilding a sustainale uture asedon reducing existing inequalities. Governments wouldecome the employers o last resort, ready to provide josor all, much as the bank o Canada acts as the lender o

last resort to the anking system. In the inancial crisis,the ederal government made $125 illion availale tothe ig commercial anks y standing ready to purchasead mortgages. It would take much less than that tocreate a meaningul employment program in Canada.

This third scenario starts rom Canadian experience. As anorthern society with a oreign owned economy dependent onresource exploitation, we have major requirements or energy,transport and inrastructure. building and heating costs arehigh. The growing season is short. Regions within Canadaare markedly dierent. Overall Canada has ecome an uransociety where, or most people, jos entail providing servicesto other Canadians. because o our size and diversity we needto make large scale pulic investments in inrastructure thatmeet our special needs as Canadians.

Pulicly owned, nanced and operated transport acilities,sports, recreational, cultural and arts acilities are needed.Canadian industry needs regular environmental audits.Penalties or polluters and those who ignore the environmentalconsequences or workers and the community o theiroperation need to e punitive.

Whether we adopt a European model, or a new economicdi h l l k d il d d



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paradigm, the employment outlook needs to e nailed down,and monitored closely. Canada could create employmentoards (much as we have school oards) in order to ensure

that all have access to paid work. In either scenario we haveto consider how to remunerate unpaid household workers,and provide people who have een outside the laour marketwith retirement income.

Corporations plan routinely. Every aspect o their uture is uiltaround strategies. Human resources, transport, vacation time,all are mapped out in advance. Governments need to get more

serious aout economic planning. The ederal governmenthas adopted a decit reduction plan. but it has ailed to planor the uture employment o our citizens. It has ailed to planor an economy o well-eing and genuine stewardship o ourcommon wealth. That task lies ahead.



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