What's Wrong With This Country – Part 1

Although we are in the throws of the worst economic meltdown in close to a century, the federal government, has failed to provide any assistance for those workers who have lost, or are about to lose, their jobs. Since the mid-nineties, the federal government, mainly under the Liberals, has racked up one “surprise” budgetary surplus after another. The former Liberal government, in effect, converted the EI program into a hidden payroll tax, and used the excess funds to pay down the deficit. Although the Supreme Court agreed that this was the case, in its recent ruling, it stated that the federal government would not be required to return the money to the taxpayers. This was a fortunate result for the current Conservative government led by Stephen Harper, who since taking office, has given away $190 billion in tax cuts, mainly to the wealthy, and spent another 14 billion dollars in debt reduction. This has essentially left the government without resources to deal with the current economice downturn and subsequent job losses.

There has, as a result, been a very significant cost to Canadians, especially to those who are being forced to depend on the Employment Insurance scheme. In 1996, Canadians were sold on the idea that the program was a waste of taxpayer dollars and discouraged claimants from seeking work. This led to a “reform” of the EI system. The problem is that now, when it is really needed, only 40% of unemployed workers will qualifiy for benefits. The current maximum payout is $435 per week for a maximum of 45 weeks. Unfortunately few of the unemployed qualify for the maximum, and the average payout is only about half of the maximum. Further, in real terms, adjusted for inflation, there has been an almost 30% reduction in benefits since 1996. The situation is worse for working women who make up the bulk of part time workers in this country and seldom qualify for any benefits at all.

Employment Insurance is not now, nor was it ever intended as a welfare scheme. It was meant as a contingency fund for employees who found themselves without a job during the course of their careers. It was paid for by the employees and the companies that they worked for. The money collected ought never have been used as a part of the governments general revenue. Had the system been properly, and honestly managed the program would have had a surplus in the order of $54 billion. A surplus that Canadians facing the loss of their jobs, would have had available to draw on. Instead of dealing with this issue, the current federal government continues to pocket this surplus. The Conservatives have however, suggested the implementation of a new crown corporation that would set up a new financing structure and set the future rates for the Employment Insurance program. This will be cold comfort to those who are being forced onto the unemployment lines.

Big Three Rescue

There seems to be a good deal of confusion whether the proposed “bailout” of the Big Three North American auto-makers is a good thing or not. Those in favour generally suggest that the economic impact and potential job loss make the loss of the auto-makers unthinkable.Those opposed seem to be of the opinion that they got themselves into this mess and shouldn't be allowed any special treatment because they didn't build the vehicles people wanted in the first place. A subgroup is intent on Union bashing, and claims the labour costs are too high and the unionised workers don't deserve the pensions that they bargained.

It is clear that any major failure in the North American auto sector would have a catastrophic impact on employment in central Canada, in particular, Southern Ontario. Automobile manufacturing is a base level industry that provides at least seven spin off jobs for every direct job created. It is estimated that if this industry fails, it could result in the direct loss of 288,000 jobs in this country. Further, the retail sector would be crippled overnight. It is not difficult to foresee stagnation in the construction industry, (recall the situation in Calgary after the last bust in the oil patch). The loss of tax base to municipalities, increased social welfare and Employment Insurance costs would clearly preoccupy all levels of government. We have some idea of the sort of pain that the loss of manufacturing can bring by studying the aftermath of General Motors closure of its plants in Flint Michigan. It should not be a scenario we would wish to see repeated on a wider scale across North America.It is clear that serious errors were made in terms of long range planning by the management of the Big Three. However, under our system as it is currently structured, management's function is to maximize the profit for the shareholders. There is little or no incentive to look forward in any great detail to try and head off any perceived problems. Management is rewarded for immediate results. Caution is not rewarded, and at best due diligence receives only lip service.

As to the argument that they never built the type of vehicle people wanted, one only has to look at what people are driving on the highways in our country. Pickup trucks, vans and SUV's abound. They built what people wanted. They didn't anticipate how rapidly the market would change, almost no one did.

Those who blame the labour and pension costs are chosing to attack the group that has the least influence on the source or outcome of the problem. They would like to see the wages in the order of fourteen dollars an hour. If that becomes the case, then it stands to reason that all wages across the board should be adjusted. To what level would we rolled back minimum wage. Perhaps we should investigate the salaried of people in the financial industry, their performance leading up to the current crisis hasn't exactly been stellar.To blame the workers for bargaining pensions, goes to the heart of what people want from our society. First, the company's should never have been allowed to under fund these plans, particularly when times were good. For people to state that pensions should not be factored into a person's working life in short sighted indeed. We have an aging population; what is society supposed to do with people who have reached the end of their working life? Everyone will be in that situation someday. Food banks and side walk sleeping arrangements ought not be a viable option in a civil society.