Front Burner - Labour shortage or short-changed labour?

Episode Date: October 28, 2021

Canada’s worker shortage in industries like retail, food and tourism is more complex than it’s been chalked up to be. We hear from those fighting their way back from unemployment and from economist David Macdonald.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Angela Starrett filling in for Jamie Poisson. Angela Starrett filling in for Jamie Poisson. Well, you've probably heard about this huge labour shortage that Canada is going through right now as we enter this recovery stage of the pandemic, especially in industries like food and tourism and retail. But you know, it's no secret. It's been a difficult year and a half for the Canadian labour market.

I can't find the staff, no resumes. And now the restaurants that made it through 2020 are having a hard time finding staffers, even though hourly pay did jump. The pandemic has forced closures and modifications at restaurants and stores, and a labor shortage the likes of which employers have never seen before. And you've probably also heard a lot of theories on why this is. Oh, it's just been near impossible. It's crazy. There's nobody applying. It's like that at every restaurant,

I feel like, across the province. It's insane. Government benefit programs, which are well-intentioned and designed to help citizens, have been providing an accidental disincentive to employment in a lot of cases. But there's another challenge. Employers are finding some don't want to lose their employment insurance or other benefits they may have had during the pandemic. Clearly something is going on. Statistics Canada reported record high job vacancies in the second quarter of 2021, up 25% from the same quarter in 2019. But what exactly? And is it really about workers just refusing to work? And today, we want to take a deeper look into what's actually happening in Canada's labour market and why. In a bit, I'm going to be speaking to someone who's been crunching the numbers on this and

looking for answers. And some of his findings really contradict the popular wisdom about the labor shortage. But first, I want you to hear from some workers themselves about how they see what's going on right now. In my early 20s, I started as a busboy at a really big restaurant in Toronto, fell in love with the industry. Right then and there, that's what I wanted to do. For me, it was really the family atmosphere amongst the co-workers. People really willing to help out. For 14 years, Matteo Giordano worked at pretty much every level of the restaurant industry. Busing, serving, managing, and sales.

He was making decent money at a high-end steakhouse in Cambridge, Ontario. A very sit-in dining place. at a high-end steakhouse in Cambridge, Ontario. A very sit-in dining place, not a takeout place. But then the pandemic hit. That kind of service, which obviously when COVID hit was affected the most. So we were laid off. We didn't know when we would be returning to work. Mateo did get the Canadian Emergency Response Benefit, or CERB, $2,000 taxable dollars a month. But that only goes so far when you've got a family to support.

A four-year-old kid plus his wife who's on long-term disability and can't work. And also, just before the pandemic, they'd sold their house and were in the process of looking for another one. And I had lost my pre-approval from the bank on the mortgage because, well, I had lost my job. The banks would not take CERB as a viable income. So, as you can imagine, made the stress of COVID, not having a job, and now maybe not having somewhere to live, all piled in at once. So without the CERB helping to facilitate that, I would have been homeless. They did eventually find a house, but only because he took out a mortgage from a private company at 12% interest, which is way higher than what banks charge. Basically, even though the Serb might have saved his family from the worst case scenario, Mateo needed to find a job like ASAP.

The only work that was available immediately was minimum wage, part-time or temporary work with bigger corporations, you know, McDonald's, fast food industries, big box stores. And again, at minimum wage, part-time, I can't survive on that and then still take care of my wife and child. He did look for work in restaurants when they reopened last summer in Ontario. But with the restrictions, the dining capacity was so low that he couldn't even find shifts. And even if he could, he knew he wouldn't be making enough money in tips to support his family. If service is slow and I'm not able to do my job to an efficient level like I was prior to COVID, well, the tips are inherently going to go down. Not to mention, no one is going out to eat. Plus, it was clear by that summer that restaurants seemed to be at a higher risk COVID-wise. Again, with me having a long-term sick wife at home and

a young child, I didn't want to bring anything to the home. I didn't know what was going on, just like the rest of the Canadians. During these months off work, Mateo came to a realization. After taking the time with CERB, what CERB really did allow me to do was slow down and take a look at what I was doing in my life. The work balance, which I think everybody had a hard, long look at, definitely came into effect. When I started in the industry, I was in my 20s.

I was single without a child. Now I'm married with a wife and a child and my priorities have changed. Having holidays and weekends and nights became important. So eventually, Mateo found a job with Canada Post, which gave him those holidays and those weekends and nights with his family. But things are far from perfect. Now he's a temporary employee and lately he's been getting a lot fewer shifts. I haven't actually had more than about 16 hours in the last three weeks.

But even with that slowdown and even now that restaurants are actually opening up again in Ontario, he's still not planning to go back to serving, especially pandemic serving. To pay me below minimum wage and to pay me server minimum wage to be maybe berated by, you know, aggressive customers, which we have all heard the stories of happening, is just not worth it. The tips will not be the same because the hours are not the same. For Mateo, this question about a labor shortage is pretty simple. Pay people more. If there's such a urgency and need to fill these positions, a person in my experience, 14 years, should be worth more than, you know,

I think it's $13 now for minimum wage. At the end of the day, I think people want to work, but people don't want to work for below poverty line wages. So with that said, I might as well stay as a temp with Canada Post and continue to do what I can with the help of friends and family to weather the storm of this pandemic. And stories like Mateo's aren't unique to the restaurant industry. My name is Stephanie Dan. I used to work at the Pan Pacific Hotel as a housekeeper for seven years.

And now I work at another company, which is as great as Pan Pacific. The Pan Pacific is a luxury hotel in downtown Vancouver. After close to seven years, Stephanie had worked her way up from minimum wage to $25 an hour, plus good health and dental benefits. You know, that was where I wanted to retire. So it kind of like, you know, because I like the safety and I like the, you know, family-oriented area, you know, feel and vibe that it got from them. Didn't feel like family when they fired us that way though. Stephanie was one of about 100 long-term workers that were fired there last year during three rounds of mass terminations. On August 28, 2020, I received an email stating I will be terminated as effective to August 1-8 due to COVID-19.

And that was a shock. Like, they didn't even call us to come in and say, hey, listen, this is a circumstance. So there's a lot of details here, but let's go through them together. So according to the union, one month before Stephanie was terminated, Pan Pacific sent her and other full-time employees a letter offering them $250 to become casual on-call workers. The letter, which we've seen, said this was a way to keep employees on and they would still offer them benefits. But according to legal experts, becoming casual could also mean they'd lose their rights to severance and reinstatement. Still, Stephanie signed on.

A month later, though, she was let go. She did get a small severance in the end, but now she was out of a job. And the union alleges that most workers who signed the new contract have since had their benefits terminated. Yeah, that was a really, really hard time, you know. I was under extreme anxiety and depression because I was just like the way I got fired and no job to go to, a child to, you know, support and a family to support. has launched two lawsuits against Pan Pacific over the firings, one for wrongful termination of their long-term workers and one for breach of contract. These haven't been tested in court yet.

We've called and emailed Pan Pacific asking for a comment, but we haven't heard back. And we couldn't find statements from them in other media outlets either. Shame on Westmont! Shame on Pan Pacific! We've got the power! Who's got the power? We've got the power! either. Last week, Stephanie and other workers also filed a complaint with the BC Human Rights Tribunal. They alleged that there was also racial and gender-based discrimination here. According to the union, 95 percent of the fired workers were women of color, including Stephanie. She's Indigenous. She's Wet'suwet'en and from the Lake Babine Nation.

Being the only First Nations woman to speak up because I like to speak up. And I feel like it's important and it's a human rights issue. I feel like it's important and it's a human rights issue, you know. After seven months without work, Stephanie found a job this March. She's now a support worker at a program in Vancouver's downtown east side. But she says it pays less. And for a number of reasons, she just doesn't feel as safe at work as she did in her old job. She could apply at another hotel, but she worries she'd have to start all the way back at the bottom again, at minimum wage. She wants her old job

to say they'll take her back, even if they can't do it right now. And instead of promising to bring them back to their jobs when the pandemic is over, hotels have been using the pandemic as an excuse to fire their long-term workforce and potentially replace them with cheaper hires. So that's not right. That is another Stephanie, Stephanie Fung. She's a representative of the union, Unite Here Local 40. She and Stephanie Dan both expressed the same belief that this is a strategy to get rid of long-term workers who cost the company more. We haven't been able to independently confirm if Pan Pacific is indeed hiring new workers for lower wages. We asked the company about this too, but again, we haven't heard

back. But Stephanie Fung says the situation at the Pan Pacific isn't an isolated incident. Other hotels in Vancouver are also in labor fights with workers right now. Stephanie Fung says the situation at the Pan Pacific isn't an isolated incident. Other hotels in Vancouver are also in labour fights with workers right now. The Hilton Metrotown in Burnaby fired 97 long-term workers. Workers there are currently locked out and fighting on the picket line every day to save their jobs. There's also Pacific Gateway Hotel in Richmond. They fired 140 plus of their long-term workers, many of them also women of color from the housekeeping department. Pacific Gateway didn't respond to our request for comment, but a spokesperson from the Hilton Vancouver metrotown told us unequivocally that they have not hired new workers at lower wages.

unequivocally that they have not hired new workers at lower wages. He said that these 97 workers are not locked out but striking during ongoing collective bargaining and that the hotel has already offered to reinstate them with the same pay and seniority as before. He added that it is absurd and farthest from the truth to say the Hilton Vancouver Metrotown or other hotels have profited from the pandemic when he says their whole industry has been struggling. In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization. Empowering Canada's entrepreneurs through angel investment and industry connections. Hi, it's Ramit Sethi here.

You may have seen my money show on Netflix. I've been talking about money for 20 years. I've talked to millions of people and I have some startling numbers to share with you. Did you know that of the people I speak to, 50% of them do not know their own household income? That's not a typo, 50%. That's because money is confusing.

In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. Because many in Canada's hotel industry say that that's a real part of their struggle right now. Statistics Canada's latest numbers put the job vacancy rate in the accommodation industry at 8.5%. And the Hotel Association of Canada says on their website that two out of three accommodation businesses see labour shortages as a, quote, significant business impediment. Representatives from PAM Pacific have not made public statements about being short-staffed, as far as we can find. But other hotels in Vancouver and across the country have. But for Stephanie Dan, this whole idea just doesn't make any sense to her. Not when she and her colleagues and workers at other hotels in the area

are literally protesting outside their former employers, asking for their jobs back. I don't believe there's a labour shortage because we're ready, willing and able to come back. If they come and say, hey, Stephanie, would you like to come back and work for us? I'd be like, sure, absolutely. I would definitely love to come back to work. So let's zoom out a bit now and get a sense of how these two stories fit into what we're seeing right across the country. David MacDonald is a senior economist with the Canadian Centre for Policy Alternatives, and he recently analyzed numbers from Statistics Canada to try to understand where low-wage workers are going, and if they're actually, quote-unquote, refusing to work. Hey, David.

Hi, thanks for having me. Thanks for coming on the show. I know you've been looking at numbers from the accommodation and the food sectors, so that's, you know, workers from hotels and resorts and restaurants. We just heard from Mateo, whose, you know, entire income essentially stopped when the pandemic hit, which, you know, in the end forced him to kind of reassess his entire career in the long run. What is his decision to leave the restaurant industry? Tell us about why Canada seems to be having this labour shortage.

Well, I don't think it's an unusual experience. I think a lot of workers in that sector in the initial months, they remained unemployed. They didn't get a job elsewhere in that sector. But as the pandemic dragged on and it became clear that those jobs weren't immediately coming back, folks migrated to other jobs. So they went, maybe they went back to get retraining, you know, maybe they used training they already had, credentials they already had to get jobs in other sectors. This started a couple months after the pandemic began that you started to see this migration out of the sector of people getting jobs elsewhere. And so we see that really reflected in the big growth in other

sectors in the economy, particularly professional services, while at the same time, we see this big shrinkage in food and accommodation. Tell me just a little bit more about that. I mean, some people might know what professional services are, but what kind of jobs are we looking at? Give me some examples. Yeah, so professional services are accountants' offices are accountants offices, lawyers offices, those sorts of things. And so it's not so much that people who used to serve tables have become lawyers and accountants, but rather that they work in that industry. Maybe they become office managers or secretaries or something along those lines. And so I think one

of the things that probably really helped, well, it was first people lost their jobs and they didn't have any immediate prospect of getting rehired in food and accommodation. But also there was this, there was the CERB, which was different than EI. It provided for most workers a lot more than they would have gotten on EI. It was predictable and it didn't have the same kinds of restrictions in terms of retraining that EI did. restrictions in terms of retraining that EI did. And so I think that one of its long-term impacts was probably that it gave people some breathing room to allow them to reevaluate where they wanted to work, what opportunities existed in other sectors, what retraining they might need to work in those other sectors so that they could move out of food and accommodation. You have to remember the food and accommodation sector, always a sector with relatively low pay, difficult working conditions.

And those conditions have just gotten worse since the pandemic in terms of people being much more exposed potentially to COVID-19, but also wearing a mask the entire time they're working, as well as trying to enforce vaccine mandates and mask mandates across the country, which has made a job that was already hard a lot harder in a post-pandemic world. You were just mentioning CERB and how that kind of was different, more flexible than EI. We've all heard this narrative that the government gave out so much money with CERB that employers, you know, just couldn't compete. That's right up until last weekend. You know, that employers just couldn't compete. That's right up until last weekend.

Various supports have made it easy for people to just stay at home. But according to your research, is that really happening? Well, the timing here is what's interesting. And so the CERB existed until September of last year, at which point it was replaced with the CRB, which is very similar for self-employed workers, as well as a revamped EI that continued to provide this $500 a week base amount. What's interesting, if we look at food and accommodation, though, is that by February of 2021, about a year after the pandemic started, about a quarter million workers who used to work in food and accommodation weren't unemployed.

They had actually become reemployed, but in another sector. It wasn't recognized in the food and accommodation sector really until June and July, when the sector really reopened in earnest in the summer season, with a lot of the previous caps that it might've had on capacity removed, that the sector realized,

wait, we're calling back all these previous employees and none of them want a job here anymore. And we're putting up these help wanted signs and no one's applying. I can't find the staff. It's been a tough ride. We've advertised on Job Bank, Indeed, I mean, a lot of these places and no resumes. But if you look at the stats, it's not that they don't want to work. They absolutely wanted to work. The problem was there weren't jobs in that sector, in the food and accommodation sector. So they found jobs elsewhere. And that was largely done by February 2021. And so what happened is that the group of unemployed people that the sector relies on for its seasonal employment was much smaller than it would have been in the past.

So, you know, the sector really relied on this pool of unemployed workers that had the skills in the industry. They knew how to operate the machinery. They, you know, they knew the basics of, you know, of how to take orders, you know, of how to work in the industry. And the sector could draw on them when it needed them. Well, now those workers just aren't there anymore because they found work elsewhere. where. I want to talk a little bit about job vacancies. You made this chart where you can see that the sectors that pay more generally tend to have lower vacancies. Like in the second quarter of this year, utilities jobs averaged over $34 an hour and they had less than 2% vacancies. Like in the second quarter of this year, utilities jobs averaged over $34 an hour, and they had less than 2% vacancies. But food services jobs, you know, paid less than $15,

and they had 9% vacancies. Is that right? Yeah, I mean, this isn't going to come as a shock to people that jobs that pay more have longer lineups to apply for them, and therefore fewer vacancies. And shops that are, you know, and firms that offer really low wages, you know, the line's going to be a bit shorter. And so that's certainly the case that we see here in Canada. What's interesting is that the relationship between job vacancy rates and offering wages has actually become stronger over the course of the pandemic. So wages explain more of job vacancy rates now than they did pre-pandemic. And also the amount that you're going to have to increase wages by now is going to be larger than pre-pandemic in order to reduce vacancy rates.

I mean, the other thing that's worth pointing out is that despite this job vacancy rates being higher in the food and accommodation sector, wages have gone nowhere in that sector. So once you adjust for inflation, wages are slightly lower in food and bars today than they were pre-pandemic, despite the fact that jobs much harder. I want to talk about the employer's perspective. There's many businesses that have already been damaged, of course, by the pandemic. We saw that many restaurants boarded up in the first part of the pandemic. Many didn't survive at all. A lot of them already were running on pretty thin margins, especially in cities with really high rents. So for those businesses, how are they supposed to lure employees back now that workers are saying they need to be paid more? It's not as if businesses have somehow been left out, you know, hung out to dry. The wage subsidy program, the rent subsidy programs that have been put in place since the start paid out far more than the CERB program did or the CRB program to help jobless workers. That's not to say that

those were bad programs. It's just to say that businesses absolutely receive substantial support more so than jobless workers. Bankruptcy rates were lower in 2020 and 2021 than they were in 2018 and 2019 prior to the pandemic. And so there is certainly more money that's continuing to float to business to try to try to adjust. That being said, I also think that where businesses stand in the in the industry is going to matter. So if you've got more flexibility on pricing, so if you're in, say, fine dining, for instance, or high end tourism, you might have more flexibility to increase prices and then, as a result, increase wages to make sure that your operation is fully staffed. What does that mean for small businesses that aren't catering to a wealthier clientele?

Well, it means a more difficult time. It likely means self-imposed restrictions, potentially on hours or capacity just due to lack of staff. And so, you know, in that regard, it's going to be pretty challenging for those folks who really have a business model premised on low wages. One of the solutions of that is obviously to offer higher wages and scoop those employees from other employers who are not willing to offer higher wages and therefore be able to run your business. This is going to put pressure on the bottom line. And so as a result, I think one of the things that all the rest of us can expect is higher prices when it comes to certain goods in the food and accommodation sector. So certainly going out to eat, certainly going on vacations, the cost for

a hotel, the cost of travel, those are likely to go up as a direct result of the fact that a lot of these workers shifted out of these industries. And so now to scoop them back and to hire, to entice new employees into the industry, employers will have to pay more and they'll pass that on to consumers. And it may well be that that fast food restaurant around the corner of your house that was open 24 hours a day isn't open 24 hours a day. And maybe it's not open on holidays, maybe it's only open on the weekends or something like that. So I think Canadians will certainly notice that. And I think as more of these restrictions are lifted across the country on the operational capacity of a lot of these establishments, that the staff shortage will

become much more a driving feature that we can't blame CERB anymore for people staying at home, even though most of those workers aren't on CERB, they're in other industries. Now it's going to be a fact that it's wages, that's what's driving this problem. And that'll become, I think, much more obvious in the coming months. It will definitely be interesting to watch the trajectory and see how this all unfolds right before our eyes.

David, thank you so much for this. Really appreciate it. Sure thing. Thanks for having me. Before we let you go today, we have an update on the cause of Iqaluit's water contamination. We did an episode on this about a week ago. City officials found an old underground fuel spill near the water treatment plant. They think that is how the fuel got into the water. Earlier, people suspected a water tank might have cracked, but so far no crack has been found. The military is now in Iqaluit to help with the water situation.

They're using the same filtration systems they've brought to countries like Haiti and the Philippines after natural disasters. For more CBC Podcasts, go to cbc.ca slash podcasts.