We need a more sophisticated approach to Construction Labour Policies
Canada has unfortunately lost some of its allure as a favoured country for investment particularly investments in our natural resources. We have gained a reputation for having too many significant regulatory hurdles to overcome. In particular, there is a perception that there simply is too much government scrutiny when it comes to environmental assessments. At the same time Canada is struggling with finding ways to meet its obligations to the rest of the world with respect to curtailing carbon emissions.
In our humble opinion what Canada lacks is an industrial strategy that creates a vision for how Canada is going to leverage its natural resources in the short-run, in the pursuit of a sustainable environmentally thoughtful economic future. Consider examples such as Norway who developed a policy with respect to North Sea oil and gas development that has allowed them to fund social welfare programs well into the future and divorce itself from reliance on an ephemeral resource. Similarly, Qatar’s comprehensive approach to gas development is a means to take advantage of a resource today, while funding investments in new industries that will serve the countries needs long after the resource has been depleted.
We lack the political leadership at both the federal and provincial levels in Canada that can truly embrace long-term sustainability as an objective and at the same time support short-term resource exploitation as a means to that end. In addition, we have an apparent problem with respect to skilled labour that has to be factored in as part of a comprehensive industrial strategy. What we have seen is well-intentioned programs that are designed to solve some of the issues but are fraught with economic consequences which will reduce the positive impact on sustainable results.
For example, the Federal government has introduced Investment Tax Credits[1] as incentives to businesses to invest in certain clean energy initiatives such as zero-emissions electrical generation, electricity storage capacity that is not dependent on fossil fuels….
In order to qualify for the full Investment Tax Credit (ITC) (30% versus 15%) the project owner must meet certain labour requirements. For example, the project must be built by workers who receive the prevailing wage to be paid in accordance with an "eligible collective agreement" or in an amount at least equal to the amount of wages and benefits (i.e., vacation, pension, health and welfare benefits) specified in the "eligible collective agreement" most closely aligned with the worker’s experience level, tasks and location calculated on a per-hour or similar basis.
In every province except Quebec[2] the eligible collective agreement must be:
the most recent multi-employer collective bargaining agreement that may reasonably be considered the industry standard for a given trade, in a region, province or territory between a group of employers and a trade union, who are accredited to bargain together and to be bound by the same agreement, or
a project labour agreement that covers the work associated with the investments eligible for the Clean Tech Investment Tax Credit (ITC) and that is based on agreements described above.
Multi-employer agreements (or province-wide agreements) are a feature of the Building Trade Unions (BTUs) who represent only about 15% of the construction labour force in Canada. So, the ITCs directly discriminate against contractors who are non-union or who are signatory on a single employer basis with an alternative union such as CLAC, CUSW or CMAW. This shuts out a lot of workers from participating in the mega-projects Canada needs to move its clean energy agenda ahead!
Arguably there are ways around this though they are awkward and still provide a decided advantage to the Building Trade Unions. Essentially contractors who are not signatory to the BTU could simply agree to abide by the BTU collective agreements for the duration of the project. This is not a simple matter as BTU benefit and pension provisions tie the worker directly to a Building Trade union and it is doubtful that a working relationship could be developed between the BTU and non-union or alternative union contractors who have their own benefit and pension programs. A Project Labour Agreement that is inclusive of all union and non-union contractors is a negotiated solution to these hurdles but in the past such open arrangements have met with significant resistance from the BTU.
The bottom line is that the federal government has become a party to a system which rewards project owners for discriminating against certain contractors and Canadian workers based on their union affiliation or non-affiliation.
The second part of the labour requirements in the ITC system is the apprenticeship requirement which stipulates:
“registered apprentices in a Red Seal trade must work at least 10% of the total labour hours that would be performed by a covered worker in a Red Seal trade on the preparation or installation of the clean technology property at a “designated work site.”
If there is a restriction under an applicable Project Labour or collective agreement that prevents the ITC claimant from meeting the 10% threshold, the incentive claimant must make reasonable efforts to ensure that the highest possible percentage of the total labour hours performed during the year by Red Seal workers on the preparation and installation of eligible property is performed by apprentices registered in a Red Seal trade while respecting the applicable labour laws or collective agreement.
The problem with this is two-fold. First is that 10% is simply not enough. Given that approximately half or more of apprentices will not have enough time to complete their programs and become a journeyperson level trade worker and given that this incentive plan may only apply to 15% of the Canadian construction labour force, it represents a drop in the bucket with respect to being a real solution. The second problem is that unions have protected entry into their apprentice programs and have traditionally restricted apprentices as a means of controlling the overall labour supply of their trade[3]. In addition, if they have restrictions (such as apprenticeship ratios that do not allow for 10%) that cause the project to fall below the required hours to be assigned to apprentices, they are not obliged to meet this requirement! (only to use “best efforts”) Unfortunately, the upshot is that this requirement seems more like lip-service than being a substantial initiative aimed at actually solving the problem.
The Progressive Contractors Association of Canada noted on their website[4] that ITCs, as the program has been designed, will actually lessen competition, lead to higher construction costs, will inflate wages and increase project risk.
What is needed is an open approach that allows and encourages wider participation from the whole of the Canadian construction workforce. We need to ensure what is called an open site is in place at all Canadian ITC worksites that support competitive behaviour amongst all contractors regardless of whether they are unionized or non union or which union they are affiliated with. We need accelerated apprenticeship programs that are designed specifically to ensure apprentices have the continuity of work necessary to complete their training (this can be up to 2500 hours or more). We need to have an open dialogue regarding using helpers and other semi-skilled people[5] to increase inclusivity and participation. We need a multi-party consultation system that ensures the voice of labour is the voice of all labour and not simply certain preferred factions.
One of the chief problems illustrated here is that the labour market is complex, particularly in respect to the construction workforce. Too often programs are designed that reflect only one labour model despite the existence of several. Government must refrain from choosing favourites and get more educated about these complexities and develop programs that incentivize the right behaviours and allow for more competition and construction growth not less.
[1] Effective as of October 1, 2023.
[2] In Quebec the eligible collective agreements are those in the construction industry negotiated under the applicable provincial legislation.
[3] Restricting supply is a means to ensure more hours of work per member.
[4] https://www.pcac.ca/itc-campaign/#blurb
[5] These are trades people who have completed some of their trades level training but not all of the levels.