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Home  Services/Departments  Pensions & Benefits  Presentation to the Manitoba Minimum Wage Board

Presentation to the Manitoba Minimum Wage Board

October 20, 1998

CAW-Canada

October 20, 1998

The CAW-Canada welcomes this opportunity to present our views on the future direction of the Manitoba minimum wage.

The CAW-Canada is Canada's largest private sector union, with 215,000 members. The CAW-Canada is also one of the most diverse unions in Canada, both in terms of sectors and the gender and ethnic mix of our membership. Here in Manitoba, the CAW-Canada represents 9,500 workers in both the federal and provincial jurisdictions. Members work in aerospace, airlines, rail and road transportation, auto parts distribution, agricultural implements, foundries, hotels, couriers, taxis, furniture & bus manufacturing, women's shelters, long term care homes, universities and in the hospitality sector.

Manitoba has the dubious distinction of having the 2^nd lowest minimum wage of all jurisdictions in Canada (see Table I). Granted, Manitoba shares this questionable honor with three other provinces - Alberta, Newfoundland and Prince Edward Island. However, the last increase in the Manitoba minimum wage took effect in January, 1996. Since then, every jurisdiction in Canada except Ontario and the NWT have raised their minimum wage rates.

This situation underscores the importance of this Minimum Wage Board. Your role must be to restore the value of the minimum wage and thereby enhance the dignity of work for all working Manitobans.

Statistics Canada has recently completed a profile of minimum wage workers in Canada. Its findings are quite revealing:

• Minimum wage workers in Canada number 545,000, or 4.8 % of the total Canadian workforce.
• Youth (ages 15-24) account for 58 % (or 316,000) of all minimum wage workers;
• Women constitute the majority (60 % ) of all minimum wage workers;
• Part-time work is the norm for 62 % of all minimum wage workers;
• Fully 28 % of all minimum wage workers are in the restaurant and retail sectors.

To put these figures in perspective, the size of the minimum wage workforce in Canada is equivalent to the entire workforce of Manitoba.

Statistics Canada also prepared a survey of Manitoba's minimum wage earners. Their findings are particularly revealing when compared to the data for Canada as a whole:

• There were 47,200 minimum wage workers in Manitoba in 1997, representing 10.8 % of the paid labour force (or double the number for Canada as a whole);
• Youth (age 15-24) comprise 68 % of all minimum wage workers in Manitoba;
• Women constitute fully 62 % of the minimum wage workforce in Manitoba;
• 26 % of minimum wage earners are heads of families (mostly single parents);
• 57 % of minimum wage workers in Manitoba work part-time. They average 26.6 hours per week and earned an average of $6,872 a year.
• The largest concentration of minimum wage workers is in the food and beverage/hospitality sectors
• 46% of minimum wage workers are students

To put this in perspective for a young person wanting to attend the University of Manitoba, they have to work 500 hours at the minimum wage today to pay their tuition (for a Bachelor of Arts program). In 1976, the figure was 153 hours. More and more students today must go heavily into debt in order to attend university.

Increases in the Manitoba minimum wage have not kept pace with inflation. As a result, Manitoba's minimum wage is now at a 25-year low in terms of its real purchasing power.

Chart I illustrates this dilemma. Since 1971, the minimum wage in Manitoba has increased from $1.50 to $5.40 per hour. However, the real minimum wage - calculated based on the Consumer Price Index (1986 = 100) - peaked at $6.21 in 1976 and has declined each year since then. Today, the purchasing power of the minimum wage is only $3.86 per hour (measured in 1986 dollars).

Another way to look at this is to determine what increase is required to raise the minimum wage to its 1976 purchasing power equivalent. To restore the minimum wage to 1976 levels, a minimum wage of $8.69 per hour is required in 1998.

The decline in the Manitoba minimum wage since the mid-1970's is even more striking when compared to average wages and salaries in Manitoba. The growth in average wages in the province reflects both inflation and productivity gains.

As recently as 1987, the Manitoba minimum wage was 46 % of the average wage for an aggregate of industries in the province. Since then, the minimum wage has not kept pace with increases in average earnings. By 1997, it had declined in value to 41 % of the average wage.

The CAW-Canada strongly favors the establishment of a universal standard for automatic adjustments to the minimum wage. The minimum wage is too important to be left to the whims of the political process. We have suggested a number of measures to use: the purchasing power, the minimum wage relative to average wages (or average labour productivity) and the poverty line. The important point is that the minimum wage be adjusted at least once per year, according to a pre-determined formula.

It is often argued that the minimum wage makes certain sectors (and products) uncompetitive in the international market. Here, it should be noted that all of Manitoba's neighbors maintain a higher minimum wage than Manitoba. This includes Saskatchewan ($5.60), Ontario ($6.85), Northwest Territories ($6.50), and the United States ($5.15 US or the equivalent of $7.31). Saskatchewan, in fact, has now established a Minimum Wage Board and plans its own increase.

The decline in the value of the minimum wage has coincided with rising poverty, in both Manitoba and across Canada. Sixteen percent (16 %) of Canadian families were living in poverty in 1996, compared to 13 % in 1990. In Manitoba, the incidence of poverty is even higher, at 19.6%, affecting nearly one in five families. Manitoba had the 2^nd highest rate of child poverty in Canada in 1997, hardly a record to be proud of. As we saw earlier, one-quarter (26%) of minimum wage earners in Manitoba are heads of families.

Our definition of living in poverty is those Canadians with income below the Statistics Canada low income cut-off lines. These amounts are given in Table III for Canada's largest cities, along with the equivalent wage for a full-time worker.

This comparison reveals that the 1996 minimum wage in Manitoba was set at 67 % of the poverty line for a single person, and an increase of $2.63 is required to provide a full-time minimum wage worker with an adequate income.

Table III - Poverty and the Minimum Wage, Canada's Largest Cities, 1996

A strong minimum wage policy is one of a number of ways government can reduce the incidence of poverty in Canada. Fully 75 % of personal income in Canada is derived from employment, and a strong minimum wage is the most direct way to increase family incomes.

There are other regulatory issues pertaining to the minimum wage in Manitoba which should be addressed by this board. These include:

• Call-in pay - In many jurisdictions, the minimum wage legislation provides for call-in pay when a regularly scheduled shift is canceled or reduced. Manitoba does not provide this protection for its minimum wage workers (unless they report for work);
• Call-in pay (unscheduled) - Manitoba provides a minimum of 3 hours of call-in pay when a worker is required for unscheduled work. But, there are exceptions to this rule e.g. in theatres, hotels & restaurants in rural areas. Other jurisdictions provide 4 hours of call-in pay. The exception should be eliminated;
• Two-tiered - Manitoba currently has a single minimum wage while other provinces have a two-tiered minimum for students, etc. The single minimum wage should be maintained.

In addition, Manitoba should consider implementing Quebec's decree system, which establishes a province wide minimum wage for major sectors of the economy e.g. security guards, garages, hospitality sectors.

Beyond these regulatory changes, the administration of the minimum wage law in Manitoba must be adapted to the new world of work. These emerging issues include:

• Domestic workers - The minimum wage in Manitoba only applies to domestic workers working more than 24 hours per week, but it is difficult to enforce in a sector known for long hours and one where workers are often dependent on their employer viz-a-viz their work status in Canada;
• Other migrant workers - Agricultural workers in Manitoba are not subject to the minimum wage, and again Manitoba is out of sync with other jurisdictions. The minimum wage law should apply to all migrant workers. Canada must ratify the proposed United Nations Convention on the Rights of Migrant Workers and greater efforts are required in the areas of education and enforcement;
• Home workers - Homework is a growing phenomena, and in certain industries is linked to piecework and other non-standard pay systems. Enforcement and education (multilingual in scope) are needed;
• Temporary employment agencies and the growing reliance on a contingent workforce requires greater regulation of the labour market;
• Transportation - The deregulation of the trucking industry has increased the potential for abuse of all employment standards rules (particularly hours of work);
• Part-time Work - The growing reliance on part-time work and the growing incidence of multiple (precarious) job holders raises new issues of scheduling and call-in rules.

In 1997, there were 2.9 million part-time workers in Canada. Of this total, 34.7 % of part-time workers are youth (ages 15-24).

Critics of the minimum wage suggest that a higher minimum wage will reduce employment, particularly in low productivity sectors and seasonal industries. However, recent research suggests that the employment impacts of the minimum wage are modest, and may in fact be positive.

There are in fact strong economic arguments in support of a higher minimum wage policy:

• A higher minimum wage will increase labour force participation, bringing new skills and capacities into the workforce and a better skill match viz-a-viz employer needs;
• A higher minimum wage paid to a student will have a lifetime impact in terms of career earnings, one's ability to continue into higher education, and savings;
• Wages in the economy move in tandem, and therefore a higher minimum wage will have a positive impact on earnings across a range of sectors.
• A higher minimum wage is one of the ways society regulates the labour market, to prevent exploitation & raise living standards.

1998 indicate there are 31,600 "officially" unemployed Manitobans, an official unemployment rate of 5.4 % and 10 % for youth. This level of unemployment is unacceptable during a time the economy has been growing and expanding.

The CAW-Canada proposes that the Minimum Wage Board adopt a strong and vigorous minimum wage policy. The minimum wage should be increased in tandem with average wages in the province. A single minimum wage is vitally important. The administration of the minimum wage should be strengthened to reflect differences viz-a-viz other jurisdictions. Enforcement and regulation must be improved to reflect developments in the new deregulated labour market.

22. Manitoba needs a strong minimum wage. The minimum wage should be increased to 50 % of the average industrial wage (currently this would be $6.55) and be automatically increased each year to maintain this relationship to other wages in society;

23. The Minimum Wage Board should reiterate the Government of Manitoba's policy of a single minimum wage, applicable to all groups of workers.

24. Serious consideration should be given to implementing Quebec's accord system, with higher minimum wages for major industries and occupations;

25. The administration of the Manitoba minimum wage should be improved to reflect discrepancies with other jurisdictions;

26. Enforcement and regulation of the Manitoba minimum wage must be strengthened in response to the developments in the new world of work and specifically the deregulated labour market;

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