ORGANIZED LABOUR is waging an ongoing struggle to preserve the vestiges of the gains it won for its members in the second half of the 20th century in the form of social protections such as employer-sponsored pension plans, supplemental health insurance, sick leave, disability insurance and paid vacations at a moment when the historic foundation of such protections–the stable full-time job–continues to atrophy as 9-to-5 gives way to the just-in-time workforce.
The shift to nonstandard employment which includes part-time (defined by Statistics Canada as fewer than thirty hours per week), contractual, temporary and seasonal work, as well as self-employment, is in some large part the result of the drive to flexibilization–a virtual code word for the erosion of stable long-term employment and the benefits historically associated with it–witnessed throughout the advanced capitalist world in the last quarter century. Partly in search of higher profit margins and partly in response to competitive pressures over the last few decades, large corporations in particular have sought the latitude to quickly adjust their workforces to fit their changing requirements, as part of a bid to contain labour and other costs. This need is further fuelled by rapid technological change, which leads to accelerated obsolescence of skills and expertise. In a global market where everyone must turn on a dime in order to compete and remain profitable, firms want to be able to tailor the size and scope of their workforces to variable and shifting requirements with minimal investments in terms of benefit packages and training. Governments, faced with spiralling costs and reluctant either to impose new taxes or strengthen their revenue bases by eliminating the myriad means for corporations to circumvent tax liability, have followed suit, privatizing and contracting out public services.
At the same time, there has been a drive for flexibility from among the ranks of the employed. Workers have sought greater control over their work schedules; some have chosen to work part-time in order to be able to devote themselves to other activities, from raising children to caring for elderly parents to pursuing interests outside the realm of paid employment; still others wish to run their own businesses with all the risks that entails.
The Rise of the “Precariat”
From the mid-1970s to the mid-1990s nonstandard employment, accounted for nearly half of all job growth in Canada. Self-employment accounted for an astonishing 79.4 percent of the net employment growth in Canada from 1989 to 1997, with the lion’s share of this growth taking the form of solo self-employment (independent workers without employees). As of 2008, the self-employed comprised roughly 15 percent of the Canadian workforce. Part-time and temporary jobs account for another 22 percent of total employment. In fact, today, more than one third of all jobs fall into the category of non-standard employment. This trend is particularly pronounced in Canada compared with some other OECD countries but by no means exceptional.
While contingent employment is sometimes a choice, as in the case of highly paid consultants, it is often involuntary and often precarious employment. This is true not only because those employed in nonstandard working arrangements–disproportionately women, ethnic minorities and youths–are often relatively poorly paid and have less job security, but also because they are far less likely to have access to non-wage benefits ranging from parental leave to pension plans. For instance, a Statistics Canada study reported that in 2000 only 17 percent of part-time workers and 14 percent of temporary workers had extended medical, dental and disability insurance, compared with 58 percent of full-time workers and 57 percent of permanent workers.
Non-wage benefits represent a significant cost to employers: they can account for as much as 40 percent of total labour costs. It is not surprising then that there is an ongoing effort in both the private and public sector to roll back gains in this area. Beyond mounting direct attacks on the non-wage benefits of unionized employees, the expansion of non-standard employment is one way that employers can and have trimmed payroll costs by transferring the costs of social protection onto individual workers. This is part of the privatization of risk that is one of the defining features of neoliberalism.
An Insecure Future
With the current corporate assault/default on employer pensions, millions of (mainly unionized) workers are now watching the end of their retirement dreams. But many millions more have never been in a position to harbour hope for a comfortable retirement. Less than 40 percent of the labour force has an employer-sponsored pension plan. Unionized workers are much more likely to have pension coverage than non-unionized workers (83 percent of union members have an employer pension). And people in non-standard employment are much less likely to be unionized.
The prospects for the 11 million workers (more than 60 percent of the labour force) without any kind of employer-sponsored pension plan are quite unsettling. Anyone who has ever played with an online retirement calculator quickly discovers the financial value of an employer pension plan, and particularly the traditional defined-benefit plan: It’s like having a million dollars in the bank. In case this sounds far-fetched, consider that to be reasonably comfortable in retirement, it is generally estimated that you need seventy to 80 percent of your pre-retirement income. However, to receive the equivalent of an employer-sponsored pension that guarantees a worker, say, 70 percent of his or her $41,000 salary (the approximate median earnings of a full-time employee in Canada as of 2005), one would need savings of nearly a million dollars (invested at a safe annual return on capital of 3 percent). If we factor in the public pension (OAS and CPP/QPP), we can knock it down to a mere $600,000.
Of course, since many of the people engaged in nonstandard employment are precarious, they are unlikely to earn anywhere near an average salary. According to Statistics Canada, in 2005 Canadians who had income solely from self-employment earned on average $22,866. Clearly, most simply do not have the disposable income to be able to sock away savings in anywhere near sufficient amounts to finance a retirement nest egg–even if their retirement goals are far less ambitious than being able to afford an annual trip to a sunny climate. Alas, this does not deter right-wing advocates of “fixing” the pension system through strategies such as expanding RRSP contributions an approach which in any case leaves retirees at the mercy of potentially volatile markets.
Currently, one-third of Canadian workers have no retirement savings. And that means millions of Canadians face poverty in old age since public pensions alone are typically insufficient to maintain someone at a decent standard of living. According to the Canadian Association of Retired Persons, for a single individual aged sixty-five or over, the maximum Canada Pension Plan, Old Age Security and Guaranteed Income Supplement benefits combined amount to an annual income of about $16,000, which is below Statistics Canada’s low-income cut-off for major urban centres.
Rethinking Social Protection
Of course, pensions are just one part of the larger issue of social protection for the steadily growing numbers of precarious workers–and indeed all those for whom the labour market does not afford the prospect of adequate protection from the vicissitudes of life, such as illness and old age. This necessarily raises questions about the creation of new forms of social protection that are not contingent on paid employment–an especially germane proposal when even standard jobs are being “hollowed out” with the relentless pressures on benefits.
One approach is to demand equal pay for equal work, which in practice involves prorating wages and benefits for part-time and temporary workers (see http://www.equalpay.ca/petition.htm).
A complementary approach is to expand the concept of employee to cover many forms of nonstandard work and thereby secure access to social protection. There is also support for the development of forms of collective bargaining for workers in nonstandard employment situations. And the most radical proposal poses a challenge to the very foundation of the wage-based society: a decoupling of the right to an income from participation in the labour market via a universal citizens’ income.
In Europe, the critique of the employment contract as too restrictive a basis for access to social protection has gained a lot of ground over the last thirty years among progressive commentators, social activists and within the trade union movement. That vein of thinking was reflected in the Bernier Report, an exhaustive report commissioned by the Quebec government in 2003, which argued that a disparity in treatment based on employment status is socially unacceptable and recommended a series of far-reaching changes to labour legislation that would extend social protection to individuals in nonstandard employment situations.
Evoking the idea of “social drawing rights,” a new type of social right based on people’s diverse contributions to society including many forms of non-market activity, the Bernier report considered different possible ways of measuring an individual’s participation in work (as opposed to employment) that take the discontinuous character of contemporary working life into account. This includes for example, factoring in education and training time as a part of working time (a perfectly reasonable proposal in light of the trend toward knowledge-intensive jobs typical of the hyperdeveloped capitalist economies and an educational system arguably geared increasingly toward training for employment as opposed to the traditional goals of liberal education) and also non-market forms of work such as volunteer work and child care. The Bernier report has, unfortunately, disappeared from the radar screen, but it is as relevant as ever to the issues at hand.
Retirement Security for All
Returning to the specific subject of pensions, given the continuing and possibly permanent shift away from the indefinite labour contract, a more forward-looking approach to pension reform is to decouple pensions altogether from the employment relationship, attach them to another criterion or “platform,” such as Canadian citizenship or residency, and create a robust public scheme with adequate universal coverage. Since the Old Age Security program is a social citizenship right, it could serve as the basis for a more inclusive approach to retirement security. And indeed feminists have supported the expansion of the OAS since it is not contingent on labour force participation and therefore does not discriminate against women who engage in unpaid care work. As Freya Kodar has argued, “Expanding the OAS programme would provide the greatest recognition of the relationship between social reproduction and production, since entitlement would not be based on labour force attachment. OAS expansion could also address the trend towards precarious non-standards employment by providing a guaranteed income on retirement equivalent to the average wage.” This proposal has an advantage over the labour movement’s preferred plan for increasing the rate at which the CPP replaces pre-retirement income (see the summary of the CLC proposal in this issue), since access to CPP benefits remain tied to the employer contract. Moreover, an overly corporatist approach on the part of the union movement which neglects the needs of new hires, the precariously employed, and women outside the labour force, among others, will only provide fodder for those attempting to divide and conquer working people by pointing to the disparities between public sector employees with their “gold-plated” pension plans and the majority of workers for whom retirement spells penury. Yes, a universal pension plan would be expensive, although it could be rendered more practical if it went hand in hand with raising retirement age in light of significantly extended life expectancy and rethinking the rather antiquated concept of concentrating leisure time at the end of life rather than distributing it throughout a lifetime by means of a general reduction in working time (see the article by Sam Gindin in this issue). But in any event it should be clear that “too expensive” is a political judgement. It is very expensive to fight a pointless war in Afghanistan, yet successive Canadian governments have been prepared to pay that price. In the end, like much else, providing adequate security for all people in their old age is a question of societal priorities.
And since it should not be forgotten that, however vulnerable they are, working people in the North remain relatively privileged in the global scheme of things, it is worth reflecting on the idea of a global pension plan set out by Robin Blackburn a few years ago in the New left Review (http://www.newleftreview.org/?view=2688). Noting that by 2050 there will be two billion older people most of whom will be condemned to dire poverty since they have no access at all to pensions of any sort, Blackburn presented a plan for a global pension of $1 per day at an estimated initial cost of $205 billion, to be financed by a 2 percent tax on global corporate profits. Given the indefensible economic inequity between North and South and if we, on the Left, are to take seriously a commitment to international solidarity, this innovative scheme for a measure of planetary wealth redistribution is the most pressing of any pension reform strategy yet proposed.