Unusual Suspects Commodify Labour Due to Talent Supply Shortages

by Samuel Kemble | May 15, 2022 | Collective Bargaining, Competition, Equity, Exclude, Human Resources, Labour Market Update, Negotiations, Recruitment, Wages, Welcoming

Reactions to Talent Supply Shortages

I often interact with labour leaders regarding talent supply. Recently I noticed a pattern among specific labour leaders and progressive commentators that concerns me.

Many notice a shortage of talent supply. That is a fact, and paying heed to that is necessary.

What gives rise to concern is some leaders’ reaction to it. Two often-heard reactions are:

Union bargaining power has increased due to the shortage, so employers must simply pay more, and

How dare you think about supplementing the supply with temporary foreign workers.

Labour Is Not a Commodity

Talent supply is not a commodity because:

Labour ought not to be a commodity, and

Labour is not a commodity!

Since 1948, the International Labour Organization’s fundamental principle has been that labour is not a commodity, which is in clause I(a) of the ILO Constitution.

It seems strange for some progressives to treat talent supply like a commodity. There is a fundamental and widely held principle among progressives and the population not to do so. Society should not treat people as though they are commodities or widgets. Yet many union leaders and progressive pundits declare that wages need to increase simply because of a shortage, as though wage rates should fluctuate as oil prices do.

Now to our second point. People are not commodities. Increasing wages does not increase the talent supply. People are not “produced,” and talent supply is not increased by simply adding a third line at the factory. It is not the same as supply-chain shortages resulting from a lack of microchips for the sale of automobiles. You can up the production on microchips, but that is not the case for increasing the supply of people. Yet, some labour leaders and employers behave as though that is the case.

Talent supply is increased in the short term by increasing productivity, adding hours, or immigration (permanent and temporary). Economies increase talent capacity over the medium and long term by increasing productivity, innovation and, through technological advances, increasing the population, training and aligning a proportion of education systems towards supporting talent needs.

Solution-based Responses, Not Reactions

The country needs thoughtful, grounded solutions. These include, yes, in some cases, labour market (wage) adjustments but also:

Immigration;

Access to temporary talent supply from out of the country;

Innovation;

Task-shifting;

Task-sharing;

Leveraging the gig-economy; and,

Leveraging alternative talent supply sources.

Human Resources, Unions, and Many Employers React Instead of Respond

For years we have seen the demographic crisis coming, and it is now upon us. The talent supply situation is a function of many factors. Our inadequate response and surprise to this foreseen event mark an epic failure for labour organizations and employers alike in many industries and occupations.

Some unions kept membership intake low to ensure their stagnant and aging members were in short supply. In construction, we should note that 7-8% unemployment is needed simply to accommodate the movement between jobs. Some hiring halls have been planning to fail by default for a long time. Plant, transportation, warehousing, manufacturing, facility, and public sector unions push back on equity, diversity and inclusion efforts out of a protectionist stance.

Employers have relied too heavily on recruiters to drive their talent supply strategy. Comparing a recruiter and a well-rounded, degreed HR professional is akin to comparing a doorbell installer to an electrician. A doorbell installer can install doorbells faster than anyone. However, you would not ask a doorbell installer to diagnose and repair a problem with your electrical panel. Employers have been asking recruiters to diagnose their talent supply woes. Recruiters are capable of identifying and describing symptoms but are not usually capable of getting to root causes and developing solutions.

Employers, unions, and human resource professionals must act more carefully and professionally.

See Adverse Reactions to Temporary Workers for What They Are

Adverse reactions to responsibly designed temporary foreign worker programs are attempts to exacerbate talent supply concerns and create a crisis for self-serving ends. The same groups who push back against temporary foreign worker programs also push back against diversity, inclusion and equity programs to push themselves up by pushing others down.

Respectfully submitted,

Sam Kemble

Executive Operations Officer

With People, Inc.

April Alberta Labour Market Update

by Samuel Kemble | May 9, 2022 | Collective Bargaining, Competition, Human Resources, Labour Market Update, Negotiations, Recruitment, Wages

April Alberta Labour market update:

Private Sector Surges, but Jobs in Goods Continues to Fall

Private, service-sector jobs continue to surge with 17,500 additional jobs in April. Employment in goods sectors declines for the third month, losing 1400 more jobs in April.

Jobs in trades, healthcare, mining and oil and gas, professional, scientific and technical, finance, and education remain significantly lower than pre-pandemic levels. Meanwhile, services and manufacturing jobs have increased to levels greater than that experience pre-pandemic.

The Alberta economy is transitioning towards being more service-based. We expect mismatches of skill sets and drastic swings in displaced workers moving from industrial to service work in the coming months and years.

Unemployment and Labour Participation Rates

Alberta’s labour market unemployment rate declined to 5.9%, and the labour market participation also declined, dropping to 69.2%.

Average Wage Rates and Earnings

Average wages ($33.25) are up 1.8% year over year, recovering slightly from the significant drop in 2020-2021. On the other hand, average earnings are up by 1% from last year.

Collective bargained/negotiated wage settlements trend at 0.9% for 2021, 0.9% for 2022, 1.9% for 2023 and 1.7% for 2024.

Increased operational costs leave less room for wage increases, and employers navigate tremendous uncertainty in today’s market. This reality creates the need for nuanced communications between employers and employees as each experienced increased costs to run their lives and operations.

Canada Benchmarks

Meanwhile, Canada’s unemployment rate fell to 5.2%, and average wages increased 3.3% yearly.

Job Vacancies

Job vacancy rates are at 4.5%. Focused areas such as services and IT and general labour associated with civil work suffer staff shortages.

Population

Alberta’s population growth is at 1.4% year to date. Increased immigration and access to temporary foreign workers are required to meet Alberta’s labour market demands.

The shortage of civil trades will eventually be the bottleneck for work opportunities for those involved in other industrial work. It is no longer good enough to look at a project from the standpoint of it being shovel-ready as a whole. Due to the uneven distribution of vacancies and unemployment rates across trades, it is necessary to determine what phase of a project will be shovel-ready.

Decoupled: Wages and CPI are on a break from one another.

by Samuel Kemble | Apr 9, 2022 | Competition, Human Resources, Labour Market Update, Negotiations, Payroll, Recruitment, Wages

CPI and Wages: With CPI trending between 3.1% and 3.7%, are wages following suit? The answer is no.

CPI is inflated due to:

disruption in energy transition,
increased government spending,
cash injections from the Bank of Canada, and
pandemic shifts,

all of which increase the risk for employers and do not translate to job creators being able to afford increased wages for their employees.

The increased business risk driving increased CPI has significant implications for wage adjustment considerations and collective agreement negotiations.

The path of least resistance, and at times lazy approach labour relations and human resources practitioners take when considering wage adjustment, is blindly following CPI increases. That is precisely the type of thinking that reduces the confidence executive leadership has in labour relations and human resources personnel and reduces their usefulness and effectiveness to the organization.

Wages and collective agreement targets must be driven by fulsome reviews of such adjustments’ affordability, sustainability, and prudence. This analysis and determination must ensure that operations and employment continues to be a going concern, presently and into the future.

CPI and wages are not automatically linked, nor should they be. Human resources and labour relations practitioners would be wise to test the business fundamentals before making promises they can’t keep with their union counterparts. Granting unsustainable wags increases helps no one if it results in shrinking operations and layoffs.

Please visit our home page or our news and knowledge centre for more information.

Respectfully submitted,

Sam Kemble

Executive Operating Officer

With People Inc.

(780) 886-1679

[email protected]

Alberta Labour Wage Settlements and Negotiations Update -Q1 2022

by Samuel Kemble | Apr 3, 2022 | Collective Bargaining, Competition, Human Resources, Labour Market Update, Negotiations, Payroll, Recruitment, Wages

The Current Economic Environment Introduces Head-Scratcher Interactions at Collective Bargaining Tables

Several economic pushes and pulls create head-scratcher moments at collective bargaining tables as negotiators assess:

where the fair deal resides, and
how best to communicate that to rank and file members.

This phenomenon presents unique challenges for negotiations conducted by human resources and labour relations practitioners, and union leadership.

Oil’s Influence on Negotiations

Oil prices soften to $100.28, and the WCS price differential increases to $11.90/barrel. Alberta’s overall economic activity is up 4.5% year over year, bouncing somewhat from 2019 and 2020 depressed levels. Overall, these factors send positive messages to negotiators currently in collective bargaining.

Employment Impact on Collective Bargaining

Unemployment decreased to 6.8%, with a 69.4% labour market participation rate and 1.1% population growth yearly. While, on the surface, negotiators view this as a positive trend in collective bargaining, they need to realize there is significant displacement within the labour market.

Inflation and Negotiations

Meanwhile, inflation increases to 5.5%.

Those engaged in collective bargaining must realize that inflation pressures are not the result of a growing, healthy economy. Instead, it is the result of commodity pressures, supply chain issues, government policy, regulation, taxes and spending. All of which increase the risk profile for employers.

Earnings, Average Wages and Collective Bargaining

Average weekly earnings are up 3%. A significant portion of that increase results from overtime and not hourly wage increases. Average hourly wages remain unchanged (0% increase) year over year.

The split between earnings, CPI/inflation, and wage rates present an inconvenient truth for negotiators currently engaged in collective bargaining. Now is not the time for a significant wage increase, except for perhaps the lowest earners – to offset growing costs of essential expenses.

Collective Agreement Negotiations

So how have negotiators at collective bargaining tables responded? Alberta’s February Bargaining Update shows 2022 settlements averaging 0.91%, 2023 settlements averaging 1.87%, and 2024 settlements averaging 1.70%.

Alberta Collective Bargaining Update, February 2022

The gap between inflation and wages is symptomatic of a great deal of increased risk, unfriendly business policy and environment, and policies with the stated goal to make certain activities more expensive for Canadians in support of greening the economy. These upward pressures are not the result of a confidence-inspiring, predictable and healthy growing economy, so employers are appropriately cautious and reluctant to lock into structural operational cost increases.

Respectfully submitted,

Sam Kemble

Executive Operations Officer,

With People Inc.

[email protected]

(780) 886-1679

US Wage Increases Risk Making Inflation Permanent

by Samuel Kemble | Feb 27, 2022 | Collective Bargaining, Competition, Equity, Human Resources, Labour Market Update, Negotiations, Recruitment, Welcoming, Workplace Respect

Canada and the United States experienced what the Bank of Canada and Federal Reserve call transitory inflation throughout 2021.

Without getting into politics, it is clear that this inflation did not result from a stable, healthy, growing economy. It is not business as usual. Aspects of price pressure result from:

pandemic pressures,
changes within the economy, and
supply chain issues.

Price pressure also arises from public policy directions taken during trying times.

United States

Concurrent to this inflation environment, US employers faced labour movement, including resignations in their workforce. Employers experienced job vacancies and labour shortages. Displaced workers scanned job postings. Human resource practitioners and applicant tracking software disqualified them. The workforce movement and misalignment resulted in jobs without people and people without jobs. Absent any more strategic approaches, human resource and recruitment personnel engaged in a wage escalation, rather than focusing on increasing supply.

US human resource practitioners and employers adjusted their recruitment tactics. Sadly, they sought to overcome shortages by pulling primarily one leaver. That leaver was increasing wages. Upping wages did not increase the labour supply. They made the existing workforce more costly to employ.

Companies passed on the increased costs to customers. US employers’ wage increases, structurally increase prices. This wage inflation makes inflation in the US economy permanent.

Canada

For the most part, Canada is not following the same wage patterns as the US. This Canadian trend is a more subdued degree of inflation and very little labour market-wide wage escalation.

Disruption in Canada’s workforce is comparatively less and focused on specific sectors and certain jobs. True, CPI is also up, but it is decoupled from wage increases year over year.

Canadian wage increases do not track CPI. Whether those increases result from collective agreement settlements or through direct negotiations in non-union settings, wage and settlement data confirm this trend.

Permanent Inflation is Regressive

Governments, industry and policymakers should avoid permanent inflation if possible.

Some will say that wide-ranging wage increases are precisely the redistribution society needs. But it is not that simple. Those pursuing such a policy would do so with progressive intentions, resulting in a regressive outcome.

The permanent inflation brought about by broad wage increases will not affect all in society equally. Increased prices negatively affect those who spend most of their income. Furthermore, price increases significantly harm those who spend a higher portion of their income on essential expenses. Price increases are regressive.

A Comment About Wages

Employers should seek mechanisms to react to today’s inflation for those most impacted and smooth the increase over a two or three-year period of forecasted commitments. By forecasting multi-year increases and front-end loading those increases for lower-paid employees, employers can accomplish this.

There is justification for attraction, retention and equity purposes, to embrace adjustments in 2022 for pay bands lower than roughly $25/hour. An example would be committing to 6% over three years, with 3% in 2022, 2% in 2023, and 1% in 2024.

For pay bands over roughly $25/hour, CPI prompted adjustments are unnecessary. Employers should avoid tracking CPI for higher-paid employees. Current price increases do not result from a strong and growing economy and coincide with significantly increased business risk and vulnerability. An example for higher-earning employees would be committing to 3.5% over three years with 1.5% in 2022, 1% in 2023 and 1% in 2024.

The above are examples only and overlaid on this needs to be an analysis of each market factor, competition, job classification and sector. There is no one-size-fits-all solution.

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Respectfully submitted by Workforce Delivery Inc.

Alberta Labour Market and Employment Update, February 7, 2022

by Samuel Kemble | Feb 5, 2022 | Collective Bargaining, Competition, Human Resources, Labour Market Update, Negotiations, Payroll, Recruitment, Wages

Alberta Employment and Labour Market Update

For the week of February 7, 2022

Employment Update: Canada lost 200,000 jobs in January. It is worth noting that Ontario and Quebec felt most of these losses after confronting the Omicron wave.

Meanwhile, Alberta employment increased by 7,000 jobs. However, full-time jobs receded by 3,900, and part-time employment increased by 10,900 positions.

The goods and manufacturing sector drove gains, with 18,400 positions filled. Service sector jobs (including education, professional and science services) declined by 11,300 positions month over month. Reductions experienced by the service sector would have been more significant were it not for gains in food, cultural, healthcare and accommodations roles.

These shifts have significant implications for Alberta employment. The trend displaces workers within specific skillsets and targets specific industries where much of the displacement occurs. Meanwhile, lower-paying jobs grow in service industries with fewer hours of work offered.

Alberta’s unemployment rate dropped slightly to 7.2%, and labour market participation reduced to 69.6%.

Construction permit values increased by 14% in 2021 – inflated input costs drove 60% of that increase.

Alberta inflation year over year increased to 4.8%, matching the national CPI rate.

On the bargaining front, 2022 negotiated wage settlements in the private sector average 1.26%. 2023 average negotiated private sectors wage settlements are 1.12%. P ublic sector settlements average 0.8% in 2022, and Public sector settlements average in 2023. The recent nurses’ wage settlement of 4.25% over four years, ratified by 87% of their membership, reaffirms this pattern.

Province-wide average wage rates in Alberta employment contracted 1.2% month over month and are down 2% year over year.

All the above factors must be considered when considering compensation and collective agreement negotiations strategies.

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