ICT expanding in New Brunswick

The provincial government is supporting a commitment from Bell Canada and the ICT Group Inc. to create up to 550 new jobs in New Brunswick. Greg Byrne, minister of Business New Brunswick, made the announcement today at a news conference. These jobs will be created at ICT’s Riverview, Saint John and Miramichi locations.

I was part of the team in the 1990s that brought the initial ICT call centre here. It’s nice to see them expanding.

The only caveat, of course, is that the well of workers for these $10-$14/hour jobs will eventually run out. Some surveys I have seen recently indicate that turnover among existing call centres is quite high.

In the past year and change, the province has announced something like 1,300 new call centre jobs – but I can’t find many projects outside the call centre realm (among companies attracted here). We’ve had 500 from VAS, a couple of hundred from TD Insurance, 550 from ICT, then there was 100 jobs or so from that Prudential project I think it was called a data centre but it sounded like a call centre.

Either they are going to have to specifically start targeting immigrants for this call centre work (i.e. from India and the Philippines) or they will have to stop attracting them (of course the call centres that pay $25/hour or higher will get workers easily but I am talking about the $10-$15/hour facilities). People will not move to New Brunswick for $12/hour and the local pool is really contracting.

As to the point of another blogger, wouldn’t it be neat if we could get this kind of momentum in another, higher wage sector? Or maybe in manufacturing? One of the challenges, of course, is that the bulk of people moving to the unemployment rolls are coming out of forestry, manufacturing, etc. which are not easily migrated to call centres (skills or wages).

Last point on economic elf-sufficiency. A job paying $14/hour will generate about $2,000 in provincial income tax each year (roughly). The New Brunswick government already receives about $3,500 per employed person (from the 2007/2008 budget) in income tax revenue (on average). So we are continuing to create jobs that generate less taxes than the average job in New Brunswick.

Why this matters is simple. We need to get our per employed person tax revenue up to $5,000 or more if we are to take a serious chunk out of our equalization needs. Ergo, we need to attract and foster jobs that pay well above that $3,500 threshold not below it. The construction jobs in Saint John are well above. So are most forestry jobs (at least the ones in the mills and the logging operations). IT jobs tend to be above it – not all but most. Most government jobs are above this threshold but that’s a weird one because the jobs are paid out of the taxes….

There are very few call centre jobs paying above the $3,500 threshold. To pay $3,500 in provincial income tax, you need to earn at least $38,000 (see here if you want to check it yourself – remember that provincial taxes are approximately 45% of your total bill. Also remember that the figure calculated here is your income tax bill – not your income taxes paid – you need to take deductions off this figure).

We need to see job creation in the $50,000/year and up if we are going to move towards economic self-sufficiency.

Final point here to make sure we are not splitting hairs here. The government will say, and I agree, that getting a person making $8/hour up to $12/hour is good public policy. In fact, I believe the call centre industry is the main reason why New Brunswick has the lowest percentage of people right at the minimum wage among all the provinces in Canada. Having those 20,000 call centre jobs spread around New Brunswick forces increases in reception, bookkeeping and other jobs where the people are migrating out of them to call centre jobs. To keep a bookkeeper now you need to pay $15/hour (at least in the cities).

In addition, they say (and I agree) that the call centre industry opens up ‘Tim Horton jobs’ for people that wouldn’t have been able to find work before the call centre. In other words, when you have high unemployment in a community, a $12/hour job is a good job.

Finally, policy makers will say (and I agree to some extent) that call centre jobs reduce seasonal employment (as persons formerly working as Christmas Wreath makers for a couple of months and then going on EI – see an economic benefit to moving to full time). This is a tricky one as several of the Miramichi call centre folks have told me that people will quit when they get their weeks in (to be eligible for EI).

Bottom line is that I like the call centre industry. I hope we can upscale it to technical support, Tier II jobs, etc. but, unlike some, I don’t thumb my nose at these jobs. Without them, a lot of people would be out of work (or out of the province) or working at $8/hour jobs.

But when the saturation point hits, we need to figure out what to do. At some point, we will be giving ICT $8,000/job for 500 new jobs as another company drops 500 jobs and sends them to India. Then you have significant government dollars out the door for zero net new job creation.

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3 Responses to ICT expanding in New Brunswick

  1. nbt says:

    I was part of the team in the 1990s that brought the initial ICT call centre here. It’s nice to see them expanding.

    Groan.

  2. nbt says:

    Oh, and now you have a reason to get involved nationally, David. lol

    Frankie goes to Ottawa

    Just so you know, my vote went to Kinsella. Seems like he’s giving Frank a run. :)

  3. joe blough says:

    I wonder how accurate the 550 “new” job statistic is; I have on authority that ICT outsourced another contract from these centers to Manila so some of those jobs were simply “recycled”. I know some workers in the center and apparently the terms of the contract are a lot stricter than their prior contracts; as well, the scheduling is worse (longer days with shorter breaks, less days off between shifts) and long-term ICT employees are reportedly getting worse shifts in programs where they had less relative seniority.

    Government dollars out the door sums it up; I remember hearing from someone that the debacle with verification in late ’06 may have been a violation of the terms of the forgivable loan. While ultimately the department is still operating at a much reduced capacity in Miramichi (apparently the Hyderabad center closed), I have no doubt ICT will try to find some way to eliminate jobs without telling the government this time as well.

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