More focus on productivity

Two large call centre closure announcements in the past week.    Eddie Bauer just announced they are shutting down their Saint John facility.  Eddie Bauer went into bankruptcy protection a year ago – I suspected they would look to outsource their customer contact activity as a way to cut costs.  As for the Oromocto call centre, it’s my understanding they were paying around $10/hour.

I think the days of lower end call centre activity in New Brunswick are rapidly coming to a close and that is likely a good thing.  I talked with an industry guy earlier this week who told me that in Moncton, for example, you have to pay at least $12/hour to get people in the door and $14 or more to keep them.  He then said that a number of the customer contact centres were paying $40k and up and have almost zero turnover.

In the real world, economic development can be a little messy. Attracting investment and employment to a community can put upward pressure on wages, tighten labour markets and increase the overall cost structure.   

As I have talked about before, the utlimate objective is to be a place where companies can invest their capital and make a reasonable return on their investment.  If we set this as our basic premise, it would help shape economic development policy.

For example, if customer contact centre wages are rising why not develop a tax-based incentive for firms to invest in productivity improvement?   If a customer contact centre can drop its employment from 500 to 300 and still have the same productivity it could afford to offer more pay and benefits.

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7 Responses to More focus on productivity

  1. In this day and age – ‘productivity improvements’ usually mean working underpaid employees to the bone. The sort of underhanded practices that result quickly destroy any sense of obligation towards or pride in the employer.

    Expecting a modern-day corporation to subsequently increase pay or benefits just because it can afford to do so is the kind of pie-in the sky idealism that leads us to spend millions to attract more fly-by-night call centers and IT firms to the Maritimes.

  2. Anonymous says:

    I agree. The service sector of our economy has the potential for growth and we ought to be taking measures to help it succeed; I am not advocating anything drastic like selling off assets but some incentives to encourage them to invest in making their business competitive would be appropriate.

  3. mikel says:

    Are you seriously saying that economic development should be focused around tax incentives to fire people? With the aim that MAYBE the companies will pay more to retaining workers? That ‘messy’ economic development makes Richard Florida’s remarks look absolutely optimistic!
    How well has that worked for the forestry sector?

  4. Yeah, I don’t think I can et behind this ‘economic development by firing people’ approach.

    Also : “I talked with an industry guy earlier this week who told me that in Moncton, for example, you have to pay at least $12/hour to get people in the door and $14 or more to keep them.”

    That’s why people are moving to Moncton, and why Moncton is rapidly becoming the economic hub of the province.

  5. You guyes are too literal. I am saying that if wages are rising to the point in an industry sector that companies are leaving the market, one policy response could be to encourage productivity.

  6. mikel says:

    You should go to the CBC and Irving online and read some of the comments of people that have worked in these companies. While you can’t take everything literally, its as good as “a guy I talked to”. These people were mostly making 10 bucks an hour, and under some fairly nasty conditions in some places. I know many people who worked in them, and there were lots of cases where I think people would be as well off at McDonalds. And as one guy pointed out, there were some fairly substancial subsidies granted in order to keep a call centre open for ten years.
    On Ontario Today a guy called in who ran a call centre and he said simply that the only thing keeping him here was that he wanted it here. Chile, Peru, India and any number of places could have workers with as good english working for a quarter of what the minimum wage in Canada is.
    Making a call centre ‘more productive’ is kind of like asking to make McDonalds more productive. What exactly can you do? Get employees to talk faster when people want help?

  7. Anonymous says:

    Not sure if any of you spent time in Moncton in the early 1990s but the visuals from high employment remain clear to me. In place of attractive store windows was plywood over many of the downtown locations. Real estate was stagnant. Shopping mall stalls and halls were more empty than full. Construction was nonexistent. There was a feeling of hopelessness. While I have not lived there, I expect there are a lot of similarities to how the residents Dalhousie feel today.

    The contact center industry was the catalyst for hope in Moncton. Hundreds of jobs were created in a short time. People got back to work. They started spending money. We all know the story from there.

    Today it seems fashionable to bash the contact center industry but people quickly forget 1990 when they drive by the BMW dealer into a bustling city with help wanted signs in every second window. I do think the sector deserves more respect than other posters are affording it; it changed a lot of lives and arguably revitalized a dying community. There are other communities in New Brunswick that would welcome such a boast at the moment. Is it the future of the New Brunswick economy? Probably not. But definitely deserves some respect.

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