Should government decide which industries win or lose?

 

I had a good conversation with a policy guy before Christmas who advocates in favour of the feds tightening TFW and immigration to New Brunswick.  In his view, in conjunction with tightening EI access, this will force more seasonal workers into year round work and bring down the overall unemployment rate.

My counter-narrative is that the changes will lead to less business investment and eventual downsizing and/or closure of a number of export-oriented businesses that rely on production wage levels under $16/hour.

His response was “good riddance”.  We have spent too much time propping up low wage industries in New Brunswick.

I really struggle with this issue.  Should the government be clamping down on firm efforts to bring in workers from outside New Brunswick if it hurts their ability to survive in the province?  Politicians always talk about not picking winners and losers but are they not doing the same thing with immigration policy?

Over 50% of all workers in the Toronto manufacturing sector are first generation immigrants.  In New Brunswick it is less than 4%.  If firms cannot recruit locally, why not let them bring in foreign workers?

The policy guy told me that manufacturers will have to up their wage rates to attract NBers to work in the jobs and that “is a very good thing”.  Again, fine for the petri dish but wrong in the real world.  A guy who owns a manufacturing facility in New Brunswick and one in Ontario recently told me it is easier to recruit workers in Ontario than NB – at the exact same wage level and so they are ramping up Ontario.  The kicker?  The Ontario workers are mostly new immigrants.

We live in a world where borders matter less and less for trade, capital and knowledge flows.  If we decide to tighten up even more on the inward labour flow – how does that benefit New Brunswick?  We certainly are not tightening up on the outward labour flow…..

avgwee

 

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2 Responses to Should government decide which industries win or lose?

  1. Mike E says:

    In terms of taxes and public services, at what wage level does a person switch from a net lifetime drawer on society to become a net lifetime contributor to society? I don’t know what that threshold would be, but my guess would be that it is significantly higher than the LICO for a family of four.

  2. These are very selective statistics. From the Statistics Canada page I note that data for New Brunswick in mining, oil and gas, and utilities is “too unreliable to be published”.

    I also notice that for ‘good producing industries’ the New Brunswick wage is $956.26, Ontario 1,114.03, while the Alberta wage is $1,557.13

    For ‘service providing industries’ New Brunswick is $775.30, in Ontario it’s $877.93, while Alberta is $961.60

    Indeed, for pretty much everything except what you list above, NB is a good $100 a week below the national average, ans significantly below the Alberta average.

    This is not data, it’s anecdote: “A guy who owns a manufacturing facility in New Brunswick and one in Ontario recently told me…”

    According to the data, staff in Ontario are *not* being paid exactly the same as staff in New Brunswick.

    The lesson for New Brunswick should be that, if it wants to attract people, it should pay higher wages. A higher minimum wage would attract people to the province, enable industry here to find the people it needs, and yes, even attract immigrants – real immigrants, not second-class people – to live in the province.

    But of course our largest employers have as a company policy an unwillingness to pay anything more than the absolute minimum, and to lobby vigorously against any government policy – and any new business – that might cause them to pay wages that would be competitive anywhere else in the country.

    http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=2810027&paSer=&pattern=&stByVal=1&p1=1&p2=1&tabMode=dataTable&csid=#customizeTab

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