Workplace Regulations Don’t Help Workers

A main priority of Alberta’s United Conservative government, given the province’s relatively high unemployment rate over the past few years, is job creation. It’s right there in the Alberta Premier’s […]
June 15, 2019

A main priority of Alberta’s United Conservative government, given the province’s relatively high unemployment rate over the past few years, is job creation. It’s right there in the Alberta Premier’s two-line Twitter biography: “Premier of Alberta. Focused on getting Alberta back to work.”

The proposed corporate tax cuts will certainly help attract business investment and cut unemployment. However, an equally important piece of the government’s economic strategy must be mitigating the damage of the previous NDP government’s sweeping workplace legislation reforms.

The labour reforms implemented by the previous government purported to benefit workers by increasing their wages, giving them more generous benefits, and improving working conditions and safety. In reality, these reforms hurt workers and job-seekers by artificially inflating the cost of employment (thus discouraging it) and restricting the ability of workers and employers to engage in mutually beneficial exchange.

One such reform was Bill 6, the controversial farm workplace standards legislation that, with some exceptions, subjected non-family employees on farms to mandatory Workers’ Compensation Board insurance coverage, Occupational Health & Safety Standards, and employment standards legislation governing work hours and wages. Bill 6 also extended labour relations legislation to farm workers, allowing them to unionize and strike.

The Conservatives rightly proposed a repeal of Bill 6, citing its unpopularity with farmers and ranchers, the thousands of lost jobs in the province’s agricultural sector from 2015 to 2018, and the particularly harmful effects of regulating labour on farms given how much farming differed from conventional businesses.

As one Alberta dairy industry representative pointed out: “Cows have to be milked twice a day, 365 days a year.” The hours and timing of necessary work also depend on the weather and season, and need to be determined flexibly. For the government to prescribe rigid labour rules, especially in this context, is unreasonable.

Another labour reform imposed by the previous government was Bill 17, introduced in 2017 to bolster the Employment Standards Code by mandating everything from more access for employees to unpaid leaves to minimum breaks for every five hours of consecutive work. New and stricter government regulations were introduced governing overtime work, holiday and vacation pay, employee termination, and temporary layoffs.

Unfortunately for Alberta workers, contrary to what Bill 17 proponents argue, mandating greater benefits and “rights” to be provided by companies to their employees does not actually benefit workers. Quite the opposite, in fact.

Provisions in Bill 17 (such as mandated minimum break periods during each work day for employees) raise the cost of hiring employees. The result is that businesses are discouraged from hiring and employing as many people, unless it is the workers themselves who, by accepting lower wages, cover the additional costs that businesses expect to incur.

In other words, labour regulations granting mandatory benefits to workers simply make workers pay, through reduced wages, for the cost of the benefits that their employers are now mandated to provide – whether or not the workers actually wanted to pay for these additional benefits. This makes workers worse off.

As Hoover Institution scholar Richard Epstein wrote of government regulations purporting to help workers by forcing businesses to provide them with certain benefits: “An employer’s unwillingness to offer such protections is well-nigh conclusive evidence that the cost of the disputed benefits package exceeds the gains for his or her employee.”

This means both parties – both employers and workers – are made worse off when government regulation is imposed on employment contracts, even when the stated intention of these regulations is to help workers. If the new Conservative government is serious about cutting job-killing red tape, the changes brought about by Bill 17 should be placed on the chopping block along with Bill 6.

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