This ideas include indexing the minimum wage, budgeting for inflationary increases to public-sector salaries, preventing employers from evading overtime pay through “overtime banking” arrangements, better enforcing laws designed to prevent workplace injuries, and implementing paid short-term sick leave.
The minimum wage
In 2015, Alberta’s minimum wage rose from $10.20/hr. to $15.00/hr., representing a 47% increase. Prior to the 2018 increase, approximately 254,000 Albertans (13.3% of the workforce) earned less than $15/hr. Of these workers, 75% were at least 20-years-old, 63% were women, 37% were parents, 53% worked full time, and 75% had permanent jobs.
The three-year, 47% increase in the minimum wage moved Alberta from having one of the lowest minimum wages to the highest among provinces. The 2018 increase was the last announced increase in the minimum wage. Inflation is now eroding the purchasing power of minimum-wage workers. Further, the minimum wage for workers under 18 enrolled in school was lowered to $13 per hour in 2019.
Indexing the minimum wage to inflation would ensure minimum-wage workers can continue to afford to provide for themselves and their families. Prior to the 2015 election of the NDP government, Alberta indexed the minimum wage to the average of annual increases of the Average Weekly Earnings and the Consumer Price Index (CPI). Mirroring the annual increase in the CPI provides a simple and consistent method by which to adjust the minimum wage.
Public-sector wages
Alberta spends approximately $26.9 billion on public-sector wages annually. Almost all public servants have seen their wages frozen since 2017. Given the erosive effect of inflation, this means that the real-dollar income (i.e., purchasing power) of most public servants has declined by approximately 3.5%. Alberta’s government achieved freezes in most public-sector agreements in 2019/20. The combined impact of 2019 inflation and a rollback would be to reduce real-dollar income for public-servants by between 5 and 8%.
Reducing the real-dollar income of public servants means that these workers are effectively subsidizing the cost of public services through diminished income. This is unfair because public-sector workers already pay taxes. Declining public-sector wages reducing consumer spending and make it difficult to recruit and retain public-sector workers. Alberta’s experience with nursing shortages after the wage freezes and funding cuts of the 1990s is an example of this dynamic.
Budgetting for an inflationary increase to public-sector wages would stabilize public-sector incomes. If inflation is approximately 2.0%, indexing public-sector wages would cost approximately $540 million in 2020.
Overtime pay
Alberta’s Employment Standards Code requires employers to pay workers an overtime (OT) premium when they work beyond 8 hours in a day or 44 hours in a month. This overtime premium is 1.5 times their normal wage rate (e.g., a worker earning $15 per hour would be entitled to pay of $23.50 per hour for every hour of over time).
Allowing employers to require work beyond a normal work week creates operational flexibility. Requiring employers to increase workers’ wages by 50% when overtime is required is intended to incentivize employers to hire more workers, rather than over-working their existing workforce.
Alberta requires OT to be paid out unless the employer and worker have entered into an overtime banking agreement. A banking agreement allows workers to defer overtime pay and take it in subsequent pay periods as time off. Banking arrangements are common in industries where work is seasonal or unpredictable, with workers drawing down banked overtime when work slows down. While employees theoretically enter into OT banking arrangements voluntarily, in practice, employers can use their greater power in the workplace to impose such agreements.
In June of 2019, Alberta amended its overtime rules. This amendment meant that banked over time was banked at straight time. So, 10 hours of banked over time would be now paid out as 10 hours of paid time off, not as 15 hours as it was previously. This change allows employers to evade the overtime premium.
This change has significant financial implications. In 2018, approximately 413,200 Albertans worked an average of 10 hours per week in OT at an average wage of $30.76 per hour. With OT factored in, these hours yielded each worker an average of $461.40 in total pay. If employers implemented OT banking, they could save an average $153.80 per week per worker.
If employers implemented OT banking arrangements for every worker, this would transfer approximately $3.3 billion in OT premiums from workers to employers. This transfer may incentivize some employers (particularly in seasonal industries, such as upstream oil and gas) to minimize additional hiring. It also significantly reduces the income that workers have available to support their families and spend in the economy.
Occupational health and safety
Alberta’s Occupational Health and Safety Act (along with it associated regulation and Code) requires employers to ensure workplaces are safe and healthy. Alberta employs approximately 140 Occupational Health and Safety (OHS) inspectors. These inspectors conducted 16,410 inspections (inspecting a total of 8,152 workplaces) in 2018/19. Inspectors wrote 16,680 OHS compliance orders while prosecutors laid 16 charges for OHS violations in 2018/19.
While the numbers of inspections and orders have trended upwards over time, only about 4% of Alberta employers will receive an OHS inspection this year. This means employers face little chance of being caught violating the law. The most common sanction if they are caught is an order to simply comply with the law.
Given this limited enforcement effort, it is not surprising that a recent study suggests only half of Alberta employers comply with even the most basic of OHS requirements (i.e., identifying hazards and control strategies). Additional funding would permit the Ministry to conduct additional compliance blitzes that target high-risk industries or employers with a history of non-compliance.
Non-compliance with OHS rules results in approximately 170,000 disabling injuries annually. Disabling injuries are injuries that mean a worker cannot go to work the next day or requires modified job duties. Overall, approximately 400,000 Albertans experience some sort of major or minor occupational injury or illness in each year (roughly 1 in 5 workers). Additional OHS inspectors and additional resources for prosecution will increase employer compliance. This should, in turn, reduce the level of occupational injury in Alberta. Adding 350 OHS inspectorS would cost roughly $70 million per year.
Paid sick leave
In 2018, Alberta granted all employees 5 days of job-protected leave to deal with personal and family responsibilities, such as illness. Alberta was one of the last Canadian jurisdictions to require employers to do so. While not losing a job if a worker (or a worker’s child) becomes sick is an important right, low-wage workers may not be able to afford to exercise their right to leave because it is unpaid leave.
For example, approximately 254,000 Albertans earn the minimum wage of $15 per hour. If these workers work a 40-hour week, their gross annual incomes are $31,200. Few of these workers will have employer-paid sick leave. Taking five unpaid days of sick leave means forgoing $600 in gross income. Losing out on 25% of one month’s salary may not be financially possible for low-wage workers. Consequently, they may come to work sick or send their children to school while sick to avoid this wage loss, thereby potentially infecting others and increasing the cost of illness.
Converting Alberta’s current job protected leave to deal with personal and family responsibilities from unpaid to paid leave will make this right more accessible to Albertans employed in low-wage jobs.
-- Bob Barnetson
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