'Their future hinges on a workforce that's motivated, that’s well-paid': employee relations academic has advice for employers
Whether it's the fallout from the NDP’s withdrawal from its agreement with the Liberal government or the looming possibility of a snap election, political dynamics are altering the landscape for hiring managers and human resources professionals.
Rafael Gomez, professor of employment relations at the University of Toronto, notes that in Canada’s labour market, what's pragmatic and a vote-winner often influences decisions more than political ideology.
“I think the answer is more about ‘What are the underlying economic and social conditions that are present in Canada?’ and that drives political policy,” he says.
This means that, regardless of which party is in power, Canadian political decisions are likely to focus on addressing labour shortages and inflation to maintain voter support.
How do politics in Canada affect the labour market?
While federal policies might not significantly affect 90 per cent of Canadian workers, who are governed by provincial regulations, federal political shifts still influence key private sectors like banking and transportation, Gomez says; employers need to be mindful of potential regulatory changes and evolving labour standards, particularly with inflation stabilizing and interest rates potentially decreasing.
“It's not ideological so much as what's practical, pragmatic and what will garner votes, and I don't see any party on traditional left or right grounds gaining traction by weakening worker rights or calling for lower wages, especially during a time of high inflation in which workers’ purchasing power has fallen behind, at least in the short run,” he says.
“So, whether it's a Conservative government, Liberal government, NDP government, it'll come down to what policies are best for workers, because those are seen broadly as vote-winners, and the tilt now has been towards making life more affordable.”
Political parties becoming more labour-friendly
A more stable, macroeconomic environment allows for better negotiation conditions between employers and workers, a key point highlighted by Gomez.
“We’re seeing a stabilizing, and a decrease in inflation, decrease in interest rates. So, this is creating a more stable macroeconomic future, which makes negotiating... easier.”
For employers, this stability can mean it's easier to plan and forecast long-term hiring and wage growth strategies.
However, the NDP’s recent decision to withdraw from the supply-and-confidence agreement with the Liberals, driven by concerns over corporate greed and labour rights, puts Prime Minister Justin Trudeau’s minority government at risk.
Jagmeet Singh announced the #NDP is withdrawing from its supply-confidence agreement with the Liberals due to unmet worker protections, positioning the NDP to challenge the Conservatives in the next federal #election.
— rabble.ca (@rabbleca) September 9, 2024
By @NickSeebruch
#canpoli#Poilievrehttps://t.co/nLWSJ9f74j
This political uncertainty could influence business sentiment, Gomez says, with employers possibly facing stricter policies around corporate profits and wage demands.
“I think we're in an era … in which worker issues, labour market issues, are front and centre in many people's minds,” he says. “And it's not going to mean that there's a rollback in worker legislation, if there's a change in government, and [it means] that even mainline conservative governments, whether they're provincial or federal, are also taking kind of pro-worker stances on issues.”
Political division can complicate employee relations
Political division in Canada also complicates policy decisions, making it harder for governments to implement consistent labour policies, says Gomez. The presence of multiple parties in Canadian politics, including the Bloc Québécois and the NDP, offers Canadians more choice than in the U.S., but it can also create fragmented approaches to employment policies.
With labour shortages in key industries like transportation, construction, and healthcare, the challenges Canadian employers are facing is clear. Plus, the working-age population is shrinking, and employers have relied heavily on the Temporary Foreign Worker Program (TFWP) to fill gaps, he says.
This has led to public backlash, with many Canadians expressing support for immigration reform, pushing for permanent residency options rather than temporary work permits.
“The current Conservative Party, led by Pierre Poilievre, has had a number of announcements that I would think are construed as pro-labour or pro-worker, especially things like protecting skilled trades from being kind of undercut by a lower wage, temporary foreign worker program that benefits employers to a large extent,” Gomez says.
“This was a concern of a lot of skilled trades, that the temporary foreign worker program was being used to circumvent collectively bargained wages and terms and conditions of work.”
A reduction in the number of temporary foreign workers could push employers to rethink their hiring strategies, invest in more domestic worker training programs, and focus on increasing wages to remain competitive, Gomez says.
Projections for employers amid political division in Canada
Despite the political uncertainty, Gomez suggests that employers should expect ongoing pressure to offer better wages and benefits as the labour market tightens.
“The shortage acuteness that employers felt coming out of the pandemic won’t abet in the mid- to long term,” he notes.
Employers will need to focus on attracting and retaining talent by offering competitive wages, benefits, and training opportunities; one potential policy change that could have a long-term impact is the tightening of the TFWP, which has been a safety valve for labour shortages in industries such as agriculture, manufacturing, and hospitality.
To navigate this changing political landscape, Gomez advises employers to stay focused on building a motivated, well-paid workforce.
“Regardless of which party is in power, that’s the key,” he says.
Policies that weaken labour standards won’t be popular with voters, he adds, reiterating that conservative parties, traditionally seen as more business-friendly, are adopting pro-labour stances in response to the current climate.
“There'll be some contention. But I would say if inflation keeps trending downward, if interest rates keep coming down, the pattern will be a little more stable,” says Gomez. “There'll be a little more pressure on employers to figure out how to train and offer better wages, to keep workers and retain workers.”
As political winds shift in Canada, employers should remain adaptable and proactive, he adds. Investing in their workforce, offering competitive wages and benefits, and ensuring a strong company culture will be essential to attracting top talent.
“As long as they remember that their future hinges on a workforce that's motivated, that's well-paid.”
