Bulletin – Just Not Credible: Challenging Claims About Closed Tendering in Ontario
Ontario Construction Secretariat Challenges Claims About Closed Tendering in Ontario
The Ontario Construction Secretariat (OCS) is addressing misinformation head-on in its report Just Not Credible: Challenging Claims About Closed Tendering in Ontario. The document challenges the assumptions and implausible claims by Cardus, a faith-based research organization, that provisions in the Labour Relations Act are increasing the cost of municipal construction projects by 15% or more.
Download the Report
These claims made by Cardus are simply not credible and municipalities who accept their claim will not see the promised cost saving of 15%. According to Statistics Canada, the share of the cost attributed to payroll is 34%. Other costs would be comparable between union, non-union and CLAC contractors. To reduce costs by 15%, claimed by Cardus, employers would have to cut payroll costs by almost half. This would trigger a race to the bottom which would undermine the significant benefits that the current system provides, including:
- undermining investments in apprenticeship,
- increasing work-related injuries on municipal construction projects by eroding health and safety standards and weakening health and safety training, and
- fostering an increase in styling workers as ‘independent operators’ to avoid employer obligations to CPP, EI and WSIB, and
- nullifying equity programs that provide pathways to construction careers.
The view that the proposed cost savings are inflated has been echoed by the City of Toronto. A 2008 City of Toronto report found that, in Toronto, the upper estimate of the potential savings from terminating these bargaining relationships would be only 1.7%. A more recent report (May 2019) from City of Toronto staff stated that if the bargaining relationships with the building trades are terminated “…it is not possible to determine with any certainty what, if any, savings will result.”
A key premise in the Cardus report is that there is no productivity difference between union and non-union firms so that higher union wages translate directly into higher costs. It is well established (and discussed in the report) that the building trades unions and their employers invest heavily in apprenticeship training, skills upgrading and health and safety training. Unionized employers support these investments because the training directly benefits the contractors in the form of higher productivity and fewer occurrences of work-related injuries. This advantage in productivity and safety supports the higher wages and better benefits that are earned by unionized workers.
Municipalities must consider whether it is worth leaving their collective agreements using accurate information on the real cost of open tendering and recognize the significant risk associated with it. We believe that municipalities should be demanding higher safety standards, more investment in apprenticeships, strict compliance with tax and reporting obligations and a commitment to equity programs.You can download a digital copy of Just Not Credible is here.