Why Canada needs a Federal Low-Wage Commission

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While we continue to wait on the federal government’s belated promise to implement a $15 federal minimum wage, questions often arise as to how future rate increases should be handled. While the government has identified wage increases based on the rate of inflation as a possible way forward, other metrics, such as using the median hourly wage, proposed in U.S. President Joe Biden’s economic plan, has also received support – including by Unifor.   Alternatively, developing a more flexible and responsive evidence-based approach that takes into consideration current economic and social factors and conditions is one that can also have several advantages. A recommendation put forth by the Expert Panel on Modern Federal Labour Standards, echoed by Unifor in our Build Back Better plan for economic recovery, is one concerning the establishment of an independent ‘low-wage commission’ that would be tasked with researching minimum wage policy in Canada and its impacts on workers, business and the economy.

The idea of creating such a commission is not new, as several countries have established similar independent or tripartite (government, unions and employers) bodies to help determine the country’s minimum wage rate, such as Germany, Australia and Japan. One model that has been often referenced is that of the United Kingdom’s ‘Low Pay Commission’ (LPC). The UK’s LPC was established in 1997, just prior to the introduction of the country’s first national minimum wage. Its mandate was to research the impacts of the national minimum wage on both workers and the economy and provide government with annual recommendations on rate adjustments. The government would ultimately choose to approve or reject the commission’s recommendations.

As these last several years have demonstrated, the fight for a fair minimum wage rate for workers can be highly contentious and divisive. One of the key benefits of the LPC’s use of in-depth research methods and activities consisting of surveys, data collection and analysis, and consulting directly with key stakeholders of workers, unions and employers, is ensuring minimum wage policy is informed by facts and evidence. For example, the LPC found that over the years, raising minimum wage rates had little to no association on hours worked or employment levels for low-wage workers – a claimed often pushed by pro-business groups. 

Of course, an independent commission alone will not ensure the total abolishment of low-wages. Despite the work of the LPC, recent figures shows there are still 8.3 million working-age adults living in poverty in the UK – 10 % of which were people living in full-time working households compared to 58 % working in part-time households. Yet some progress has been made. In 2019, the proportion of low-wage jobs in the UK dropped to 16.9% -- the lowest level since data collection began in 1997. However, we know that corporate interests will continue putting downward pressure on wages in order to protect profits. That is why additional interventions such as improvements in job quality, better employment standards for precarious and gig economy workers and access to collective bargaining, will continue to be necessary in raising work standards and incomes. The establishment of an independent committee can still be a useful tool in ensuring that myths and misinformation are not the core foundations on which important policy decisions are made.