Erin O’Toole, socialist crusader

This shows some disturbing smarts on the part of Conservative policy makers. Some workers are going to fall for it.

• Gene McGuckin

Aug. 31, 2021

The policies put forth by the Conservatives are serious, sensible and pro-worker. They're also impressive when put next to the anemic NDP platform.

“It may surprise you to hear a Conservative bemoan the decline of private sector union membership,” Erin O’Toole told captains of industry last year.

But that’s exactly what the Conservative leader did, in a speech to the Canadian Club of Toronto no less. He lamented that where there was once a balance between workers and business, “today, that balance is dangerously disappearing. Too much power is in the hands of corporate and financial elites who have been only too happy to outsource jobs abroad.”

It was a curious line from the leader of a party that has rarely been a friend to organized workers.

But, at the time, that’s all it was: A line. O’Toole had offered no particular course of action on how to remedy the growing imbalance between boss and employee; corporation and worker. And the Conservatives continued to struggle attracting new voters.

In his beefy campaign document, O’Toole offers a number of clever, innovative and forward-thinking policies that could be a real boon to workers in Canada—from those with strong unions to those who know the precarity of gig labour.

Workplace democracy

O’Toole’s platform calls for four major things to give workers a voice around corporate governance and economic policy.

• Require that large federally-regulated employers—either those with 1,000 or more employees, or $100 million in annual revenue—have worker representation on their boards of directors
• Provide tax breaks to employers who sell shares to Employee Ownership Trusts
• Amend the Canada Labour Code to give workers a leg up when trying to unionize shops in companies with a history of anti-union activity, especially large multi-nationals
• Give labour unions standing at the Canada International Trade Tribunal to file action against companies

Putting workers on boards is not only a brilliant idea, but it’s been standard policy in Europe for decades—originating in Scandinavia, it has become popular in France, Germany and a number of other countries.

A recent study from the U.K-based Centre for Economic Policy Research found, looking at Germany’s example, three huge benefits for companies and workers alike: One, “​​capital increases rather than decreases when workers get seats on the board”; two, outsourcing goes dramatically down as firms decide to “produce more in-house rather than buying intermediate inputs from suppliers”; and finally that worker productivity increases. 

Hans Böckler Foundation, a German trade union think tank, boasts similar numbers: From productivity and economic returns, to innovation and job training, workplaces with worker representation on the board—usually referred to as “codetermination”—simply perform better. 

Given the federal government only regulates about 18,000 employers—largely in telecommunications, transport, banking and a few other sectors—there are roughly 750,000 workers in the country who could expect to see a direct result of these measures. Even still, it’s a novel idea that could inspire provinces to follow suit.

One measure that may have wider application is the creation of Employee Ownership Trusts—a vehicle for shares in the company, owned by employees. If an employer sells stakes in the company into the trust, they’ll enjoy a break in their capital gains tax. (The Business Development Bank of Canada would help finance the trusts.)

These two levers of employee ownership of corporations are fairly radical in North America. In fact, getting more workers on boards was a core policy plank from erstwhile Democratic presidential hopeful Elizabeth Warren, while the idea of employee corporate ownership trusts was pitched by her rival Bernie Sanders—Vox called it his “most socialist idea yet.” (In fairness to both O’Toole and Sanders, the Conservative wants to incentivize the contributions through tax breaks whereas Sanders wanted to mandate such contributions.)

While it’s not clear exactly how it will take shape, O’Toole’s camp is also proposing measures to help workers in anti-union workplaces. Citing examples of large multinationals, like Walmart and Amazon, firing workers who attempt to unionize, the Conservatives are suggesting they would work with unions to find solutions to help workers organize. While it’s not clear how exactly that would work—Ottawa can’t regulate provincial workplaces—it’s nevertheless an intriguing commitment that could seriously advantage workers who are often most in need of representation and most at risk by asking for it.

Other measures, like giving unions standing at our international trade tribunal, could be an interesting, if modest, development. In 2019, the United Steelworkers secured a victory at the tribunal, after it found that four countries had been dumping steel into the Canadian market, harming domestic industry—the proceeding only began because a private company filed the action.

What’s a recession?

Only real policy wonks picked up on a particularly radical proposal from O’Toole’s platform.

The Conservatives are pitching a “Super EI” that would, temporarily, provide more generous benefits to employees in a recession—75 per cent of their previous salary as opposed to the 55 per cent status quo.

But that’s not the radical part.

In determining when a province falls into a recession, O’Toole would use the “Sahm Rule,” a (thus far) relatively obscure definition of recession that tracks unemployment, not GDP growth. 

We currently consider ourselves to be in recession when the whole country sees a contraction in its GDP over two consecutive quarters—it’s a useful definition because it’s an international standard, but it’s not always reflective of the real health of an economy.

O’Toole, for the purposes of EI anyway, would consider a province or territory to be in recession if the unemployment rate rises by a half percentage point over a quarter. (A recession ends, under this application of the Sahm Rule, after three months of job gains.)

The Sahm Rule, to this point, has largely been used for analysis, not policy-making. Nevertheless, Claudia Sahm—who came up with it—was giddy to see it in the Conservative platform.

“I jumped for joy,” Sahm wrote in a recent blog post. “Yes, of course, it’s cool to see my Sahm Rule in a platform. What really makes me happy is that the unemployment rate, not politics, would decide when the unemployed get extra financial support.”

Sahm actually went back and applied her rule to the Canadian economy, going back to the 1970s: Unemployment, she found, would have been an incredibly accurate predictor of a broader economic contraction. Good predictors alleviate the need for politicians to be oracles, she notes, while also ensuring workers get the help they need for as long as they need it.

“Up until now policymakers have passed enhancements during the crisis and set time limits with a guess of when people will be back to work. It would be much better to put it the program autopilot,” she writes. “Get politics and forecasting out of it.”

Worth noting, however, that O’Toole is not promising any obvious increase in EI contribution rates, even as he promises this and various other increases in payouts, raising the possibility that these measures could plunder the fund.

And something for the gig workers

It’s taken this election for politicians to finally start talking about what it means to protect workers in the gig economy.

Gig workers—who do everything from drive Uber to deliver groceries to coding and designing —probably numbered shy of 2 million before the pandemic, and have likely only increased in numbers since then. Around 3 million Canadians are self-employed, or freelance, according to Statistics Canada.

These workers, generally speaking, don’t have any of the benefits we associate with employment: If they want supplementary health insurance, Employment Insurance, Canadian Pension Plan benefits, they’ll have to pay for it all themselves.

The Conservatives are proposing a rather elegant solution: An Employee Savings Account. Gig economy companies would have to pay contributions “equivalent to CPP and EI premiums” into their gig workers accounts, where it will sit, tax free, to be withdrawn when needed.

It’s hardly a replacement for a good pension plan or an actual safety net—without employee contributions, and considering the hours worked by these employees, these funds will likely be quite modest.

And yet it’s more than the other parties are proposing.

Erin O’Toole: Social Democrat?

It seems unlikely that the measures outlined above will start peeling off New Democrat voters, or convince the Marxist-Leninists and Communists to put aside their differences to get behind Erin O’Toole.

And yet these policies are serious, sensible, pro-worker, and decidedly conservative in purpose.

They look particularly impressive when put next to the anemic New Democrat platform, which is verbose yet shallow when it comes to the tough realities facing many workers in precarious jobs across the country. Nobody can doubt the New Democrats working class bona fides, but one can wonder if they suffered from a lack of competition on that front.

The Liberals, meanwhile, need to convince workers that they, and they alone, can manage the post-COVID recovery with compassion and competence.

If O’Toole’s policy book is any indication, the Liberals’ job just got a whole lot harder.

[Top photo: Erin O’Toole makes a transportation announcement at a trucking company while campaigning in Winnipeg, on Aug. 20, 2021 (Ryan Remiorz/CP)]