The war against good jobs extends well beyond the banks.
Banks have been at the centre of controversy since complaints surfaced this month about the Royal Bank of Canada’s decision to outsource 45 well-paid, high-tech jobs to India.
But as readers have reminded me, banks aren’t the only ones involved in a contracting-out process that has been going on for years.
Businesses of all sorts do it to avoid payroll taxes such as employment insurance premiums as well as the statutory benefits, like vacation pay, that employees are guaranteed by law.
Governments do it to reduce their deficits and curry favour with voters. As several readers noted, media companies do it, too.
“Why stop with the banks?” asks one.
That reader worked at the Ontario Ministry of Health for eight years. He operated out of ministry offices and used ministry equipment. But technically, he was not a government employee. Technically, he worked for a third-party contractor hired by a government desperate to keep its wage costs down.
Writes another information technology worker who was laid off two years ago by the Ontario government so his job could be outsourced: “Let’s start at the top. Make our governments stop the practice.”
Initially, the jobs outsourced were low-skilled such as those performed over the phone by customer service agents. Initially, these jobs were outsourced to Canadians in low-wage provinces like New Brunswick.
In the 1990s, then-New Brunswick premier Frank McKenna tried to turn this into a virtue by touting his province as the call-centre capital of Canada.
But soon, employers figured out the secret of the electronic age: If telemarketing can be done in low-wage New Brunswick, it can also be done in even lower-wage jurisdictions such as India.
And then the second revelation: In the Internet age, why stop at telemarketing? Why not outsource any job whose product can be delivered electronically? Why not outsource those very information technology positions that Canadian governments have been touting as the jobs of the future?
In 1981, a reader whom I’ll call Jim graduated with a degree in the hot new area of information technology. He worked for several financial institutions. Then a few years ago, he got into a new line of work — helping banks outsource to India the very jobs he once did.
Did he feel guilty? “Absolutely,” says Jim. But he had kids in university. He needed the work. What could he do?
In the end, Jim suffered the final irony. His new job was outsourced to a third-party contractor — who promptly brought in someone from India to do the work.
The Internet may have permitted this kind of job destruction. But the Great Recession has accelerated the process.
This slump is not like the Depression of the ’30s. It is not a time of total economic collapse. Rather it is a time of relentless grinding down.
Unions are being ground down; wages are being ground down. Jobs are being ground out of existence. With the economy so weak and foreign competition so fierce, domestic firms find it harder to expand.
For many, the only solution is to squeeze their workers.
Before the Great Recession, goods moved easily across borders. So did capital.
But what’s new about this slump is that labour has become an equally fluid component of the production process.
Sometimes labour moves physically. The federal temporary foreign worker program is designed to shift individual labourers swiftly and painlessly into Canada in order to accelerate the downward pressure on wages here.
Sometimes, as the Royal Bank has demonstrated, jobs move at the flick of a switch. The physical workers remain in Canada. But their work moves abroad.
“I feel the whole game is rigged against us,” says Jim, the IT specialist.
- Former outsourcer describes how RBC-style job destruction works: Walkom (thestar.com)
- Deliberately lax visa rules encouraged RBC outsourcing: Walkom (thestar.com)