by David P. Ross

This article is based on a presentation made by David Ross, executive director of the CCSD, at a January 1997 forum on job creation held by the Canadian Centre for Policy Alternatives.

Poverty, family tensions, drug and alcohol abuse, child neglect ... the list of social ills that are compounded when people cannot find well-paying, regular work is long and wearying. The prevalence of these maladies points to the main threat to societal peace and security today – a lack of decent jobs. Unfortunately, no single magic bullet – such as cutting taxes, lowering interest rates, eliminating social programs, doing away with legislated minimum wages, or spending billions on make-work projects – will produce jobs. If creating jobs were an easy or painless exercise, surely it would have been done by now.

It's time for Canadians to move beyond the general belief that the problem of unemployment is too big to grapple, or that its solution lies outside our national borders. Here is a five-point plan that I estimate would create an additional 350,000 to 500,000 jobs between now and the year 2000, thereby reducing the unemployment rate from the current 10 per cent to 6.5 per cent.

Re-invest in public services

The public sector at all levels provides our society with needed goods and services. Roads, hospitals, schools, parks and cultural centres are part of the shared spaces that bind us together as a nation. When public sector employment is cut, so are our common spaces and heritage. Between 1991 and 1995, more than 73,000 teachers, nurses, social workers, conservationists and other workers were cut from publicly funded payrolls. Eliminating these stable, well-paying jobs has an impact beyond the individual households directly affected by the cuts. In small communities, there is a domino effect of job losses leading to reduced consumer demands and confidence, fuelling further job losses as other businesses lay off staff.

It's tiresome to hear politicians talk about how cuts to public sector employment have "saved" taxpayers' money. Have they considered the costs incurred by such cuts, such as increased unemployment insurance benefits, social assistance and CPP disability claims, and the hefty losses in tax revenues that result from reduced incomes and consumer spending? Their short-sighted "cost savings" may appear to reduce the fiscal deficit, but any reductions will be short-lived. And the social deficit that arises, as witnessed by greater family disfunction and increased criminal activities, for example, represents a future fiscal time bomb.

Governments must start recreating jobs. If even one-third of the 73,000 public service positions that were eliminated across the country were re-staffed to fill the growing gaps in critical areas like health care, education and environmental protection, almost 25,000 more Canadians would be back at work and contributing to the well-being of their communities.

Corporate leadership and social responsibility

Throughout the past decade, demands by the business community have, for the most part, been satisfied by governments. Businesses asked for reduced public deficits, lower interest rates, stable prices, lower corporate taxes, fewer government regulations, and liberalized trade. And governments have delivered. But to what end? Fairly robust economic growth has not produced the promised jobs.

The guiding business mantra of the 1990s has been to maximize short-term shareholder returns on investments. But the result has been that employees and their communities are left in the dust, while shareholders and top executives are showered with rewards. Business leaders must start to weigh their short-term profits against the toll that high unemployment takes on families, communities, governments and other businesses. In much the same way that corporations have begun to grudgingly accept the need for environmentally responsible practices, they must also begin to accept responsibility for a social accounting system that recognizes the real costs and benefits of their decisions.

If the top 100 most profitable companies listed on the Toronto Stock Exchange – which collectively reported almost $30 billion in profits in 1995 – hired even two new staff for each million dollars in profit, they would create 60,000 more jobs, and without making a dent in their profits or the shareholders' equity. Since our youth face the highest rates of unemployment, companies should start hiring younger workers. This would provide benefits beyond the immediate pay cheques: providing training and employment opportunities for young people today – the parents of the future – would guarantee the health and prosperity of the next generation.

And what about the banks?

One cannot talk about job creation without looking at the pivotal role played by Canada's big and enormously profitable banks. These six large federally chartered institutions act as giant vacuum cleaners, scooping up depositors' savings across the country. The banks then decide whether they will use our savings to provide loans to finance consumer purchases, new or expanded businesses, or to fund pointless corporate take-overs. The public entrusts enormous discretionary power to the banks' loan managers. One has to ask why the banks, in return for this federally chartered privilege, do not make a greater contribution to their communities by providing more access to our capital for Canadians who want to start or expand businesses? Lending relatively small sums to enterprising men and women with ideas for new businesses would be less risky than it was, for example, to bankroll the Reichman real estate empire in the 1980s.

If the banks diverted even a small proportion of their six billion-dollar profits from 1996 into new business ventures, they could create a significant number of jobs. A mere 10 per cent of those profits would provide $600 million in start-up capital – enough to provide a $50,000 line of credit to 12,000 new entrepreneurs. This would create jobs for the entrepreneurs, the people they hire, and others in the community who would benefit from the positive economic spin-offs of these new ventures. There is the potential to create more than 35,000 jobs annually through such an undertaking.

The Canadian Imperial Bank of Commerce (CIBC) recently announced a $100 million loan fund for small business job creation. This fund is a positive step, but it could be improved upon to provide even more valuable service. Right now it is restricted to small business expansion, thus excluding new ventures. And it lacks the aggressive "outreach" or "storefront" component that is necessary today to overcome the negative image of banks among prospective young business people. With these amendments, the CIBC fund could provide a model for the other big banks.

Third sector employment

According to a recent survey, most registered charities have experienced increased demands for their services. They would like to hire more staff, but don't have the money to do so. If governments and the private sector provided them with more funds, non-profit organizations could lever resources by combining paid employment with volunteers' efforts. This would lead to more community activities, increased local economic stimulus, and jobs.

The following initiatives would stimulate job growth in the third sector:

• establishing community economic development (CED) corporations, worker co-ops or similar vehicles;
• providing wage subsidies or intern programs to allow voluntary organizations to hire additional staff on a cost-shared basis with governments, businesses and foundations;
• enhanced government tax credits to encourage charitable giving.

If federal and provincial support was provided for 6,000 CED projects in small communities – $30,000 for a coordinator, plus a small capital operating budget of $20,000, levered by local private sector and voluntary contributions – at least 30,000 jobs could be created at a cost of $300 million to the sponsoring governments. Another 70,000 jobs could be created if governments made wage subsidies available to charities to hire individuals (assuming one new job is created in each of the 70,000 registered charities in Canada). Some of the financial support for these initiatives could come from enhanced tax credits and other incentives.

Voluntary reduction of hours

As a result of technological advances over the last few decades and the resulting increases in productivity, it is unlikely that we will be able to create more jobs without reducing and redistributing our hours of work. A comprehensive survey done in 1985 found that almost one-third of workers would accept some form of voluntary work reduction with a matching reduction in pay. Analysts for the study estimated that reduced workdays, increased paid vacations and self-funded sabbaticals would produce the equivalent of a two to four per cent increase in employment, or between one-quarter and one-half a million more jobs.

A more recent Statistics Canada survey indicated that only about six per cent of working Canadians would voluntarily reduce their work hours and pay. Insecurity about their jobs likely affected their desire to voluntarily reduce their paid working hours. Nonetheless, tens of thousands of Canadians are still willing to reduce their working hours, and many more would probably be willing to do so if governments and businesses provided the right incentives.

In the 1994 report on working time commissioned by the federal government (known as the Donner Report), the authors suggested a number of ways that governments and businesses in Canada could encourage a greater distribution of the available work, such as:

• pro-rating employer and government benefits for part-time workers;
• granting employees the right to refuse overtime beyond the standard 40-hour work week;
• encouraging time off in lieu of overtime pay;
• offering phased-in retirement options for older workers;
• expanding the availability of family and personal leave.

Even a one per cent increase in employment as a result of work redistribution initiatives would mean 125,000 more jobs. And with more substantial efforts, a two per cent increase or 250,000 new jobs could be created.

Time to act

The five-point plan sketched out here would spread responsibility for job creation among governments, business owners, workers and community organizations. Any one of the five measures in isolation would produce results, but if all were enacted, they would yield an even bigger employment pay-off – between 350,000 and 500,000 jobs over the next three years – because of synergies between the activities. For example, people would feel more confident about starting a small business if public agencies were not shedding tens of thousands of jobs. Consumer confidence and spending would be much higher if there were fewer job losses due to corporate downsizing. A more positive employment picture and greater economic security would afford people with the confidence to reduce their work schedules. And as our social ills compound today, there is no more time for hand wringing. Let's move on to action.

David Ross is Executive Director of the CCSD.

Canadian Council on Social Development, 190 O'Connor Street, Suite 100, Ottawa, Ontario, K2P 2R3