Human Resources Committee on April 26th, 2010

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

The fact of the matter is that in the legislation as proposed, the rates that are charged to employers and employees are meant to equal the benefits generally over time. The moneys don't come out of general revenues; they come out of an EI account. It is a type of insurance. That's how it works.

When you look at this particular bill, you see that it would add benefits and therefore add a charge to the EI account. We had someone appearing on a previous bill, where the intention was to shorten the qualifying period and increase the amount and duration of benefits. All of this is fine and good, I suppose, excepting that ultimately somebody has to pay. It ends up being the employer and the employee, in a labour dispute that has some particular significance, while in others, it's just a question of what employers and employees are prepared to pay and for what.

I'm wondering about your membership and if you have done any surveys of your membership or polled any of them to see what their appetite would be for EI premiums going up, what their appetite would be for increasing the benefits--employers and employees alike. I meant to ask about this when we had a member from the Canadian Labour Congress here, because it's fine for them to say they want all these additional benefits, but ultimately there will be employees who have to pay and there will be employers who have to pay, because it is an insurance program. It doesn't just happen. There are pluses and minuses to it.

What are the views of employers and employees, to the extent that you know them? Are there certain benefits that are more amenable to the membership than others? Maybe you can tackle that area.

[John Farrell]

First of all, the point of view of employers will vary depending on the industry they're in, their company situation, the markets they're operating in, and the general state of the economy. Obviously the current economy that we're in has not been robust. We're coming out of a very serious recession. In many cases, employers are doing the very best they can to stay on top of their cost structure.

Ten years ago, who would have thought that AbitibiBowater, for example, would be a company that is on the cusp of bankruptcy? Who would have thought that General Motors and Chrysler would be on the cusp of bankruptcy? Who would have thought that Air Canada, which operates in an oligopoly, in a way--they have a great deal of control over the market in Canada--would be unable to compete, to make ends meet, and to meet their pension obligations?

All of these issues are important to employers. Every single cost that an employer is facing, particularly in the current economy, has to be reckoned with. Any costs that are lobbed on top of companies by governments are not welcome in the current economy. When we were operating in a robust economy, people were making money in spite of themselves, and the Canadian dollar was trading at 60¢, there was an appetite for spending, and there was less concern about what governments might be doing. But in the current environment, all employers are extremely concerned about any costs.

Mr. Komarnicki, I can't comment exactly on the exact point of view of how employers would view this employment insurance, but I can tell you that it's just like any other cost they would be facing. They don't have any appetite for it at this point. If our economy returns and becomes robust, then there may be opportunities to increase our costs in certain areas.

[The Chair, Conservative, Candice Bergen]

That's all your time.

Thank you, Mr. Farrell.

We have time for a second round of five minutes each.

I understand that you don't have further questions...?

Then we'll go to Mr. Lobb, please.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thank you, Mr. Farrell.

Would you happen to know, from your experience, what the longest current labour dispute is in Canada at this time? Roughly?

[John Farrell]

The longest current labour dispute in Canada at this time? I don't know. Perhaps you do.

[Ben Lobb, Conservative, Huron—Bruce, ON]

No, I'm asking you.

[John Farrell]

Oh, okay.

[Ben Lobb, Conservative, Huron—Bruce, ON]

In the last decade, do you know how long the longest labour dispute might be?

[John Farrell]

I can talk about the pulp and paper industry because I know the pulp and paper industry quite intimately. That is the industry I worked in prior to taking on this role at FETCO.

In the pulp and paper industry, there is a company called Stora Enso in Port Hawkesbury, Nova Scotia, which had a very lengthy strike in 2005. It lasted approximately nine months. They returned to work for a period of time, and then the mill shut down after the strike was over so the employees and the company could work out an arrangement to improve the cost structure of the mill, which they managed to do.

In that situation, while the employees were not working following the strike, they were entitled to employment insurance benefits because they were in fact laid off by the company and were not engaged in the strike. During that period, the employees and the union found a way to improve the collective agreement, fundamentally for the employer, because the employer was looking to reduce their cost structure. But they found middle ground and they were able to resolve their differences quite handily.

As for other long strikes, J.D. Irving, the Irving companies in eastern Canada, had some long strikes in the various industries that they were engaged in. The purpose of those strikes was around trying to find ways to be more productive and manage their cost base.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Further to whether we call it fairness or neutrality between the employer and the employee when we talk about employment insurance, I think it's pretty fair to say that after a lengthy work stoppage, whether it's in manufacturing, pulp and paper, foundries, mills, or what have you, either major capital improvements are going to have to be done to a facility to keep up with the changes in how the world works in business, or major repairs and maintenance work will be needed to get cylinders, valves, and everything working again.

It's pretty safe to say that the way this bill is written will guarantee that somebody who strikes will be paid employment insurance at some point in time. It seems to me that the risk is being shifted to the employer quite a bit and that no risk is being shifted to the employee. Is that how you would read this?

[John Farrell]

Yes, I would say that this bill does shift some of the risk to the employer.

[The Chair, Conservative, Candice Bergen]

Is that all, Mr. Lobb?

We'll go to Mr. Lessard, please.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Mr. Farrell, you tell us that you are familiar with the situation in Lebel-sur-Quévillon. You may be able to shed a little light on this for me. You say there was no lockout in Lebel-sur-Quévillon. Well I have been there. It started with a strike, and then the employer said, almost at the beginning of the strike, that it would not be reopening. It closed down.

The employees went to the employment insurance office to claim benefits. The employment insurance office investigated because the employer was opposed to them receiving employment insurance benefits. The Quebec ministère du Travail investigated and decided that it was a lockout. The reason why the employees did not get employment insurance benefits from the outset was because it was a lockout. The employer dragged the lockout out for three years.

Did you know that? If you knew it, why did you say something else?

[John Farrell]

I can read a statement, a press release, that was issued by the company on November 25, 2005, by the chief executive—

[Yves Lessard, Bloc, Chambly—Borduas, QC]

You're talking about November 2005. I am stopping you because I have only five minutes. That was what the employer claimed in November 2005. I'm talking about the reality of the workers' situation now, in terms of this lockout situation.

Is it or is it not correct to say that it was a lockout for three years? First, did you know that?

[John Farrell]

No, as far as—

[Yves Lessard, Bloc, Chambly—Borduas, QC]

You didn't know that?

[John Farrell]

May I answer?

As far as I know.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

You didn't know. A little earlier, you said it was not a lockout, but I will give you the benefit of the doubt. Because I need to understand, let's get back to the reasoning.

[John Farrell]

Please, sir, don't put words in my mouth. I'm happy to answer a question, but...

To my knowledge, Domtar, in 2005, closed the operation in Lebel...laid off the employees in Lebel-sur-Quévillon because of the economic conditions. At the time, the press release that was issued by the company said: “Domtar is taking measures to mitigate the negative impacts of a combination of economic factors: downward pressure on prices, growing fiber supply costs, rising energy and transportation costs—

[Yves Lessard, Bloc, Chambly—Borduas, QC]

You said that already, Mr. Farrell, forgive me for stopping you.

The question is whether or not it was a lockout. If we accept the decision by the Quebec ministère du Travail and the employment insurance authorities, it was a lockout. That is why they did not get benefits.

Now I do want to understand your reasoning, because we will also have to take your opinion into account in examining this bill. You are telling us that after 52 weeks, they should not be entitled to unemployment, but before 52 weeks, can they be entitled?

[John Farrell]

Before 52 weeks, the current provisions permit the entitlement to employment insurance benefits.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

But you don't want it to be extended, for the reasons you gave earlier. I don't want to put words in your mouth that you didn't say, but from what I understood, your opinion is that if it goes beyond 52 weeks, the employees will have to suffer the consequences of their decision. Is that correct?

[John Farrell]

Fundamentally, yes.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

I have no other questions.