Industry Committee on Nov. 29th, 2007

[Joyce Reynolds]

We are a diverse industry with so many different positions and so many different wage levels, it is very difficult to reach an average for the whole food service industry. For instance, 75% of those who are earning close to minimum wage are students. They're working part time. They are not full-time positions where they're trying to support a family. These people are often from high-income households and they are people who are working a limited number of hours while they're going to school.

You also have people who are earning close to minimum wage who are tip employees. As I mentioned earlier, they're making hundreds of additional dollars a week.

[Peggy Nash, NDP, Parkdale—High Park, ON]

But I know that, for example, there are more than a million people in the city of Toronto who make less than $10 an hour, which is about the poverty level. Now, some of them, as you say, may be students, although today's students are not like when I went to school, when I could work in the summer and pay my tuition. Today students are carrying a huge level of debt and certainly need more income from their work experience. But I do certainly talk to people every week who are trying to support themselves and their families. They're working in the food service sector, and it's a great challenge for them.

I think that work in the food service sector is reputable work. It's important work. Feeding society is important work, and I think that with our busy lifestyle today, eating out is more common for people than it was, say, in my parents' day.

So I'm interested in your ideas about how we help people who spend not just a few months as a student but significant parts of their working lives in this sector, how we help them make a living in this field and provide a job through which, if they do spend years in the job, they can actually support themselves and their families.

[Joyce Reynolds]

There certainly are opportunities to advance in this industry from a front-line position into a supervisory or managerial position and, as I said previously, even become an owner-operator of a restaurant. I think we have to look at how competitive the industry is and the fact that our profit margins are so skinny that there is not a lot of room to push on wages. If we're—

[Peggy Nash, NDP, Parkdale—High Park, ON]

Are we selling food for too little? Is that the problem? Should we be actually charging more for this sector?

[Joyce Reynolds]

The problem is that when you start charging $10 for a sandwich, then people will not buy sandwiches any more at restaurants. They will refuse to buy a sandwich for $10. That's the issue. You can't push those prices on to consumers.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Reynolds.

Thank you, Ms. Nash.

We'll go now to Mr. McTeague, please.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Thank you very much.

Welcome, everyone, and thank you for your presentations.

I can see that there are problems that lie ahead. It's a little depressing, but you only have to read the papers to see that in about a year's time, despite the fairly rosy picture here in Canada at the moment, the economic situation will be considerably different, especially in terms of job creation.

Maybe I could get a response from either and all of you with respect to the impact, first and foremost, of credit availability in Canada.

As a scenario has it, the commercial paper problem in the United States continues to sideswipe the Canadian economy, both with a higher dollar increase appreciation yesterday and the prospect, real or apprehended, of less money being made available for commercial loans. What contingencies do you anticipate your industries are going to need to undertake to, as it were, cushion the blow?

[The Chair, Conservative, James Rajotte]

Who would like to start?

Ms. Brisebois?

[Diane Brisebois]

The industry is already feeling the pinch, so to speak, because of what's happening in the U.S., for several reasons. One of them is that the manufacturers that retailers depend on in Canada, regardless of whether they're Canadian based or foreign owned, developed over the years a very lucrative export market in the United States, and that allowed retailers to purchase their goods in Canada at more competitive pricing because of economies of scale.

So we've already started with contingency plans because we realize that those manufacturers who now have 75% of their business in the U.S. and are losing it because their prices are too high will not be able to provide competitive prices in Canada. So we suspect that in the next couple of years we will see more retailers go offshore to try to find competitive pricing.

Number two, there's some great concern with regard to opening new stores and expanding throughout the country in light of the fact that retailers are concerned that consumers may lose their jobs. They may not feel as confident as they have in the past.

I have to be honest, though. Retailers generally are a very optimistic lot, but most of the large employers in retail are very much aware of the problems in the U.S. and those impacts in Canada. So to answer your question, they have a plan A, which is caution, a plan B, which is optimistic, and right now they're riding a bit more on the caution.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

There has been a rapid increase in the presence of retail outlets throughout, I would suggest, my area in Ontario. It's staggering and impressive. But considering what might be in store in the next few months...today, for instance, a major oil pipeline disruption to the United States could see energy increases at least for the next couple of weeks, as we get into colder weather. I'm not sure if the industry has been so healthy, certainly in the retail side of things, that one small event south of the border or around the world could not trigger a precipitous decline in employment and possible bankruptcies. Fifteen years ago we had those problems, and we've slowly come out of that.

[Diane Brisebois]

Based on our discussions and our projections for 2008, we don't suspect we will experience the same problems as we did in the early nineties.

I have to say, though, that our biggest concern is for independent margins. You have to realize that we spend a lot of time talking about very large companies. Yes, they're large employers and they provide great head office jobs as well, but all of our communities live because of independent merchants who have been there for 30 or 40 years on Main Street, and they are the ones who are suffering right now, first, because of cross-border shopping, and second, because they're not seeing the savings in the Canadian dollar. We are very concerned for them.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Maybe not in a response, but I'd like all of you to consider the impact of counterfeit products in your industry as well. On a somewhat related note, I think it's important the committee has done some work on this.

[Diane Brisebois]

It's of great concern to us, because as you can well appreciate, if you're a small merchant, this is called the golden quarter. If you always wondered why in the United States they call it Black Friday, it's because it's finally when retailers start making money. They live in the red until Thanksgiving Friday, and it's Black Friday.

So you can imagine that at this point our small retailers are probably not making money. It concerns us because then they will try to find alternative ways of sourcing products that are less expensive. We as an association are out there working with, as you know, the justice department and the provinces to ensure that our retailers understand they have to be extremely careful when they source products because of counterfeit. Product safety is another issue.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. McTeague.

We will go now to Mr. Lunney, please.

[James Lunney, Conservative, Nanaimo—Alberni, BC]

Thank you very much, Mr. Chair.

I've been enjoying this discussion. I'm not usually a member of this committee, but I'm finding this a very interesting discussion.

I am noting the increase in average weekly earnings for food service employees. Of course, I'm a western member--my riding is on Vancouver Island--and some of the problems that retailers and the food service industry are experiencing in Alberta are certainly hitting British Columbia in a significant way now, particularly on the island, where we're well known for having a large retirement community. In that regard, we're seeing a lot of seniors actually working in the retail industry and also in food service to supplement their retirement incomes, as is increasingly happening where there's a shortage of labour.

Anyway, I'm pleased to note, in the average for Canada, a 9.4% increase for wages over last year. Considering the competition in the industry, that's quite remarkable. In British Columbia it's 9.3%, so it's a very positive thing. We know Canadians do like to eat, we're very social critters, and we do like to shop.

I am wondering about this good news story, though. I know it's certainly a challenge providing employees with training and then seeing them go to another job, particularly in Alberta—and it's happening. It's frustrating for many of our service providers. The employees just get them trained, and zoom, they're gone. That's certainly a problem.

I guess it's market fluctuations. Eventually it will sort itself out. In B.C. I would certainly say it's being helped by the entrance of some retired people.

I wanted to ask you this, though. How is that going to sort itself out? Do you see these trends across the country? You have more people coming into the industry that way. What solutions do you see in that sector?

Perhaps another thing you might comment on is that more Canadians are travelling at home. We certainly see that on Vancouver Island, where there's an influx. Maybe there are fewer Americans, but there are more Canadians travelling at home and spending at home.

[Joyce Reynolds]

Thanks for the question.

You are quite right that the restaurants that are going to have the competitive advantage in the coming decades are the ones with the best human resources practices. There is more and more emphasis on that in terms of recruitment strategies and retention strategies. Certainly all restaurant operators are looking at how they can reduce the labour component of their businesses. But of course, that's a challenge in a service industry and in the food service industry in particular.

They are increasing salaries and benefits, but as you noted, their margins are being reduced accordingly, and that's an issue. They are putting more emphasis on attracting and accommodating groups that are under-represented in the labour force: aboriginals, people with disabilities, and seniors. That is why one of the recommendations we made was to make it easier for seniors who do want to work, who do want some additional income, to work without seeing their guaranteed income supplement reduced. We're looking at anything and everything, because we see this as a tremendous challenge in the years ahead.

[James Lunney, Conservative, Nanaimo—Alberni, BC]

Do you have any comment on the tendency of Canadians to travel more?

[Joyce Reynolds]

Yes. Thank you for raising that.

That is a good news story in terms of the fact that while our international travellers have increased dramatically, we are seeing a trend to greater domestic tourism, which is very positive. The increase in domestic tourism has made up some of the gap that's resulted from the drop in international tourists.

[James Lunney, Conservative, Nanaimo—Alberni, BC]

Certainly in our end of the world--it's probably indirectly related to your industry--one of the things in particular keeping seniors, our snow birds, at home is the high cost of health insurance. If they get a change in medication, they can't travel, and so on. We're increasingly finding Canadians coming out to the west coast, and I know that's good for our retail sector out there.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Lunney.

We'll go now to Mr. Simard.

[Raymond Simard, Liberal, Saint Boniface, MB]

Thank you, Mr. Chair.

I have a few questions with regard to the labour shortage. I think that's a very important issue, and I think it will probably be an increasing problem down the road.

Both of you mentioned the temporary foreign worker permits, but nobody mentioned the provincial nominee program. I'm from Manitoba, and I'll tell you, it is probably the most successful program in the country. You identify the jobs first and you bring people in to take up those jobs. The retention rate in Manitoba, I believe, is somewhere around 92% or 93%. People are staying in the provinces. It's a collaboration between the provinces and the federal government. It would seem to me that this committee should be encouraging more of these things.

I don't know if you have a comment on that.

[Diane Brisebois]

It's the same program, is it not?

[Joyce Reynolds]

No. Every province has a different provincial nominee program.

I think you're quite right that Manitoba has a unique program. One of the things Manitoba tries to do with their program is that when they bring people in, because people tend to go where their family is and where their friends are, they encourage that. They have developed the program around relationships. So if you have somebody you can sponsor who you're pretty sure is going to move to the community where there are labour shortages, then those people are accommodated. It's very different from the federal point system approach. The provincial nominee programs in Alberta and B.C. are also looking at lower-skilled components that are required, and this is something we encourage.

Thank you for raising that. It's something we're pursuing.

The only thing I find interesting is that the provinces, when we talk about the provincial nominee program, say that it's a federal responsibility and that they need to change the points system. Then when we talk to the federal government, they say that the provinces now have the authority to do whatever they want; it's their responsibility. And we're seeing a lot of this. Let's look at a coordinated approach that benefits employers across the country without having to....

[Raymond Simard, Liberal, Saint Boniface, MB]

I think we should look at the Manitoba model, because we were bringing in 4,000 people four to five years ago, and it's 10,000 this year. And they are planning on 15,000 next year. It's the most successful in the land. I really think this works. When you bring somebody in who has a job already, the odds that they'll stick around are pretty good. Right? I think this committee should actually look at that.

Alberta obviously has a very unique problem in terms of a labour shortage. Can you tell us if the labour shortage is pretty well consistent across the land, or are there areas where there is not a problem, for instance?

[Joyce Reynolds]

It's certainly the most critical in Alberta, probably followed by B.C. But Saskatchewan is also becoming a real problem for many employers who are trying to attract staff. We are hearing from operators in virtually every province of this country.