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We have plenty of regulations that protect shareholders, but employees’ needs are not addressed
BY REGIS DUFFY
The world we know is in a vortex of change. Job security seems to be a thing of the past. The classical fringe benefits including dental, medical, long term disability and pension benefits are not available for a large percentage of the population. Employers are hiring more part time people who work from home.
Companies are building less office space if their employees can work at home. They save money and capital. The internet is a free device that the world uses for communication. Workers are supposed to answer questions from management on weekends or other free time periods. In the case of work overloads, it may take 60 hours per week to complete the work while pay levels remain at 40 hours.
Median pay for families in the United States and Canada have remained constant for 40 years. Great advances in technology are not being shared with them while two family members need to work to provide for family needs. Child care expenses became a significant expense for most families to say nothing about increased cost of housing and school demands.
We need to ask the question whether companies have obligations to families and their workers as well as to their communities and shareholders. When companies get into financial difficulties or go bankrupt, workers seem to be at the bottom of the list for pension benefits owed to them. Sears Canada went bankrupt last year.
Workers had no separation pay and their pension funds were underfunded.
Why do we tolerate a situation where workers in this and other cases are thrown under the bus? The simple answer is we do not have rules and obligations that protect workers. We have plenty of regulations that protect shareholders, but workers needs are not addressed.
Before 1982, the U.S. Securities and Exchange commission considered share buybacks a dubious form of stock manipulation. During the Regan era, these rules were changed to allow buybacks. When a company buys its own shares, this reduces the number of shares outstanding and increases the value of the shares.
Sears bought back $5 billion worth of its stock between the years 2005 and 2010. This rewards shareholders but none of that money was spent on employee pension funds. We don’t have rules assuring pension funds for employees are fully funded today and into the future. Workers who build the company over the years have no legal claim to make sure that pension funds are secure and rank at the top of the company’s obligations.
In the U.S. this year, companies will buy back a $1 trillion worth of their shares which will enrich shareholders. However, there is no requirement that some of this money is a backstop for pension funds for employees. Companies are also moving from high tax cost jurisdictions to lower ones. There is no requirement that their workers have adequate separation or pension requirements.
Companies such as Apple with $150 billion in cash are moving their headquarters to countries such as Ireland enjoying a low tax rate of 10 per cent. Their technologies were developed by university and federal U.S. research institutions and their technology is protected by U.S. patent and intellectual property rights.
However, they don’t see any need to pay taxes in the community which supported the origins of their technologies and where many of their researchers live and work.
We need a new compact between workers, companies and governments to ensure workers needs and rights are protected. If workers are laid off, retraining programs should prepare them for future jobs where the expenses are shared between companies and government. Regulations should require companies to provide secure financing for worker’s pension funds and fringe benefits during a transition period between new jobs.
The inequalities between the wealthy and average families are increasing. Capitalism is working well for the rich, but families are left bones with very little meat on them. There are lessons from the French Revolution. Other solutions rather than the guillotine must be developed. New rules and regulations must ensure that the riches of technology and robotics are shared by all members of society.
- Regis Duffy, Charlottetown, former owner of Diagnostic Chemicals Limited and BioVectra.