Royal Bank's blunder highlights Canadians' loyalty to income equality.
by Marc Zwelling
Why did the Royal Bank of Canada apologize for letting a contractor hire offshore workers while the bank was downsizing its Canadian payroll? Public opinion is why.
The bank went into damage control earlier this month when some of the 45 employees being sacked in the RBC’s information technology operations in Toronto told their story to the CBC. An RBC contractor was importing workers to take over the Toronto IT jobs before handing off the work to another contractor in India.
So long as the public thought of Temporary Foreign Workers as nannies, fast-food employees, hotel cleaners and farm workers, the public accepted the FTW program growth from 250,000 in 2006 to more than 400,000 in 2010. But the RBC story involves white collar jobs.
RBC president and CEO Gord Nixon sounded humiliated in his “open letter to Canadians.” The bank published the letter in a full-page ad in daily newspapers and posted it on the bank website.
“First, I want to apologize to the employees affected by this outsourcing arrangement as we should have been more sensitive and helpful to them,” said the chief of the country’s largest bank in assets and employees. “All will be offered comparable job opportunities within the bank.”
The CBC also disclosed that California-based iGate had obtained a permit to let the replacement workers into Canada under the federal government’s temporary foreign worker program, which green lights permits for employers who can show they are unable to find qualified Canadian workers.
RBC’s turn in the media glare followed the uproar last year involving a firm controlled by investors in China that imported 201 workers from China for a coal mine it’s developing in British Columbia.
On the top floor of a downtown office tower, bank leaders can get isolated from public opinion. The Canadian Bankers’ Association thumped its chest last year when its annual poll showed “86 percent of Canadians have a favourable impression of banks in Canada, up from only 59 percent in 2001.”
But while Canadians like their banks, they don’t like bankers, who are among the least respected professionals around. According to a 2012 Angus Reid Public Opinion study, 55 percent of us have a “great deal” or “fair amount” of respect for bankers, putting them 22nd in a list of 25. At the top, nurses and doctors (96 percent respect them); at the bottom, politicians (27 percent) and car salesmen (26 percent).
Those bank fees and towering salaries don’t help the bankers when they step into public relations quicksand. RBC's Gord Nixon got $12.6 million last year, a 25 percent increase over the previous year. Probably Nixon was caught off-guard by public outrage because downsizing, offshoring and outsourcing are everyday corporate behaviours.
As the Dow Jones business news service reported, “RBC is the latest bank in Canada to downsize as it attempts to reduce costs in the face of a sluggish economy and slowing residential-mortgage and consumer lending.” The revelation that the RBC employees facing layoffs had been training their own replacements just added fuel to the media fire.
The Conservatives see the economy as an engine that needs flushing to expel the gunk and sludge. It’s too easy for redundant employees to collect unemployment benefits instead of packing up to move to new jobs.
What made the Royal Bank situation newsworthy was that it involved white-collar, well-educated people. Young Canadians take out student loans to afford college and university, and their parents save for their kids’ education, expecting that when they graduate kids will get – jobs at the RBC.
While not in the category of BP’s Gulf of Mexico oil spill in 2010, the temporary foreign worker fiasco shook the RBC. As Nixon confessed in his open letter, “RBC has been in the news this week in a way no company ever wants to be.”
After helping the bank downsize, the government abandoned RBC. Prime Minister Stephen Harper claimed, “We have been concerned by the growth of the program.” He promised that “in very short order” the government would have “a series of reforms … to make sure this program is serving its purpose.”
Actually it has served its purpose. The Harper Conservatives expanded the program because it fits their definition of the country’s labour market problems. The Conservatives see the economy as an engine that needs flushing to expel the gunk and sludge. It’s too easy for redundant employees to collect unemployment benefits instead of packing up to move to new jobs. By raising wages, unions also impede the smooth running of the labour market engine. The Conservative narrative says reduce labour costs, and employers will hire more.
The foreign worker program has never been popular.
- In a 2007 Vector Poll™ 80 percent agreed that instead of bringing in more temps, “the more effective way to combat a labour shortage is for employers to improve wages and benefits for all workers” (45 percent agreed “strongly”).
- 62 percent agreed strongly that instead of allowing in more temporary foreign workers, “the government should put more money and effort into solving labour shortages through better education and job training.
- In 2008, a 44 percent plurality opposed “making it easier for employers to bring in temporary workers from abroad … when employers claim there is a labour shortage in Canada.” Just counting those expressing a view, the public opposed the foreign worker program by 58 percent to 42 percent.
Soon after the Conservatives were elected in 2006, employers lobbied them to lower the gates to offshore workers. The same year, immigration minister Monte Solberg said, “Not a day has gone by since I was appointed minister that I have not heard about labour market shortages threatening to hold up Canada’s economic growth.”
The Conservatives’ spin, in Solberg’s words, was “temporary foreign workers help support economic growth and prosperity.…”
As he cut ribbons at new offices to expedite foreign worker permits, Solberg was conceding that management comes first in the government’s heart. Labour shortages are a problem for employers but a solution for workers and unions, who can negotiate higher pay in tight labour markets.
As he cut ribbons at new offices to expedite foreign worker permits, Solberg was conceding that management comes first in the government’s heart. After all, labour shortages are an employer problem but a worker solution. It’s easier for workers and unions to negotiate higher pay in tight labour markets.
Nonetheless, in those days most Canadians didn’t see temporary foreign workers as a threat to their jobs or living standards.
In 2008, 43 percent of the public said foreign temps “mostly take low-paying jobs Canadian workers don't want” while only 9 percent felt they take jobs Canadians would do. The rest – 39 percent – said temping foreigners do both. Just 17 percent felt foreign temps “mostly hurt the economy by driving wages down for many Canadians.”
The deep recession beginning in 2008 increased everybody’s anxiety. In an August 2012 Vector Poll™ 43 percent disagreed that “temporary foreign workers are an economic benefit to the country because they fill jobs that Canadians do not want or cannot do,” a 34-point increase in four years.
Framing the issue as offshore temps vs Canadian workers tips public opinion overwhelmingly against the foreign worker program. In a December 2012 Nanos Research poll, 47 percent “opposed” and another 22 percent “somewhat opposed” bringing “temporary foreign workers into Canada while Canadians qualified for those same jobs are looking for work.” Only 25 percent supported the program (6 percent had no opinion).
With a nod to public opinion, that’s why the RBC’s sorry.© Copyright 2013 Marc Zwelling, All rights Reserved. Written For: StraightGoods.ca