March 10, 2010

Municipal procurement

Independent contractors association criticizes Burnaby’s fair wage policy

RICHARD GILBERT

staff writer

B.C.’s open shop association is criticizing Burnaby’s fair wage policy for increasing construction costs and taxes, but the mayor said it is just good social policy with a 20-year track record of success.

“Burnaby is clinging to an outdated, ill-conceived policy of forcing building trade union wages and benefits to be paid by private sector employers, who are awarded city construction contracts,” said Philip Hochstein, president of the Independent Contractors and Businesses Association (ICBA).

“They are repaying their political supporters in the trade unions, with Burnaby taxpayers’ money.”

A fair wage policy is a set of contract instructions that compel contractors and suppliers to provide specified minimum wages, benefits, training, safety standards, disability, minority hiring and other working conditions to their employees, while working on city contracts.

“If we wanted to pay back unions – and I have no idea what we would do this for – but if I was going to do this, I would probably say only union companies can bid on municipal work,” said Burnaby Mayor Derek Corrigan.

“But, we haven’t said this. Any company can bid on municipal work, as long as they are paying fair wage rates.”

Corrigan said he believes this is just good social policy and all governments should be doing it.

“We are creating good paying jobs and giving people an opportunity to use their skills,” he said.

“If we are paying back anybody, it is the taxpayers in our own community.”

Burnaby councilor Pietro Calendino said paying fair wages is a progressive policy that allows people to earn higher wages and contribute more to the local economy.

“We have unionized wages like every other municipality in B.C.,” said Calendino.

“These wages are determined by a collective bargaining process, which is done by the labour relations bureau of Metro Vancouver. We make sure workers get a fair living wage rather than contractors pocketing it as profit.”

Hochstein argued that this policy has nothing to do with a livable wage, because it does not apply to suppliers from other industries.

He believes there is no need for this policy in construction, since workers in the industry already earn above average wages.

In response, Corrigan maintained that not all construction workers are paid adequate wages.

He said this includes many workers in the open shop construction sector.

According to Hochstein, the fair wage policy inflates construction costs for Burnaby citizens, who will pay more for the labour component of projects.

“Wages represent 30 per cent of the cost of a construction project,” he said.

“If labour costs are increased, the total cost of the project is higher.”

Corrigan said that Burnaby doesn’t award contracts on the basis of a low bid or who can cut wages to the absolute minimum.

“We have a prequalification process that looks at the skills and capacity of the contractors, instead of selecting the contractor with the low bid,” he said

“This approach allows the municipality to deal with good companies with good reputations up front.”

Corrigan said this approach also allows the municipality to avoid hidden costs that are associated with low bids, such as numerous change orders and shoddy work.

“We have been working under a fair wage policy for 20 years, and we have no shortage of people looking to bid on our projects,” he said.

“They like to bid on our projects, because we make the skill of the contractor the important factor, not how far the contractor can pull back the wages of employees.”

On May 15, the City of Burnaby will finalize next year’s budget and city staff will likely recommend a tax increase just less than four per cent.

With reference to this proposed increase, Hochstein said there would be no need for higher taxes, if the city allowed contractors working on city projects to pay their workers a competitive salary.

In response, Calendino said there are no costs in the budget related to the fair wage policy.

Corrigan said this has to do with the fact that the majority of the budget relates to operating expenditures and not capital expenditures.

In fact, during the last few years, Burnaby has not undertaken many infrastructure projects because the economy was overheated and they didn’t want to pay a premium to get this work done.

Last year, Burnaby was ranked as the best-run city in Canada by Maclean magazine’s first survey of municipal governments, conducted by the Halifax-based Atlantic Institute for Market Studies, a public policy think tank.

Burnaby’s overall cost of government, $148 per person, is substantially below the $235 national average.

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