Key issue: Labour
Labour is a key component of the horticultural industry. Many fruits and vegetables require significant manual labour to grow and harvest, and although work is ongoing to try to reduce the amount of labour required, many horticultural crops can not be grown and harvested using mechanized processes.
The OFVGA is actively involved with an organization called Foreign Agricultural Resource Management Services (FARMS), which manages the seasonal agricultural workers' program.
The OFVGA also played a key role in the establishment of the Labour Issues Co-ordinating Committee (LICC) and also works with the Farm Safety Association to address occupational health and safety concerns within the horticultural industry.
Seasonal Agricultural Worker Program
Fruit and vegetable production is very labour-intensive as many crops must be planted and/or harvested by hand. They also have very specific – and often short – planting or harvesting seasons so sometimes a lot of work has to be done very quickly.
In order to make sure fruit and vegetable farms had a steady work force, the Seasonal Agricultural Worker Program (SAWP) began in 1966 when a group of 264 Jamaican workers arrived in Ontario to harvest apples. Today, the program is available to only five countries, as stipulated in the General Agreement on Tariffs and Trade (GATT): Mexico, Jamaica, Trinidad & Tobago, Barbados and the Eastern Caribbean Islands.
If Canadian horticultural farm employers can’t find suitable Canadian employees, they can employ foreign workers through this program, which provides them with a much-needed, reliable labour source. The SAWP is a government-approved program and must not be confused with other temporary foreign worker programs available to Canadian employers. Here’s what sets it apart:
- Free, suitable accommodations must be provided to workers by farm employers.
- Health coverage – the same as Canadians get – is available immediately upon arrival.
- Canada Pension Plan and some Employment Insurance benefits, like parental leave, are available on approval to eligible workers.
- Provincial employment standards programs and workers’ compensation standards apply, just like for Canadian workers.
- A formal, four-way employment agreement between the employee, employer, foreign government, and government of Canada is in place.
- Same minimum hourly wage rate as Canadian workers doing the same job – and many earn a much higher rate. In fact, wages they earn working on Canadian farms far exceeds what they would be able to earn during the same time in their home countries.
For example, workers from Mexico have stated that they can earn as much in a three month stay in Canada as in one year in Mexico – IF they can find a job there.
Many families in the Caribbean have risen out of poverty because of the money they’ve been able to earn in Canada and bring back to their home country.
A job in Canada can mean being able to build a better house, enjoy better healthcare and sending children to high school, college or university.
About 20,000 workers come to Canada every year as part of the SAWP – the only program of its kind in the world – and more than 85 per cent of workers are requested back annually.
Many workers have been with the same farmer for more than 20 or 30 years and some employers are now requesting the adult children of their workers to come and work with them as well.
Close relationships develop between many workers and the farm families they work for, and many workers also become involved in their adopted communities through volunteering and being part of local service clubs and church groups.
Did you know…that for every seasonal farm worker in Ontario horticulture, 2.1 full-time Canadian jobs are created in the agri-food industry?
If Canada had no workers under SAWP, over one half of the Canadian horticulture market would be lost to imports – and many popular but labour-intensive crops could no longer be grown here. (Source: Stevens Associates 2003 - Quest for a Reliable Workforce in the Horticulture Industry).
For more information, visit www.farmsontario.ca.
Labour Issues Co-ordinating Committee
The Labour Issues Co-ordinating Committee (LICC) is a farm-driven coalition representing the interests of Ontario employers in the agriculture and horticulture sector.
It was formed in May 1991 in order to develop consensus among the farm employer community on employment and labour issues, and to represent their collective position to government.
The focus of LICC is on policy, legislative, regulatory, and program developments related to labour relations, employment standards, workplace safety and insurance (workers' compensation), occupational health and safety, Ontario Works, and other related labour legislation.
Potential unionization of the farm labour force, the Employment Standards Act, and the Occupational Health and Safety Act have been at the forefront of issues the committee is dealing with on behalf of growers.
The fruit and vegetable sector in Ontario is a very diverse, low margin and very labour intensive business.
We are a $1.5 billion sector that provides over 30,000 on-farm jobs, most of which are at the minimum wage level. Ten years ago minimum wage earners made up less than 20 per cent of the agricultural work force, but in many sectors today it is over 75 per cent.
Our total non-family wages are in excess of $400 million annually and the announced increase in the minimum wage level, including additional costs like Canada Pension Plan and Employment Insurance, will add an additional annual cost of over $30 million to our farmers.
Since the Ontario horticulture sector operates against global competition in both domestic and export markets, this additional cost cannot be recovered from consumers and so comes right off of the bottom line profits of our farmers.
With estimated margins in our sector averaging at less than five per cent, we have a total sector margin of approximately $75 million. The increase in the minimum wage rate to $11 an hour therefore represents over one-third of the total profit margin of the sector. No other business sector was asked to sustain such a disproportionately negative impact on profitability.
The $0.75 an hour increase in minimum wage rate may sound insignificant, particularly since it is the first increase since 2010. But it’s not insignificant. Our products are under constant price pressure, even in our domestic markets, from imported products grown in regions with much lower wage and other societal and production costs.
Furthermore, despite claims of frozen or lagging minimum wage rates in Ontario, we have also operated in a business environment where the mandatory minimum wage has increased much more rapidly over the past ten years than either inflation or the prices consumers paid for fresh fruits and vegetables as measured by the Consumer Price Index (CPI).
According to Statistics Canada data, the Consumer Price Index for all goods for Ontario for the 12 years from 2002 to 2012 went up 23 per cent.
According to OMAFRA statistics, food purchase prices as a component of CPI are up 32 per cent between 2002 and 2012, but fresh fruit prices paid by consumers are up only 9.7 per cent and fresh vegetables are up even less at 8.1 per cent.
From 2004 to 2010 the minimum wage rate went up by 50 per cent. The newly announced rate increase takes the minimum wage rate up by 60 per cent since 2004.
From 1995 to 2004, there were no increases in the Ontario minimum wage rate. Since 2004, there have been eight increases. Neither system represents a good ongoing solution.
All farm groups that provided input to the Minimum Wage Panel indicated they felt that adjustments to the minimum wage rate should be based on annual reviews of the change in CPI. They were opposed, however, to creating a starting point for the CPI-based adjustments by first adjusting the rate upwards to make up for the fact that no adjustments had been made since 2010.
This is because the existing Ontario minimum wage rate of $10.25/hour is already higher than would be called for based upon CPI increases over recent history. If for example we had adopted the CPI system for adjusting minimum wage rates in 1995, we would be at $9.78/hour in 2014. If we had followed the same CPI system since 2004 we would today be at $8.72 an hour.
The fruit and vegetable sector is particularly sensitive to increases in the minimum wage rate. We operate in a global free trade environment in which retailers set the price and we are price takers with minimal opportunity to recover cost increases from customers.
Minimum wage earners make up the majority of our work force, encompassing 75 per cent of workers on average and as high as 90 per cent in some fruit and vegetable crops. Ten years ago minimum wage earners made up less than 20 per cent of the agricultural work force. However, increases in Ontario’s minimum wage over the past ten years, coupled with our inability to recover additional money from the marketplace through higher prices, have greatly increased our dependence on minimum wage earners.
Also complicating the profitability issue is the fact that Ontario’s three biggest retailers are eroding farm margins even further by demanding mandatory rebates of four to 4.5 per cent of their purchase price for produce. In January of this year, Sobeys announced that they are taking a further one per cent reduction from their suppliers.
Given the huge imbalance of power between buyer and seller in the produce industry, farmers are in no position to refuse to pay this rebate, which has increased from two to 2.5 per cent only a few years ago. This rebate and other retail business charges come directly off the selling price and further erode already low margins.
The combined impact of mandatory increases in minimum wage, retail rebates and other charges threatens the continued existence of the fruit and vegetable sector in Ontario.
This sector will not be able to participate in the recent Premier’s challenge of creating 120,000 new jobs and doubling our growth rate. It will, in fact, go backwards as many will go out of business and those farmers so heavily dependent on exports will relocate to Michigan and Ohio where the cost of doing business is so much lower.
This change will start to happen this year and it will start with the largest producers who provide the majority of the 30,000 jobs. The smaller farms may not be as immediately impacted since they use less hired labour, but they produce only 10 per cent of total Ontario production.
In short, the Ontario fruit and vegetable sector will shrink at a very rapid speed and it will start with the most labour intensive crops. Those looking to expand their businesses, particularly the larger greenhouse vegetable farms, will do so in the United States.
Ontario Retirement Pension Plan
The Ontario government has announced it intends to introduce the Ontario Retirement Pension Plan (ORPP).
It is intended to provide a predictable source of retirement income for those most at risk of under-saving, particularly middle-income earners without workplace pensions.
The ORPP will be introduced in 2017. This will coincide with the expected reductions in Employment Insurance premiums, helping to minimize the impact on employees and employers.
To help with the adjustment, enrolment of employers and employees in the ORPP would occur in stages, beginning with the largest employers.
ORPP contribution rates would be phased-in over two years.
Employees and employers will contribute an equal amount, capped at 1.9% each (3.8% combined) on an employee's annual earnings up to $90,000.
Earnings above $90,000 (in 2014 dollars) will be exempt from ORPP contributions.
Contributions will be invested by an organization at arm's length from the government.
ORPP benefits will be indexed to inflation to provide a predictable source of retirement income for life.
More information is available at www.ontario.ca/taxes-and-benefits/ontario-retirement-pension-plan.
Posting on the online job bank
In the summer of 2014, Employment and Social Development Canada suddenly changed the rules on how job openings must be advertised. All Canadian growers who rely on workers through the Seasonal Agricultural Worker Program must post on the online job bank at www.jobbank.gc.ca.
The job bank posting is a requirement in addition to any jobs you post in local newspapers or trade publications.
By going to the website and typing in “farm worker,” you can see the variety of postings ranging from ginseng farm labourer to greenhouse worker. Minimum wages are listed as are expectations of the worker and number of weekly hours.
“I’m advising to post jobs 365 days a year,” says Ken Forth, chair of Foreign Agricultural Resource Management Services (FARMS) “Employers must be
vigilant that their advertisement is refreshed every 30 days to prevent the advertisement being dropped. In case you have a worker who gets sick or needs to go home, you’ll be covered with the internet posting and it
shouldn’t take so long to get a replacement worker."
As printed in The Grower, September 2014