Financial Post (Canada) | 29 December 2007
Select few see benefits of free trade: report
20th Anniversary; ’Pay packages of the top Canadian CEOs have ballooned’
Eric Beauchesne, CanWest News Services
OTTAWA — The large Canadian-based corporations and their CEOs that led the campaign for North American free trade are the major beneficiaries of the agreements, while their employees and Canadian workers in general have been the victims, an economic think-tank said yesterday.
And now those same corporations are pushing for Canada’s deeper integration into the U.S economy, the left-leaning Canadian Institute for Policy Alternatives says in a report released in advance of next month’s 20th anniversary of the signing of the first Canada-U.S. free trade deal.
The select group of large firms that were part of the Business Council on National Issues, whose CEOs pushed for free trade with the United States two decades ago, and that remain members of the since-renamed Canadian Council of Chief Executives, have cut jobs since even as their revenues have soared, the institute said in the report.
"Not satisfied with NAFTA ... the Canadian Council of Chief Executives has been pushing hard for NAFTA-plus measures to integrate Canada more deeply into the U.S. economy," it said, referring to its support for the North American Security and Prosperity Partnership, which the NAFTA leaders signed in 2005, and whose aim is to harmonize economic, security, military resource, social and environmental, policies, practices, regulations and institutions.
Of the 41 non-financial publicly traded corporations, 13 have increased their combined employment by 88,580 and their revenues by $65-billion, the analysis notes.
However, 28, or twice as many, have reduced their payrolls by a combined total of 205,062 over the same time that they increased their revenues by $93-billion.
"Overall, the 41 companies’ combined revenue grew 127%, from $137-billion to $310-billion between 1987 and 2006," it said, adding that over that period they shrank their combined workforce by over 118,482, or nearly 20%.
Meanwhile, average Canadian wages, adjusted for inflation, have not grown at all since 1987 — in fact, not since 1980, it says.
"This is the first time the average real hourly wage has failed to grow since 1914, when data were first collected," it says. "Average labour productivity, on the other hand, has continued to grow steadily since 1987, as it had in the three previous decades when wages were rising in tandem."
"If the average wage increase had fully reflected the improvement in productivity during 1991-2005, full-time workers would have had, on average, $10,000 more in their 2005 annual pay-cheques," it says.
"In contrast to the experience of average Canadian workers, the pay packages of the top Canadian CEOs have ballooned," it says, citing a survey that found that the country’s top 100 CEOs earned an average of $9-million in 2005, 237 times the average Canadian wage, up from what 10 years earlier was 104 times the average wage.
Also, while workers’ wage share of the national economic pie declined to just over 60% in 2005 from a peak of nearly 66% in the late 1970s, corporate profits share of that pie rose from a low of under 25% of GDP in the early 1980s to a more than 40-year high of 33.7% in 2005.
The Canadian Council of Chief Executives was not available to comment.
A recent report by the Bank for International Settlements noted that the increase in the share of the economic pie going to profits and the decline in the share going to wages is not limited to Canada.
"Profits currently account for a higher share ... than in the previous couple of decades in a diverse range of countries, including most continental European countries, Japan, Australia, Canada and the United States," says the report by the Swiss-based economic research arm for the world’s central banks. "There are only a few countries where the profit share ... lacked an upward trend."
The report concludes that the trend likely reflects the increased pace of technological change and rising investment in capital, which it says may have reduced the bargaining power of labour.