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Ikea's Latest Model: Equal Pay

Fight against two-tier contracts shifts to Safeway, other BC chains.

By Tom Sandborn 22 Oct 2007 | TheTyee.ca

Tom Sandborn is a regular contributor to The Tyee with a special focus on labour and health policy issues.

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Workers 'stuck to their guns.'

Imagine getting a new job, only to discover that your co-worker, who has been with the employer for a while longer than you, is paid seven dollars an hour more than you to do the same task. Welcome to the world of two-tier wages, a surreal zone entered by a small but significant minority of Canada's unionized workers in the past two decades.

Now a contract won by a Teamster local in Richmond is being viewed as a possible first step toward eliminating two-tier agreements from B.C. labour's future, and the union that represents supermarket clerks across the province is gearing up for a struggle next spring that will try to do just that.

Teamster Local 213 signed a new contract with the Richmond Ikea on Sept. 9 that reverses a two-tier wage agreement a union spokeswoman said was "forced down our throats" in 2004.

The new agreement will run for six years, and by the end of that term, Teamster official Anita Dawson told The Tyee, wage gaps between Ikea veterans and 125 new workers hired under the 2004 contract (which in some cases were as wide as seven dollars an hour) will be closed.

The deal came at the end of a strike by the Ikea outlet's 300 employees that began on Aug. 20 this year.

Requests to Ikea management for comment on the new contract had not been answered by the time this story was filed.

Grocery workers emboldened

This news was welcome over at the headquarters of B.C.'s United Food and Commercial Workers Local 1518, where union leadership is anticipating tough negotiations next spring on contracts expiring then with the province's Safeway and Save-On-Foods/Overwaitea operations.

The contracts with the supermarket giants involve nearly 19,000 workers across the province in agreements that have imposed two-tier wage regimes on them since 1997, union sources told The Tyee.

The Ikea workers "won on this fight because they stuck to their guns. We hope to do the same next spring," UFCW communications representative Andy Newfeld told The Tyee, claiming that two-tier systems "are fundamentally unfair to workers" and "fly in the face of fundamental justice."

Safeway operates 79 stores in B.C., while the Overwaitea Food Group (OFG), which controls Save-On-Foods and Overwaitea stores, has 73 in the province.

Of those 73 stores operated by OFG, six have been converted to the company's PriceSmart banner. The status of these six converted stores is now subject to an arbitrator's ruling, but union spokesman Newfeld said that the UFCW expects to be negotiating this spring for workers at the six converted stores as well as all the others covered by their Overwaitea/Save-On-Foods contract.

Messages left with the press office of the Overwaitea Food Group asking for comment on this story were not returned. Scott Gibney, a press spokesperson for Safeway Canada, told The Tyee the company would not be willing to make any comment on their relationship with the UFCW or their contract negotiations until next spring.

Outlawed in Quebec

In the province of Quebec, labour law takes a dim view of two-tier wage systems. Section 87.1 of the province's labour standards legislation, passed in 1999, prohibits any agreement or decree that would "operate to apply to the employee, solely on the basis of the employee's hiring date, a condition of employment less advantageous than that which is applicable to other employees performing the same tasks in the same establishment."

Two-tier contracts were a popular management strategy in the 1980s and '90s, UBC labour economist Craig Riddell told The Tyee. The controversial deals hold wages for an existing work force steady or even provide modest raises for older workers, while permitting managers to hire new workers at a reduced wage.

According to David Fairey of Vancouver's Trade Union Research Bureau, two-tier agreements have been most typically established in retail, transportation and service sector industries. However, in B.C., two-tier contracts have also been signed at BC Hydro, the Council of Marine Employers, at some B.C. government-funded community social services and at Canadian Freightways.

"You don't hear so much talk about two-tier agreements these days," Riddell said. "Since 1996-97 the labour market has been tougher, with power shifting toward workers, especially in the past five boom years. There was a lot of downward pressure on wages in the '90s, with the excess supply of young workers. Now, however, smaller cohorts of workers are entering the workforce."

'Devastating for morale'

Mark Thompson, a labour expert at the Sauder School of Business at UBC, sees another reason that two-tier contracts haven't become more common in Canada.

"The win at Ikea doesn't surprise me," he told The Tyee. "Two-tier arrangements are devastating for morale. They represent an invitation to high turnover. In today's market they are not viable."

Bill Saunders, president of the Vancouver and District Labour Council, agrees.

"Anyone who analyzes two-tier contracts knows they create bad dynamics. Two-tier contracts create a younger work force with different economic interests."

Currently, according to the federal government's Workplace Information Directorate, 5.7 per cent of workers who are covered by union contracts in Canada for workforces larger than 500 employees are working under one form or another of two-tier wages.

Of these larger two-tier agreements, 32 contracts are classified by the federal data bank on labour matters as "parallel, " which is to say that they are designed to perpetuate the two-tier structure indefinitely, while 23 agreements are classed as "merging" in that they are designed to equalize wages for all workers doing the same job in the long run. The Teamster win at the Richmond Ikea transformed a parallel contract into a merging one that will see all Ikea workers doing the same work getting the same pay by the end of its six year term.

As for the larger question of the future of two-tier contracts in Canada, the returns are not yet in. The Ikea settlement only affects 300 workers. But depending on how the UFCW negotiation goes next spring, the Swedish firm known for its assemble-it-yourself furniture also may be known in B.C. as the first place to dismantle two-tier contracts.

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