Tens of thousands of Canadian workers are set to swell the ranks of what Karl Marx called the “reserve army of labour” following a wave of layoffs in the service industry. The elimination of 17,600 jobs at Target stores – one of the largest mass layoffs in recent history – is only the most egregious example in a series of announcements that also included the elimination of 350 positions at Tim Horton’s and up to 1,000 job losses at Future Shop.
Target announced on Jan. 15 that it would close all 133 of its Canadian stories following an ill-fated northward expansion by the U.S.-based discount retailer, which expected to report an estimated $5.4-billion (US) of pretax losses for its discontinued Canadian operations in the fourth quarter of 2014. The company quickly announced that it would make cash contributions of $70-million into an employee trust that would provide a minimum of 16 weeks’ worth of compensation for laid-off Target workers.
The reality of the situation was not nearly as generous as what was widely reported in the media. Many outlets reported that Target was offering “16 weeks’ worth of severance” to laid-off worker; the fact was that the majority of workers received 16 weeks’ notice prior to the end of their employment and so would be paid just their regular wages. Some could expect to be let go early, at which point their wages would be drawn from the employee trust. Workers who voluntarily left at any point would forfeit any future wages and benefits for the duration of the notice period. Meanwhile, employees at the distribution centres used by Target, which are run by the company Eleven Points Logistics, would not be covered by the fund since they were not considered Target employees.
Any lingering illusions in “shared sacrifice” by workers and bosses were immediately dispelled when it was revealed by Fortune magazine that the severance package for Target CEO Gregg Steinhafel, who led the company’s disastrous expansion into Canada, amounted to $61-million, including stock options and other benefits. In other words, the value of Steinhafel’s “golden parachute” — his reward for driving the company into the ground — is almost equal to the total amount being distributed among the company’s 17,600-strong workforce!
The news from Target came amidst a constant stream of layoffs in retail and food services. Sears Canada had previously announced, in January 2014, that it was eliminating 2,200 employees from its payroll after already eliminating thousands of positions in 2013. The last three months of 2014 saw announcements from fashion retailers Jacob, Smart Set, and Mexx Canada that they were closing all of their Canadian stores, with 250 of the latter’s 1,785 employees losing their jobs in one week alone. On Jan. 15, Sony announced it was closing its 14 Canadian retail outlets, eliminating 90 part-time and full-time jobs. Two weeks later, Tim Horton’s confirmed that 350 employees would lose their jobs, largely at the company’s corporate headquarters and regional offices.
In the case of Target, a Jan. 15 analysis in the Globe and Mail pointed to numerous factors behind the company’s botched Canadian expansion, including poor store locations (many purchased from Zellers), opening too many outlets at once, and underestimating competitors such as Canadian Tire and Wal-Mart. The widespread layoffs in retail, however, point to a more systemic problem than poor business decisions by one company or another.
The McKinsey Global Institute, the business and economics research arm of consultant firm McKinsey & Co., noted in a February report that the Canadian economy remains vulnerable due to high levels of household debt, which it concluded were higher than those in the U.S. and U.K. at the height of the financial crisis in 2007. Rising housing prices were identified as one of the chief factors behind the rise in consumer debt.
Sal Guatieri, a senior economist at BMO Capital Markets, argued in a Feb. 5 CBC article that a wider crisis was only likely if there were significant job losses across Canada in a short period resulting in mortgage defaults. Susan Lund, a partner at the McKinsey Global Institute, noted in the same article that a slowing economy and increased unemployment make it more difficult for households to service their debt, leading to them cutting consumption in other areas and contributing to a further slowdown in GDP growth.
Service sector layoffs are fundamentally symptoms of an economic environment in which Canadians struggling with household debt, stagnant wages, an abysmal job market, and increasingly precarious short-term and part-time work simply do not possess the spending power to continue fuelling endless growth in retail and the food industry. Instead, forced lowering of consumption reduces overall demand. This trend is most marked among poor and working-class Canadians, and the increasing unemployment resulting from the closure of retailers such as Target only exacerbates the problem. As Marx noted, in the last analysis, all such crises under capitalism can be traced to the problem of over-production, in which the amount of goods produced for the market exceeds demand.
In the Jan. 19 issue of the Winnipeg Free Press, Canadian Labour Congress President Hassan Yussuff called for a government response to the Target layoffs, which he called a “national emergency.” Specifically, he argued that the federal government should extend Employment Insurance (EI) coverage, on an emergency basis, for anyone “unfairly disqualified”; that federal and provincial governments should offer emergency support for local services such as the United Way to assist laid-off workers with counselling, adjustment needs, and re-training; and that the federal government should recognize the need for a national jobs strategy.
Such measures, while well-intentioned, fail to address the root of the problem. Leaving aside the Harper government’s contempt for workers — illustrated by its ongoing attempts to reduce EI eligibility — that would preclude even the consideration of these ideas, the first proposal is only a stop-gap solution; the second akin to putting a band-aid over the gushing wound that is the Canadian job market; and the third not even on the table for any of Canada’s three major parties, none of which have made a serious proposal to directly address the jobs crisis. The severity of the federal debt incurred by the 2008 bank bailouts rules out anything approaching a Keynesian job creation program.
The lack of job opportunities for Canadian workers, particularly the youth, in no way reflects the real potential of the productive forces in this country. There is plenty of work to be done. Yet so long as those forces are privately owned and geared towards profit rather than human need, millions of working people will continue to languish in unemployment or struggle to make ends meet. The only long-term solution is to take the commanding heights of the economy out of the hands of the capitalists, nationalizing them under democratic workers’ control and putting them to work as part of a planned economy in which the right to productive employment is guaranteed to all.
Support laid-off service sector workers!
Full employment and decent wages for all as part of a nationalized planned economy!
