Capitalism as usual: Why RBC's outsourcing isn't really a surprise

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A protest against RBC's investments in the tar sands.

Sunday's revelation that the Royal Bank of Canada (RBC) will be bringing in "temporary guest workers" to replace some of its Canadian employees captured headlines, sparking outrage and surprise, and leading many to threaten a bank boycott and move their accounts elsewhere.

The outrage is certainly understandable -- as one would think that RBC, with its more than $2 billion in first quarter profits, could afford to retain these workers -- but the surprise isn't.

 Without being condescending, I have five words for those who greeted this news with disbelief and shock: this is how capitalism works. Or, as RBC CEO Gord Nixon recently wrote in a more sanitized and politically correct manner, it simply falls in line with the bank’s dedicated commitment to "operational effectiveness."

 Before proceeding any further, it is important to inject into this conversation -- which can quickly descend into xenophobia and anti-immigrant sentiment, is that it is not the "temporary guest workers" which are the problem -- it is solely government and corporate policy which is at fault.

It was been recently confirmed that it was the federal government which gave the nod to RBC's plans to shift towards the hiring of guest workers by granting it a "positive labour market opinion."

The statements given by RBC CEO Gord Nixon and Human Resources and Skills Development Canada Minister Diane Finley have both put forward a particular policy loophole which might allow RBC to be let off the hook. On paper, it was not RBC which arranged this change to temporary guest workers; instead, that was done by a U.S. based staffing agency, known as iGate, which, according to its website, specializes in "strategic outsourcing solutions" that help companies reduce costs.

Whether it is called "operational effectiveness" or "strategic outsourcing," what is happening at RBC is not a new phenomenon, it is that the attack on Canadian workers has grown confident enough to begin attacking the jobs of information technology professionals.

With the signing of NAFTA it was blue collar, predominately unionized workers who were met with threats to accept less pay despite being more productive and profitable. Despite the impact that free trade has had on manufacturing it has been spun by the government and the media as the acceptable cost of doing business in the new global economy. There is more to it than that. While the high dollar has been often cited for accelerating the decline in manufacturing, this was not the case when a significant amount of jobs left during the years of the record low Canadian dollar from the mid-1990s well into the 2000s. It has been the ongoing policy of successive Canadian government to produce a flexible (aka non-unionized and cheap) labour force.

Despite having both qualified workers and profitable production in Canada, there has been an alarming erosion of manufacturing jobs -- with federal government statistics revealing that between 2000-2007 there was a loss of 278,000 manufacturing jobs. From October 2008 to October 2009 alone, there was a loss of 218,000 full time manufacturing positions.

The lack of organized public support from the non-unionized sectors for those manufacturing workers who continue to face everyday threats of outsourcing from profitable companies reveals a class bias which has been deeply ingrained into Canadian society and politics that must confronted. The problematic 'right to work' platform of Tim Hudak reveals that the conservatives have calculated (one hopes incorrectly) that a significant portion of Ontarians are in support of anti-union initiatives and putting wages which support a middle class standard of living out of reach.

In many ways, the growth of the "temporary guest worker" program is giving a new face to the exploitation of marginalized groups for the sake of maximizing already staggering corporate profits. In January it was revealed that Canadian corporations are sitting on $500 billion of corporate cash holdings -- but still continue to portray themselves as being victims of discriminatory labour and environmental policies. The recently passed Bill C-38 gutted Canada's environmental regulations, removing or reducing much needed protections for water, air and wildlife in order to boost corporate profits.

The latest jobs report from Statistics Canada highlighted the undeniable success of these regressive polices, revealing that employment within the low wage food service was the fastest growing sector in the Canadian economy. To add to the shedding of high paying manufacturing jobs for low paying service jobs, in April 2012 Immigration Minister Jason Kenney and Human Resources Minister Diane Finlay announced the implementation of a two-tier wage system which would extend into the fast food service industries -- with "temporary guest workers" being paid 15 per cent less than Canadian citizens. These government policies have helped to put downward pressure on the wages of Canadian workers across the board.

In a sign of the times, even corporate Canadian donut icon Tim Horton's found itself in hot water, after being hit with a human rights complaints due to the mistreatment and exploitation their temporary guest workers. In the past it was the case that one's race or gender would bring lower wages for doing equal work (and in many cases it still does); now foreign workers are underpaid for doing the exact same work that was once done by Canadians. For years Canada has underpaid farm labourers from Latin America and the Caribbean, who pay into benefit systems they are not entitled to, face dangerous working conditions and often live in substandard housing.

Hopefully the RBC outsourcing has just revealed to the public that the labour flexibility policies pursued by the Canadian government seek to spare no sector -- whether in manufacturing, mining or information technology.

The Harper government is not interested in creating good jobs and strengthening the Canadian middle and working class; it is solely interested in maintaining record high corporate profits by further deregulating labour and environmental policies.

If there is any chance of reversing this trend of attacking workers by undercutting them at home and abroad, the outrage directed at RBC should not be an isolated incident, but instead be replicated at every single CEO and government enabler which seeks to bring about "operational effectiveness" by shedding much needed jobs to further bloat a very profitable bottom line.

If this is not the case, we can only expect more of the same to be on the way once the federal government finalizes and implements the Canada-China and Canada-EU free trade agreements.


Kevin Edmonds is a writer and activist based in Toronto. 

Photo: Rainforest Action Network / flickr


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