Earlier this week, the chambers of commerce in Fredericton, Moncton and Saint John, with the support of the Atlantic chamber, jointly wrote to Minister Holder regarding Bill 27 on behalf of our members. The bill, which calls for amending the Employment Standards Act to replace the current requirement that employers provide five unpaid sick days with ten paid sicks days annually. This is a cross-industry issue that would affect our entire memberships and indeed, businesses and organizations throughout the province. It can be difficult to evaluate policy decisions such as paid sick leave while still in the shadow of the pandemic, but employers understand very well both the value and cost of paid sick leave. While we appreciate the good intentions behind the bill, it will have significant ramifications for the provincial economy that may not have been fully considered.
As has been well established and extensively discussed, employers are facing a very tight labour market now and for the foreseeable future – it is the number one issue for businesses, not-for-profit organizations and charities across the country. Despite strong population growth over the previous five years, there are fewer people in the workforce. The reasons for this are various and complex – our population is continuing to age; the pandemic appears to have been a catalyst for retirements and for workers changing industries and a significant number of people seem to have simply left the workforce. This has caused employers to be more creative and do whatever they can to recruit and retain employees – including offering incentives that they have not provided in the past. Paid sick leave is one of these inducements – many businesses as well as not-for-profit and charitable organizations that do not currently offer paid sick leave would if they had the financial and human resource capacity.
Benefits such as sick leave are becoming an increasingly important employee attraction and retention tool and act as a differentiator to be an employer of choice. Similarly, employers are providing healthier and safer working environments since the pandemic and many offer work-from-home options for employees to avoid being sick or getting others sick.
Paid sick leave should be left to the market and the government should avoid sweeping aside this competitive advantage for employers. Additionally, because the Employment Standards Act prevails over collective bargaining agreements and sick leave is a negotiated piece of these agreements, essentially all (or most) collective agreements in the province would be caused to be renegotiated.
10 days of paid sick leave would be approximately equivalent to 4% of annual salary (the same as vacation pay). When also considering that these employees would have to be replaced for their missed shifts, that number essentially doubles to potentially increasing their payroll costs by 8% for individual employers. Like individuals, employers are facing a difficult cost environment with inflationary pressure, a significant minimum wage increase in 2022 outside of the normal statutory review process, CPI increases, EI expansion, increasing carbon taxes, property taxes, and more. To put this additional cost on employers now would threaten the economic growth that the province has seen recently. For employers who are unable to replace an employee on sick leave, the productivity lost can never be replaced – an area that New Brunswick already severely lags the Canadian average.
It may be instructive to consider that only two other provinces have legislated paid sick leave – British Columbia with five and Prince Edward Island with one. At a minimum, New Brunswick must maintain competitiveness vis-a-vis other provinces, not only for current employers but also for the government’s own investment attraction purposes and not creating obstacles for Opportunities New Brunswick’s efforts to bringing new investment to the province. Our competitive cost advantage has eroded over the past decade and this introduction of mandatory paid sick time will further exacerbate this issue. To give a sense of the magnitude of the cost of paid sick leave – using Stats Canada average wages and hours worked – the total value of 10 paid days for every employee in the province is north of $17 billion annually.
It would be appropriate to consult with the business community before even considering legislation such as this, given the potential impact on employers throughout New Brunswick. Employers could bring perspective and context to such considerations as the inability to carry-over days, how they might be accumulated (based on hours worked vs. employment), if part-time employees would be included, how the number of employers each year would impact an employee’s accumulated sick time, etc.
The private sector is responsible for economic growth, creating jobs and increasing the wealth / prosperity in the province that ultimately funds government to provide the services that citizens need. Governments, on the other hand, are responsible for creating conditions that will either facilitate or hamper this growth and ten paid sick days would fall into the latter category. We are asking that the government not pass Bill 27 or, alternatively, provide a robust opportunity for input and consultation from employers.
Krista Ross is CEO of the Fredericton Chamber of Commerce, a nationally accredited organization with more than 1,000 members, is an active business organization engaged in policy development and advocacy that affects the competitiveness of our members and the Canadian business environment. The Chamber’s vision is ‘Stronger Community Through Business Prosperity’.