04/17/2012 08:50 EDT | Updated 04/17/2012 10:21 EDT

Canadian Auto Workers' Wages Falling Behind U.S., Union Says


In advance of what promises to be a difficult round of collective bargaining negotiations with the Big Three this fall, the Canadian Auto Workers union (CAW) is taking aim at what it sees as the myth its members are overpaid.

In a report released Monday, the CAW said auto workers north of border are struggling with lower wages than their U.S. counterparts, when cost of living is taken into account.

“There will be a lot of focus on our wages over the next few months, but the stereotype that we’re ridiculously expensive is factually wrong,” CAW economist Jim Stanford told reporters. “Canadian auto workers have less real consumption possibility through their wage than our American equivalents do.”

According to the union, the top hourly rate for production workers in CAW-represented assembly plants is $34 -- about $6 more than in unionized shops in the U.S. But as the report points out, consumer prices are 23 per cent higher in Canada, meaning that “real automotive wages are actually lower in Canada than in the U.S.”

Factoring in the premium Canadians pay for everything from gasoline to hardcover books, the union estimates that “real” auto wages are in fact two to three per cent higher in the U.S.

And when it comes to evaluating the overall “Canadian labour cost advantage” -- which includes the cost of health care and retirement expenditures -- the union claims that the benefits of doing business on this side of the border are even more pronounced.

Under current market exchange rates, all-in labour costs for CAW members at about five to 10 per cent higher than their counterparts in the United Auto Workers union (UAW). But that changes when Canadian consumer prices are taken into account. Evaluated relative to carmakers’ costs, the report finds that “real Canadian all-in labour costs are actually about $7 per hour lower than in UAW plants.”

The CAW is calling for government intervention to reduce the value of the loonie, as an integral part of its 10-point plan detailed in the report, entitled Rethinking Canada’s Auto Industry: A Policy Vision to Escape the Race to the Bottom.

In part due to speculative pressures around oil exports, the Canadian dollar has been “driven up … nearly 25 per cent higher than its fair value,” the report maintains. That translates into “a 25 per cent penalty on any value-added in Canadian operations, in industries (like auto) for which exports are a major source of demand.

“This punishing cost burden cannot be tolerated without a constant drain on Canadian investment, employment, and exports,” the report asserts.

As long as the loonie hovers around parity with the U.S. dollar, employers may reject the notion of increasing wages paid to Canadian auto workers, regardless of the difference in the cost of living.

But the report dismisses that logic as hypocritical, maintaining that automakers charge Canadians more for their own product, and pay less for imported parts used to manufacture vehicles in Canada, when the dollar is high.

Yet even if market exchange rates are used as a guide, the union insists that considering that labour costs now amount to less than five per cent of total production and sales expenses, the ultimate cost disadvantage in Canada is negligible, at about one and a half per cent.

“That is barely large enough to measure, let alone to motivate a large-scale relocation of investment and production,” the report concludes.

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