Today I'm thrilled to be sharing an interview with Tom Zizys. Tom is a noted labour market expert, former civil servant and a current Metcalf Fellow at the Metcalf Foundation. He holds a lot of the answers into what's holding back the transformation and development of Ontario's economy and workforce. We had a wide-ranging discussion that covered the long-term seismic shifts that have occurred with the economy, the structural flaws within the labour market, the social location of young people within workforce and what sort of policy responses might be necessary to fix the economy. Tom has conducted research into a range of labour market issues. You can find a couple choice reads from Tom here and here; furthermore, he was recently part of a great panel discussion on The Agenda discussing Ontario's labour market pains. The interview appears below in its entirety; enjoy and please share it with your friends, family and co-workers.
A.L.: Starting in the 1980s Ontario’s economy start to experience some seismic shifts. Could you describe what sorts of changes have occurred? What trends are we seeing here?
T.Z.: What Ontario experienced is similar to what most advanced economies experienced in the 1980s and beyond. A number of factors came together that facilitated increased globalization and thus greater competition. Prominent among these factors were the IT revolution and sharply reduced communications and transportation costs. Changes in financial regulations greatly enhanced the mobility of capital, and increasingly companies measured their performance not on long term growth but rather their quarterly results, that is, their stock prices. This severely shortened the time horizons for corporate decision-makers. The political climate also changed, government and its rules and regulations were seen as a problem, and various public benefits and protections were scaled back. And as the global economy opened up, new competitors emerged and cheaper labour flooded the world’s labour market. All these factors transformed our labour market.
A.L.: There are some fundamental flaws in Ontario’s labour market with growing polarization through the development of a two-tiered labour market, a hollowing out of the middle-class, the ascendancy of income inequality, the growth of precarious employment and the existence of a skills mismatch. You’ve previously argued that Ontario’s labour market is dysfunctional; how did we arrive at such a haphazard and fragmented system?
T.Z.: With all these shifts in the global economy, the over-riding concern of employers was to stay competitive, and the easiest way to do so was by reducing costs (as opposed to the more difficult but more rewarding strategy over the long term of improving productivity), with the major expenditure being staffing costs. So, in a short period of time, the notion of life-time employment was done away with, the idea that a person would typically be hired for life, or would work for two or three employers at most throughout their lifetime. If there was no lifetime employment, there was less incentive to invest in a worker, who may not be around tomorrow. This reduced the practice of grooming employees for higher level positions, having them advance up career ladders. Instead, people were hired from the outside, based on their credentials, on an as-needed basis. Entry-level jobs no longer were the starting point of a career, they became dead-end positions, and employers could make them casual jobs, or contract them out, or hire temps, all for the purpose of reducing costs. This coincided with a hollowing-out of the middle-level positions, whose functions were split into high-end jobs and low-end jobs, resulting in a two-tiered labour market.
A.L.: There are numerous deficiencies and contradictions in Ontario’s labour market at present; the current system handsomely rewards an elite few, while the rest of workforce faces stagnant or declining wages. What are the long-term implications for social stability, economic prosperity and social justice?
T.Z.: As growing polarization is being experienced across most developed countries, the issue is attracting more attention and study. The most illuminating research has been done by Richard Wilkinson, who examines industrialized countries by their rate of income polarization and compares the incidence of a host of social problems. His findings are that advanced economies that have higher rates of income polarization also have higher rates of mental illness, violence, imprisonment, teenage births, obesity, drug abuse and poor educational performance of school children, among other problems.
The prosperity we experienced in the 1950s and 1960s was in part related to strong consumer demand, a consequence of having an affluent middle class. Increased polarization of income reduces the purchasing ability of a larger part of the population, which weakens our economy. And if a large portion of the population does not benefit from the way the current economy operates, they will have no incentive to support policies that uphold or advance the present economic set-up.
A.L.: The recession damaged the economic prospects of young Canadians. From economic scarring to delayed adulthood to precarious employment there will be profound impact going forward. At the same time, youth are facing crippling debt from student loans, a dismal job market and a difficult transition from school into the workforce. What do you think the long-term implications of recession will be on young people?
T.Z.: There is definitely cause for concern. Even pre-recession, there is a reason why the labour market outcomes of youth and newcomers were often singled out in the media – being the ones entering the labour market, they have been most affected by the change in the hiring and career advancement paradigm (older workers in manufacturing, on the other hand, have been greatly affected by structural changes in our economy).
With the recession, first hiring slows down and then stops, so again, those entering the labour market are most affected. Then the layoffs start, and typically those first in are more likely to be let go, so again, youth and newcomers – their unemployment numbers rose disproportionately during the recession. Then, as employers start hiring again, with so many unemployed to choose from, there is a tendency for those with more experience to be hired more quickly – again, youth are at a disadvantage. Those youth who come out of school just as a recession hits may find it especially hard to get work in their field. After a year or two in a tight labour market, even when employers start hiring again, those youth are competing for work with more experienced individuals who had been laid off, as well as more recent graduates who do not have to explain a one or two year gap in their resume. That’s the kind of scarring that creates a cohort of youth who end up having to play catch-up in the labour market for years after the recession.
A.L.: The growth of internships as a form of employment in Canada is a great example of the structural problems young people face within the labour market. Unpaid internships are quickly replacing entry-level jobs, generally flout workplace laws and are a form of precarious employment. How has the growth in the use of internships by employers detrimentally impacted on the career paths of young people?
T.Z.: In principle, the concept of an internship is a good idea, the notion that one can gain some work experience and learn on-the-job as a step toward recognition as an accomplished worker in the field. Many professions formally rely on a highly structured process for this stage of career development: the medical profession (where I believe the internship model was first developed), through articling in law, as well as apprenticeships in a wide range of trades.
What is troublesome is, firstly, the practice of unpaid internship, and secondly, the concern that for many the internship experience actually does not involve any real skills development for the intern. These two concepts are related: one might accept the implicit contract where an individual acquires some marketable skill by working for free, but if no skill development is taking place, and in fact if the intern is doing work for an employer that actually is of value to the employer, then it seems to me that the question to ask is: we have minimum wage laws, don’t we? If there is no learning that takes place, then how is that supposed to advance a person’s career? If the point is you have to offer free labour to improve your chances to get a job down the road, then that sounds to me like someone is being taken advantage of.
A.L.: While it’s clear that deep structural problems exist within Ontario’s labour market there hasn’t been a coordinated policy response. Why aren’t the various stakeholders (government, employer, post-secondary institutions) working together? What public policy solutions would you suggest to fix Ontario’s labour market?
T.Z.: I think the main reason for the lack of a coordinated policy response has been that we have not fully accepted how the changes in our labour market have changed what kind of labour market programs we need. So long as people could step onto a career escalator, that is, get an entry-level job and work their way up in the firm, then the right policy response to unemployment was helping the unemployed overcome any barriers preventing them from getting a job. This is a supply-side response.
Nowadays, we need to anticipate what employers need in real time, which includes not only qualified workers but linking training with actual jobs. This is what workforce development, as opposed to employment services, needs to be about. Most current policies and programs, and the institutions delivering them, are fixated on a supply-side approach. To change this, we need a very deliberate acknowledgment that our policies have to adapt. To make that happen means bringing together those stakeholders who recognize that the current policies and programs are not serving the unemployed and are not serving employers. I think there is enough disillusionment in the system for a broad-based coalition to emerge which could advocate for a workforce development system in this province.
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