OTTAWA - Canada's workers are not reaping the rewards of economic expansion and the hard work they are putting in to increase productivity, says a new study by a left-wing think tank.
The report released Thursday by the Canadian Centre for Policy Alternatives says that Canadian workers' productivity has increased by 51 per cent in the past 30 years, but they have little to show for it.
Had their real wages reflected productivity and economic growth during that period, the average worker's pay cheque would be $10,000 more a year than it is now.
"Canadians are constantly being told they need to improve their productivity and growth the economy -- which is exactly what they've done -- but their pay cheques aren't growing to reflect their work effort,'' said the group's senior economist Ellen Russell.
The think tank, which has written extensively about Canada's income gap, looked at what has happened in the Canadian economy between 1975 and 2005 with the aim of tracking where most of the benefits for Canada's generally strong economy ended up.
What it found is that the economy grew by a total of 72 per cent and labour productivity, measured as gross domestic product per hour worked, increased by 51 per cent.
But when the researchers looked at wages, they found that after registering strong increases in the early and mid-1970s, real wages adjusted for inflation have remained virtually unchanged for the remainder of the last three decades even though productivity continued to increase.
"The stagnation of workers' real average wages despite their rising productivity is a powerful indictment of the promise that a growing economy -- and increased productivity -- will produce benefits widely shared by the majority of Canadian workers. It simply isn't happening,'' the report says.
But that's not the case of Canadian corporations, which the group says has been gobbling up the lion's share of the benefits of higher productivity.
"Corporate profits shares are the highest they've been in 40 years,'' noted Russell. "Sharing those earnings with workers could have gone a long way to reducing Canada's growing income gap.''
The study shows that while workers share of the economic pie grew steadily between 1961 and the late 1970s -- a time when corporate profit share declined -- the two lines began to reverse in the early 1980s.
After that, corporate profit share has been steadily increasing and workers' wages, as a slice of the economic pie, has been falling.
Corporate share of the economy, minus taxes, went from a low point of 22 per cent in 1991 to about 34 per cent in 2005, the study says. Meanwhile, wages' share slipped from close to 65 per cent in 1991 to 60 per cent in 2005.
Using 1991 as a base, Russell said corporations banked $130 billion more in gross profits in 2005 than they would have if profit share had remained at 1991 level.
The report does acknowledge that 1991 was a low point in terms of corporate profits as a share of the economy. In 1961, the share represented by profits was close to 29 per cent, not far from the 2005 level.
As well, not all workers have fared badly.
Between 1983 and 2005, hourly wages for employees in finance, insurance and real estate sectors increased between 15 and 20 per cent during those years. On the opposite end of the spectrum, workers in the transportation sectors saw real wage losses in the 16 and 17 per cent range.
As well, the study found that higher paid workers tended to see their incomes rise during the period, while lower paid workers got less and less.
This may be because provincial minimum wages have declined from $9.14 to $7.32 in the past 30 years, based on 2006 dollars.
"Workers earning minimum wage are experiencing real wage decline,'' the report states.
