Chapter 4: Vulnerable workers in precarious jobs

Definitions and terminology

To fulfill our mandate, we must understand what is meant by vulnerable workers and identify those employees who are experiencing precariousness in their employment. Again, our understanding is based on our own reading and on a number of academic papers prepared for us, and especially the two background reports prepared for the Review by Professor Gunderson,from which we have borrowed significantly, but the views expressed are our own.

Precarious employment

As we use the term here, the concept of precarious employment is broad and means work for remuneration characterized by uncertainty, low income, and limited social benefits and statutory entitlements. ^{footnote 42[42]} For some, precarious employment is limited to work that has an element of contingency, and for others it is used synonymously with non-standard employment such as part-time and temporary work. However, employees in contingent work include people who are well paid, sometimes precisely because of the uncertainty inherent in their work. We agree with the Law Commission of Ontario (LCO) that, for our purposes, the term precarious should be restricted to include only those whose work is low paid. We agree with the LCO that low wages are a necessary condition for those who are considered precarious for the purposes of needing protection and we agree that we must include employees in standard employment categories.

Accordingly, although our definition of precarious work includes work that has an element of uncertainty over whether it is continuing, we do not treat it as synonymous with contingent or non-standard work. Rather, precarious employment transcends the standard/non-standard work distinction, such that forms of employment that are full-time or part-time, permanent or temporary, may be characterized by precariousness. In other words, this definition recognizes that some non-standard work is highly paid, secure and not precarious, while some standard or full-time permanent work is poorly paid and is precarious because, for example, there may be insecurity because there are no medical benefits or a pension plan. Finally, without equating the concept of non-standard jobs to precarious jobs, our Terms of Reference do recognize a correlation – that is, that the growth of non-standard work has put many workers in more precarious circumstances.

Vulnerable workers

Vulnerable workers describes people, not work or jobs. It is used in many contexts to denote social groups who are defined by their social location, that is, by their ethnicity, race, sex, ability, age and/or immigration status. In other contexts, however, the term vulnerable workers denote groups of workers who have greater exposure to certain risks than other groups, regardless of their social location. In the latter context, the term vulnerable describes all those (regardless of the social group(s) to which they belong) whose conditions of employment make it difficult to earn a decent income and thereby puts them at risk in material ways including all the undesirable aspects of life that go hand-in-hand with insecurity, poverty and lower incomes. We believe that our Terms of Reference, in describing the objective of this Review as improving the security and opportunity of vulnerable workers, is intended to have us consider the position of all vulnerable workers in this latter sense. Indeed, we think vulnerable is used in our Terms of Reference to include workers, who are, for example, low paid, full-time, without benefits and whose vulnerable status is not at all associated with their social condition. We think the term includes full-time, non-ethnic, non-racialized, male, Canadian-born workers, who have no disability, but who have low wages.

Defining the group

Conceptually, we understand that our mandate requires us to consider all workers in Ontario whose employment:

• makes it difficult to earn a decent income;
• interferes with their opportunities to enjoy decent working conditions; and/or
• puts them at risk in material ways.

Indeed, we do not think it would make public policy sense to limit our inquiry to only non-standard employment, and not to ask whether, and how, the changing workplace has affected vulnerable employees working in jobs that are considered to be standard employment.

Quantifying the number of vulnerable workers in precarious jobs

In order to draw a picture of the number of vulnerable workers in precarious jobs, we have looked at data from the Canadian Income Survey for Ontario for 2014^{footnote 43[43]}. Based on various measures, we estimate that the number of vulnerable workers in precarious work in Ontario in 2014 was between 30-32%. It may be somewhat higher or lower given the breadth of our definition but this data provides a reasonable approximation.

In keeping with our conceptual definition, we looked at those employees:

• working full-time for low wages, with minimal or no benefits, (such as no pension plan); or
• working for low wages without any or minimal benefits such as without a pension plan; and who:
  • work part-time involuntarily because they want more hours – about 30% of all part-timers;^{footnote 44[44]} (referred to in the literature as involuntary part-time);
  • work part-time voluntarily, in the sense that they do not want, or cannot avail themselves of, more hours;
  • work for temporary help agencies or on a temporary basis directly for employers;
  • work on term or contract;
  • are seasonal workers or casual workers;
  • are solo self-employed with no employees;
  • are multiple jobs holders where the primary job pays less than the median hourly rate.

Working for low wages is common to these calculations. There are a variety of cut-offs below which individuals could be considered as low-wage. We use two that are common in the literature.

The first is the Low-Income Measure (LIM) which is half of the median income (the median being the number that divides the relevant population in half so that one-half fall below the median and one-half are above the median). It is a common and readily understood measure of low income, used internationally. We use the measure based on before-tax employment income for a single individual since our focus is on what the labour market yields to an individual independent of their family circumstances, and before taxes and transfers alter their circumstances. The individual before-tax employment income is what reflects labour market vulnerability and that can be affected by employment standards and labour relations regulations, which are the policies under review. In Ontario in 2014, the LIM was $25,038 for a single individual before taxes and transfers, excluding the self-employed who have paid help, and excluding those who made contributions to a private pension plan.

The second measure of low wages that we use is the percent of employees who fall below 150% of the Ontario general minimum wage. This is another common measure used and is often linked to the concept of a living wage.  Based on the Ontario minimum wage of $11 per hour in 2014 (the year of our LIM data), this yields a low-wage cut-off of $16.50 per hour, excluding all the self-employed and excluding those who made contributions to a private pension plan.

In addition to the criteria requiring the individual to fall below the low-wage cut-off, we also require that the person not have made a contribution to a private registered pension plan; that is, we exclude such persons on the grounds that they are unlikely to be vulnerable if they have made a pension contribution. The database was unable to take into account benefit plan coverage such as health plans. Finally, we exclude the self-employed who have paid help on the grounds that they are an employer or entrepreneur.

All self-employed, including those without paid help, are excluded from the measure involving the minimum wage since they do not have a wage. Also, those with two or more jobs are excluded since it is not clear as to how to apply a minimum wage. Obviously, excluding these various groups may be excluding some who are vulnerable. But judgement calls have to be made, and there are some, based on our criteria, who may be included but who are not vulnerable.

Based on the criteria set out above, our LIM measure implies that 2,097,000 or 31.9 percent of the 6,571,000 workers in Ontario have a before-tax employment income that is less than half of the median individual before-tax employment income, and have made no contribution to a private registered pension plan nor are self-employed with paid help.   Of that 31.9 percent who are vulnerable, about half (51.2%) are in standard jobs about equally divided between permanent full-time jobs (26.9%) and voluntary part-time jobs^{footnote 45[45]}(24.2%). The other half (48.9%) of the 31.9% who are vulnerable are in non-standard jobs with 18.2% in temporary jobs, 5.8% in involuntary part-time jobs, 23.9% in solo self-employment and slightly less than 1% in two or more jobs.

Based on our minimum wage measure, 1,665,000 or 30.4 percent of the 5,481,000 workers in Ontario who are not self-employed or hold two or more jobs fall below 150% of the Ontario minimum wage and had made no contribution to a private pension plan. Of that, 30.4% who are vulnerable, about three quarters (75.8%) are in standard jobs mostly in permanent full-time jobs (48.7%) but also in voluntary part-time jobs (27.1%). The other one quarter (24.7%) of the 30.4% who are vulnerable are in non-standard jobs with 18.9% in temporary jobs and 5.9% in involuntary part-time jobs.

We estimate that 30 to 32 percent of workers in Ontario are vulnerable according to these criteria. The fact that substantial numbers of workers are in standard jobs (e.g. permanent full-time, voluntary part-time and self-employed without paid help) highlights that vulnerability does not apply only to non-standard employment. Many in standard jobs work for very low pay and do not have a private pension. Clearly, there are other concepts in the literature of calculations of vulnerable workers in precarious jobs, although many yield figures that are close to these. In whatever manner it is defined, vulnerability in precarious employment applies to a substantial portion of the workforce, and it is a concept that merits policy attention.

Our figures are broadly in keeping with the experience in industrialized countries generally. The OECD has found that between 1995 and 2013 in the OECD countries, 60% of job creation was in non-standard jobs,^{footnote 46[46]} and that non-standard work accounted for around a third of total employment in OECD countries in 2013.^{footnote 47[47]}

What social groups are overrepresented among vulnerable workers?

A study for the Law Commission of Ontario (LCO) based on 2008 data identified social groups more likely to be found in precarious jobs in Ontario.^{footnote 48[48]}   It identified the relative proportions of precarious workers in different populations. Although that study used different definitions to determine who was precarious, we find that its results were in keeping with the literature, and more important, the general picture it paints is useful for us for policy purposes in broadly identifying the populations that most concern us.

The populations that are overrepresented in precarious jobs, in descending order, relative to the overall average of 33.1% according to Noack and Vosko’s definition of precarious jobs are:

• workers with less than high school diploma (61.4%);
• single parents with children under 25 (51.7%);
• recent immigrants (40.7%);
• women (39.1%);
• visible minorities (34.4%).^{footnote 49[49]}

Non-standard employment

Non-standard employment as a category does not take into account aspects of precariousness or labour market insecurity such as low income, control over the labour process, and limited access to regulatory protection. However, there is an obvious correlation between the two, and non-standard employment as a category of employment is what is often written about and measured when precarious jobs are discussed and analysed. It is useful, therefore, to consider the nature and size in Ontario of non-standard employment and its component forms.

Components of non-standard work used in the literature, often in different combinations, include: temporary work (including term/contract, seasonal, and casual/other), solo self-employment (i.e., without paid help), part-time work, and/or multiple jobholding. Sometimes measures of non-standard employment involve a low-wage cut-off (e.g., encompass only those earning less than the median wage). At other times, they include persons at all pay levels. Some commentators include in the definition both those who work in part-time jobs voluntarily and those who involuntarily occupy such jobs because they want more working hours or full-time work. Other commentators exclude voluntary part-timers, often acknowledging that the voluntary/involuntary distinction is murky as when people are constrained by pressures such as family responsibilities for childcare or eldercare.^{footnote 50[50]}

Some non-standard work is well paid, sometimes to compensate for the uncertainty of the work. Some workers prefer higher cash wages to fringe benefits since they already receive fringe benefits as the children or spouses of other workers. Some non-standard jobs are temporary stepping stones into more permanent jobs.

These differences and different analytical approaches to the definition of non-standard employment make it difficult to determine the exact extent of the phenomenon and the extent to which it has changed over time.

In the literature, the negative aspects of non-standard employment are well-documented. Such employment is generally characterized by low pay and low fringe benefits, little or no job security, limited training, few opportunities for career development and advancement, little control over one’s work environment, uncertainty over work scheduling, and little or no protection through unions. It can include large numbers of people who are recently unemployed, women, and members of visible minority groups, immigrants and youth. Also, some secure non-standard forms of employment also have a negative aspect such as, for example, poorly paid permanent part-time work. The OECD indicates that people are more likely to be poor or in the struggling bottom 40% of society if they have non-standard work.^{footnote 51[51]}

Non-standard employment in Ontario constitutes more than a quarter of Ontario’s workforce: 26.6% in 2015.^{footnote 52[52]} This type of employment comprises temporary employees (including term/contract, seasonal, and casual/other), solo self-employment (i.e., without paid help), involuntary part-time employees (i.e., part-time workers who say that they want full-time work, and/or multiple job-holding (where the main job pays less than the median wage).

Non-standard employment has grown over time, rising from 23.1% in 1997 to 26.6% in 2015.From 1997 to 2015, non-standard employment grew at an average annual rate of 2.3% per year, nearly twice as fast as standard employment (1.2%).

Temporary employment grew at an annual rate of 3.5% from 1997 to 2015 – faster than the other component of non-standard employment.

Compared to workers in standard employment, those with non-standard jobs tend to have lower wages, lower job tenure, higher poverty rates, less education and fewer workplace benefits.

Poverty rates of workers in non-standard employment are two to three times higher than the poverty rates of workers in standard employment.

Real median hourly wages were about $24 for workers in standard employment relationships and $15 for workers in non-standard forms of employment in 2015.

In 2011 most workers in standard employment had medical insurance (74.3%), dental coverage (75.7%), and life or disability insurance (68.1%), or a pension plan (53.8%). In comparison, less than one-quarter of workers in non-standard employment relationships had job benefits such as medical insurance (23.0%) or dental coverage (22.8%), while only 17.5% were covered by life and/or disability insurance or had an employer pension plan (16.6%).

In 2015, the median job tenure in non-standard employment was 32 months, less than half the tenure of standard jobs (79 months). The median length of time in temporary jobs was 13 months in 2014.

The industries with the highest incidence or concentration of workers in non-standard employment, in descending order of the percentage of employment in the industry in non-standard employment (relative to the average incidence of 26.6%) are:

• arts, entertainment and recreation (57.7%);
• agriculture (48.9%);
• real estate and rental and leasing (42.9%);
• business, building and other support services (40.0%);
• social assistance (35.7%);
• construction (33.8%);
• professional, scientific and technical services (32.9%);
• other services (32.6%);
• educational services (31.3%);
• accommodation and food services (30.2%);
• transportation and warehousing (28.6%); and
• retail trade (26.9%).

The distribution or share of non-standard employment by industry in descending order for 2015 is:

• retail trade (11.1%);
• professional, scientific and technical services (10.4%);
• construction (8.9%);
• educational services (8.7%);
• health care (8.4%);
• accommodation and food services (7.3%);
• business, building and other support services (7.2%);
• transportation and warehousing (5.0%);
• arts, entertainment and recreation (5.0%).^{footnote 53[53]}

We now turn to consider in detail some specific aspects of non-standard employment and their characteristics in Ontario.

Part-time work

It has long been the case that the standard five-day work week and permanent 35 to 40 hour job is not as common as it once was. For many years, businesses have been expected to be open longer and sometimes around the clock as they have to meet the demand for goods and services. Employers need part-time workers to staff business that have peaks and valleys of demand for goods and services. Part-time work is often sought by those who need to balance work with family responsibilities, or students going to school or older workers who want to remain active labour force participants or may not have enough money to live comfortably in retirement.

Between 1976 and 2015 part-time’s share of total employment increased from 13.5% to nearly 20% (19%) with almost all of that increase occurring in the earlier period between 1976 and 1993.^{footnote 54[54]} A little under a third of these (30% of part-time employees and 5.6% of all employees), referred to as involuntary part-time employees, had to compromise and to accept part-time jobs because they could not find the full-time positions they wanted. Part-time work is highly concentrated in the retail trades and accommodation and food services industries.

There are now many more women in the workplace and work-life balance issues are of great importance especially to those with child and family responsibilities. While this affects many men as well, women comprise two-thirds of the part-time workforce and are therefore disproportionately affected by any negative impacts that arise from part-time work and scheduling issues.^{footnote 55[55]} In 2015, median hourly rates for part-timers were $12.50, which is only slightly more than half of the $24.04 for full-timers, although these are not comparisons between workers in the same job and same establishment (we lack the relevant data).^{footnote 56[56]}

This wage difference does not take into account that health and other benefits (which are mostly non-taxable compensation), that are often not available to part-time employees where they are available to full-time employees in the same establishment.

The dramatic inequality in rates of pay between full-time and part-time employees, especially when they do similar work in the same establishment, together with the lack of benefits available to part-timers have also created policy issues that we have considered in Chapter 7.

Today, employers’ need for part-time workers to deal with fluctuating demand dovetails with the preference of many in the workforce for that type of work. However, the employers’ need to schedule work according to fluctuations in demand often conflicts with the need of employees for predictability in their work lives. There is tension between the employer need for flexibility and the employee need for predictability, including those having to work on-call or who are subject to last minute changes in work schedules. We have also considered these issues and the need of employees to be able to move more easily from one status to another in Chapter 7.

Temporary, casual and seasonal work

The share of temporary employment in Ontario in 2015 was 10.8%, more than doubling from just under 5% in 1989.^{footnote 57[57]} Temporary employment, including limited-term contracts, has been the fastest growing component of non-standard employment, expanding at an annual rate of 3.5% between 1997 and 2015.^{footnote 58[58]}

Issues have been raised around the insecurity of limited-term contracts. Sometimes there is no issue regarding renewal because the contracts are genuinely for short duration, as in the case of a single project. Often, they are renewed (sometimes automatically or consistently) over many years so that they appear to be almost permanent. Nevertheless, in many situations there is uncertainty and anxiety about whether there will be renewal, and in some professions and disciplines, permanent employment with the salaries, benefits, and security that come with it seems remote and impossible to attain. We discuss this in Chapter 7.

Over the last twenty or more years in Ontario, temporary help agencies which provide staffing services and assignment workers to clients have become ubiquitous, giving rise to a host of concerns, among them the phenomenon of perma-temps, and sometimes even situations where the entire workforce of a particular business is composed of temporary assignment workers.^{footnote 59[59]} There have been concerns identified over the economic incentives for clients to use temporary workers for more dangerous work, and the lack of meaningful requirements to reintegrate those injured workers into the workplace. Indeed, this category of workers is part of an inherently insecure triangular relationship between agencies, clients and the assignment workers where they generally receive lower pay than others performing the same work, face immediate removal from the workplace, and constant uncertainty. Although Ontario made legislative changes in 2009 to regulate temporary help agencies, important issues and problems remain and we have addressed this in Chapter 7.

There has always been a segment of the work force that has provided their services on a casual basis, and issues of pay and scheduling are raised for this group as they are for part-timers. Also, there has always been a part of the workforce that works on a seasonal basis in certain industries such as construction and agriculture where precarious work and vulnerable workers are often found.

Finally, there are also workers holding multiple jobs, often because their main job does not pay sufficient wages. The number of multiple job holders accounts for about 5.3% of the workforce in 2014, up from 2.2% in 1976. Three out of every five multiple job holders (62%) report earnings below the median hourly wage. Women are more likely than men to be in multiple jobs (59.3%) and in jobs with multiple non-standard characteristics (58.4%).^{footnote 60[60]}

Self-employment

There are two categories of self-employment, one category of workers who have their own paid help and the other category where the person has no paid help. The entire category grew from 10.5% in 1976 to 16.1% in 1997 remaining roughly constant to 15.7% by 2015. Most of the growth was in self-employment without paid help, and that group was 6% of the workforce in 1976, 10.6% in 1997, and 10.9% in 2015. Self-employment with paid help has been fairly constant over the full period, increasing slightly from 4.4% in 1976 to 5.5% in 1997, then declining slightly to 4.8% in 2015.^{footnote 61[61]}

Solo self-employment is classified as non-standard employment; self-employment with paid help is categorized as standard employment. Some of this growth is genuinely a result of entrepreneurial efforts by persons who start small business and employ others, while many are genuine entrepreneurial efforts by solo consultants and freelancers. Many workers now work from home or remotely, and/or are deemed by those to whom they provide services to be independent contractors; therefore they do not have access to benefit plans, or statutory benefits like maternity and paternity leave.

Some of the growth in self-employment is tied to the growth in project work, or to a growth in technological expertise by individuals who can provide their specialized services to many businesses. Some of the growth is the result of the fact that many employers do not want to make permanent commitments to employees. Some of the growth is the result of cyclical tough economic times and represents for many of the self-employed a poor second choice reflecting the absence of good employment opportunities. Some of the growth also represents a natural change in practices in some industries where people can now work online at home, and freelance. Many think this type of independent work will continue to grow substantially through the gig economy and new and expanding peer-to-peer platforms.^{footnote 62[62]}

In contrast, some of the growth in self-employment is the result of deliberate misclassification by businesses that do not wish to incur liability for employees and wish to shed liability for mandatory deductions and contributions to public pensions, employment insurance, and workers compensation schemes, together with shedding responsibility for employment standards such as maternity and parental leaves. Also, some of the growth is from a genuine desire by the providers of the service to get tax advantages that might not be available if they operated as employees, despite the fact that the dependency inherent in the relationship makes the providers of the service much closer to being employees than to being really in business for themselves. Some of this growth is highly controversial with changes in industry practice (such as the change from employed taxi drivers to allegedly independent providers who provide services to Uber).

Tenure of employment in the new workplace

Expected long tenure with one employer may be high for incumbent older workers, but many new entrants to the workforce cannot expect to have lifetime long-tenured jobs and a semblance of job stability with the same, often unionized, employer as did earlier generations. Younger workers can expect to start off in limited-term contracts or in internships (sometimes unpaid), or self-employment, and can expect to change careers often working for different employers.