California’s landmark Assembly Bill 5, which makes it harder for workers to be classified as independent contractors rather than employees, has started to make waves across the state. This past week, a county judge in San Diego noted “the handwriting is on the wall” and ordered the grocery-delivery service Instacart to reclassify 2,000 local workers as employees.
Far from California, there are other recent signals that the vise is tightening for gig-economy companies.
This week, Foodora delivery drivers became the first app-based workforce to unionize in Canada. The Ontario Labour Relations Board ruled Tuesday that Foodora food couriers are dependent contractors, a classification that falls between independent contractors and employees—and gives them the ability to unionize, according to labor officials. “This decision shows that the tide is turning towards justice for thousands of gig workers in Ontario and soon these workers will have the right to their union,” Jan Simpson, national president of the Canadian Union of Postal Workers, said in a statement.
Foodora is based in Berlin and operates in 15 countries. The labor board ruling in Canada comes after Foodora workers in Norway—who are largely part-time employees—formed their first union after a six-week strike in September. The 600 employees involved were demanding higher pay as well as guaranteed compensation for workers’ use of bikes, uniforms, and smartphones.
In Japan, where 3 million workers are estimated to be working as freelancers, UberEats workers unionized last October, with the chairman of the union calling for “safer and more stable working conditions for all platform workers.” Uber said it would locally introduce an injury-compensation program, cover insurance fees, and pay up to 10 million yen ($93,000) in case of death.
The recent uprising of app-based workers has been brewing for the past couple of years, says Kate Bronfenbrenner, director of labor education research at Cornell University’s School of Industrial and Labor Relations, where she researches unions in the global economy. She says workers tend to mobilize in areas where legislation is more progressive or where there’s alreadyhigh union density, often with higher percentages of workers of color.
“AB5 happened because there was all this activity out there,” Bronfenbrenner says. “And so many times, unions think, ‘If we just wait for labor law, we have to wait for labor law reform before we can organize,’” she says.
But they don’t necessarily have to wait. The Foodora workers in Ontario, for example, held a union vote last August. (The results were sealed pending the labor relations board ruling and have not yet been disclosed.)
Meanwhile, back in California…
AB5 is heralded as a big win for California workers by labor advocates, as it could push on-demand companies to provide benefits like a minimum wage and workers’ compensation. But that would be costly to the companies, many of which are still losing money.
Uber, Lyft, and Doordash have pledged $90 million for a ballot initiative this coming November to win an exemption from the legislation. Their alternative, the companies say, would preserve worker flexibility while forcing concessions on minimum wage standards, health benefits, and collective-bargaining rights.
While the ballot fight plays out, California courts are taking their cues from the legislature that passed AB5, from the governor who signed it, and from the state supreme court’s 2018 decision in Dynamex Operations West, Inc. v. Superior Court, which set precedent for how employers should determine whether workers are really contractors or full-time employees.
“The policy of California is unapologetically pro-employee (in the several senses of that word),” San Diego Superior Court judge Timothy Taylor wrote in his ruling in the Instacart case. “While there is room for debate on the wisdom of this policy, and while other states have chosen another course, it is noteworthy that all three branches of California have now spoken on this issue.”
Instacart has long faced questions about its labor model. Last year, the company was found cutting into workers’ wages by using customer tips to subsidize the fees paid to drivers. It was a tipping structure used also by DoorDash and Amazon until widespread criticism pressured the companies to modify how they handled tips. In a February blog post on Medium, Instacart CEO Apoorva Mehta said the company will revamp its pay structure.
Uber, meanwhile, has been making changes to its app that underscore the view that its drivers are contractors and not employees. For instance, in California, a “marketplace fee” charged to riders is not shown to drivers, suggesting a separation between drivers and the relationship between Uber and its customers. (In other states, the fee is visible on drivers’ receipts.)
Over the years, Uber has shown a willingness to engage in regulatory battles—but it isn’t always successful. For example, its drivers have already been recognized as employees by UK and French courts.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
