Community Benefits Agreement is money well spent: report

The provincial government's Community Benefits Agreement for construction delivers an economic and social payoff, according to a new study by Community Savings Credit Union

Credit: Tallulah

Electrician Emelia Colman-Shepherd, coordinator with the BC Centre for Women in the Trades, is one of the relatively few women in the B.C. construction industry

The provincial government’s construction program delivers an economic and social payoff, according to a new study by Community Savings Credit Union

This story was updated on April 28 to include comments from the Independent Contractors and Businesses Association (ICBA).

If Mike Schilling had his way, there would be a lot more women on construction sites throughout B.C.

Schilling says he recently spoke to an economist who told him that when it comes to rebuilding the provincial economy post-COVID, putting British Columbians to work on infrastructure and other construction projects isn’t the answer. Their reasoning: most people who found themselves jobless during the pandemic were women in the service industry.

“I said, Well, OK, the point is that women who work in the service industry can do these jobs,” recalls Schilling, who is president and CEO of Community Savings Credit Union.

Traditionally, women have been overlooked for construction work, he adds. We’ve also failed to enable them in the way that Crown corporation British Columbia Infrastructure Benefits (BCIB) is now doing through its Community Benefits Agreement (CBA) program, Schilling argues.

“I’m a father of two young girls, and I want them to be able to take any job that they want to take, and I want them to be able to live in Vancouver, where they grew up,” he says.

“That old idea that we need to get more service jobs for these young women who’ve lost their jobs, I think is nonsense, frankly, in 2021. And there’s lots of opportunities for people to have high-skilled jobs, high-paid work.”

To help make that case, Community Savings recently published Building a Better BC: Social and Economic Impact of the Community Benefits Agreement. The report, released to coincide with Construction Month, finds that the long-term benefits of the CBA program justify its costs.

Launched by the provincial government in 2018, the program determines who gets hired for publicly funded infrastructure projects like roads, schools and bridges. It also aims to tackle the B.C. construction industry’s chronic skills shortage.

The CBA’s goals include tackling systemic inequality by increasing employment for women, Indigenous Peoples, young people and local area residents. Among its other objectives: boosting apprenticeship opportunities, offering apprentices a clearer path to Red Seal trades certification, and making the industry more attractive to new entrants by improving the workplace environment.

In the construction sector, the CBA has been the subject of fierce debate—and a legal battle.

Groups including the Independent Contractors and Businesses Association launched a challenge under the Charter of Rights and Freedoms, on the grounds that the program infringes on participating workers’ freedom of association by requiring them to belong to a union. After the B.C. Supreme Court rejected that effort last year, the B.C. Court of Appeal upheld the decision.

Why did the Community Savings wade in? As a B.C.-based financial institution, the Surrey-headquartered credit union pays close attention to the provincial economy, Schilling replies. “We believe that as 9 percent of the province’s GDP, the construction industry is clearly critical to the economic health of B.C., so we look at that very carefully.”

Community Savings, a co-operative owned by its members, also has a mandate to support working people, Schilling says. On a similar note, he wants discussion of the CBA to move beyond courtrooms and the legislature. “We think this should be a breakfast table issue for business owners and workers in B.C.,” Schilling says. “It shouldn’t be something that’s just being talked about by political leaders or lawyers.”

Credit: Courtesy of Community Savings Credit Union

B.C. construction wages are 25 percent higher than the all-industry average

A market failure

The first step Community Savings took with its report was to determine if the construction industry had problems. It found a few issues in a sector where the average weekly wage—$1,246 in 2019—is 25 percent higher than the province’s all-industry average.

For starters, women account for just 14 percent of the province’s 250,000-strong construction labour force. There’s been progress over the past two decades: the number of women in the industry climbed from about 10,000 in 2001 to 36,000 in 2019. However, women held a mere 6 percent of onsite jobs that year.

Indigenous Peoples have fared somewhat better. In the 2016 census, they comprised about 6 percent of B.C. construction workers, slightly more than their share of the provincial population and labour force.

And young people? B.C. had 30,000 construction workers aged 15-24 in 2019—only 12 percent of the total. By comparison, almost 20 percent of workers were over 55.

Apprenticeship training is another weak link. Within the Industry Training Authority (ITA), which administrates the qualifications for skilled trades, the 60-percent failure rate for apprentices is one of highest in the country. “That’s obviously a huge waste,” Schilling says. “There’s a huge cost associated with that.”

All of this points to a looming skills gap, given a full slate of public infrastructure projects and a booming private sector. Over the next decade, the B.C. construction industry will need to attract 70,000 new entrants, the report estimates. As BCBusiness contributor Roberta Staley noted in her 2019 feature story, women could play a pivotal role in filling those ranks.

Community Savings, which has been working on its study for more than a year, thought a pandemic-induced downturn in private building activity might reduce the labour crunch. That didn’t happen: “Residential construction is at hot as it’s ever been,” Schilling says.

“So we’ve got this demand for this work to be done, and we’ve got a lot of, frankly, older white men who are about to retire from this industry. And we’re not getting the young men joining the industry that we used to, we’ve never got women coming into the industry, and we need to do more to engage Indigenous groups.”

Schilling describes the situation as a market failure. “The long-term supply of labour is not being encouraged because of the way we set these things up,” he says. “So by having the Crown corporation administrate that with a clear mandate to make sure that people get the opportunity to pass through, that’s just one example of how this can be better for businesses and individuals.”

For Schilling, the economic argument in favour of the CBA is simple. “If we can get local people doing these high-skilled jobs, then they’re going to spend their wages in our local businesses,” he says. “This is a real opportunity for us as a province, and not one to be missed.”

Chris Gardner, president of the ICBA, doesn’t think most people would have a problem with the program’s objective to create more opportunities for underrepresented groups. “The challenge is in the details of how this new procurement framework was rolled out by the provincial government.”

The Province isn’t achieving any of its stated goals with the CBA, Gardner says. First, for financial, logistical and other reasons, it’s in contractors’ best interests to hire local workers, he explains. “So that local hire is something that every contractor was already doing and continues to do.”

Second, creating more opportunities for the CBA’s so-called priority hires won’t solve the labour shortage, Gardner argues. “We have more women and more people from Indigenous communities and more young people working in construction now than there ever have been, but there’s simply not enough of them.” In his view, the way to fix that shortfall is by boosting efficiency and productivity—and by recruiting more immigrants.

Third, Gardner says, only about 12 percent of B.C. construction workers are represented by BC Building Trades, the 19 traditional unions whose members are eligible to work on CBA-designated projects. “Why would the government freeze out approximately 85 percent of construction workers and just carve out the work on these taxpayer-funded projects for about 12 percent of the construction workforce?” he asks. “It doesn’t make any sense.”

Credit: Courtesy of Community Savings Credit Union

In 2016, almost 10 percent of B.C.’s construction labour force was 55 and older

A drop in the ocean

Taxpayers—and perhaps construction companies—must foot the bill for the CBA. Is it worth it?

As the report notes, for major construction projects, the tendered bid portion typically accounts for about 65 percent of total costs. In 2018, the Province estimated that the CBA’s impact on those costs would be in the 4- to 7-percent range—a projection now under review. Applying the 2018 estimate to an anticipated $2 billion in CBA project spending when the program matures, tendered contract prices might rise anywhere from $52 million to $91 million.

For the province, the report pegs the annual net cost of the program at $50 million to $80 million. Meanwhile, the CBA is expected to generate 14,700 direct and indirect jobs.

Contractors’ costs will go up under the program, according to the ICBA’s Gardner. If your company isn’t a BC Building Trades member and you win work on a CBA-designated project, he notes, your entire crew for that job must resign and join one of the 19 unions.

“You have lost complete control of your workforce,” Gardner says, adding that the tradespeople will have to enrol in new benefit and pension plans. “It’s inefficient, it’s costly, it’s time-consuming to administer. And so what’s happening is that open-shop contractors are effectively opting out of bidding, which is putting upward pressure on the bids for these CBA projects.”

Schilling, who says he and his colleagues don’t see any evidence of higher tendered bid costs, puts the program expenses into perspective.

“This province spends nearly $7 billion a year on educating our children and young people. Why do we do that? We don’t get an immediate payback; there’s no net-present-value calculation there. We do that because we want to create that skilled, educated workforce, which attracts international investment, which does all the things that economies are supposed to do.”

In his view, the CBA tab is a small price to pay for transitioning people to employment in the construction industry and getting them work-ready. “It’s a drop in the ocean compared to the sort of infrastructure investment I’m talking about.”

We can do better

The CBA also aims to create better workplaces for skilled tradespeople. “There’s not much research on this, but I don’t think anyone’s got any doubt in their mind about the impact of workplace culture in an extremely male-dominated area,” Schilling says. For women and Indigenous groups, the failure rates within the Industry Training Authority are high, he notes. “So clearly, we’re getting something wrong there.”

To help solve that problem, BCIC has tried to encourage respect in construction workplace culture, Schilling explains. The BC Centre for Women on the Trades joined forces with the Ending Violence Association of British Columbia to offer a program aimed at senior men called Be More Than a Bystander.

Schilling remembers talking to a young woman who was going through the trades. “She actually quit her job to go work in a bar because she was harassed less in the bar than she was working in construction,” he says. “We can do better. This is 2021, and B.C. really should be a leading light in terms of creating inclusive workforces.”

With such low female participation, the construction industry is also missing out on a wealth of talent, Schilling adds. “Forget equity for a while,” he says. “This is a really dumb thing to do by excluding half of your workforce.”

Although Indigenous Peoples are reasonably well represented in construction, Schilling sees room for improvement there, too. As he points out, many projects outside the Lower Mainland might be in areas with relatively large First Nations populations. Also, Indigenous workers tend to have lower-skilled, lower-paid jobs rather than more technical roles like master electrician.

“Where we see imbalance, I see that as a market failure,” Schilling says. “There’s no reason that women or Indigenous people can’t do these jobs.”

Credit: Courtesy of Community Savings Credit Union

When it comes to apprenticeships in the skilled trades, B.C. has one of the highest failure rates in the country, at 60 percent

Ideological differences

Although it’s early days for the CBA, the signs are encouraging, Schilling maintains. On one of the first CBA-designated projects—the Highway 1 expansion from Kamloops to the Alberta border—46 percent of workers were so-called priority hires: women, Indigenous Peoples, young people and area residents.

Community Savings plans to revisit its report in about two years, when it will look at who’s working on construction projects and which companies got the contracts, Schilling says. “Was a portion of the private sector closed out, or did we get broad participation based on merit and based on good businesses in this province?”

As far as his group and other CBA opponents are concerned, most construction companies have already been shut out, the ICBA’s Gardner maintains. “No one’s asking for a special deal or a special favour. We’re just asking for a level playing field, to say, Hang on, this isn’t fair. It’s costing taxpayers more. The government, when they procure these projects, should be saying, Come one, come all.”

Anecdotally, Schilling has heard that objections to the CBA are thawing, despite ideological differences about how much a Crown corporation and the provincial government should be involved in construction labour.

“At the start of this, there were certainly lots of questions about who would be able to tender work for these jobs. But the truth is that any organization, whether it’s linked to organized labour unions or not, can tender work.”

Schilling remains optimistic about the Community Benefits Agreement. “I think people see the opportunity here and see that this is an organization that people can work with,” he says. “We are seeing engagement from the private sector, and I think that’s great because that’s going to test the system and test if this is the right approach for the province to take.”