A Canadian Company Used COVID Wage Supports to Hire Scabs
While Canadian workers took to picket lines to agitate in the face of the hardships brought on by the pandemic, Canadian businesses collected COVID benefits intended for the very employees they laid off.
Union boilermakers picket CESSCO in frigid conditions in Edmonton, Alberta. (Hugh MacDonald / Boilermakers Lodge 146)
For eighteen months, the manufacturing company CESSCO, based in Edmonton, Alberta, has locked out unionized employees. Meanwhile, the firm has used Canada’s federal government COVID-19 wage subsidy funds to hire scabs.
Unionized employees at CESSCO Fabrication and Engineering Ltd have opposed a raft of attacks on their pay and working conditions. These include slashing wages by 10 percent, pensions by up to 50 percent, and removing seniority from their collective agreement. In union agreements, seniority stipulates that wage and security benefits accrue to workers based on their length of service, so those who have been there the longest are paid the most and are the last to be let go in the event of layoffs.
The employees, many of which are boilermaker fitters and welders who manufacture containers that hold gases and liquids for the oil and gas industry, have been locked out of their workplace since June 28, 2020.
Hugh MacDonald, the business manager at Boilermakers Lodge 146, which represents the locked out CESSCO workers, told Jacobin that the union was initially willing to accept wage rollbacks until the price of oil increased. As of January 14, the price of Canadian crude has more than doubled, from USD $27.84 on June 29, 2020, to USD $69.51.
“Many of the guys on the picket line have worked all their adult lives in that facility. Some of them have been there for 40-plus years. They would certainly rather be working,” says MacDonald. “But we’re getting support from the labor community in northern Alberta and we’re getting support from our international in Kansas City. That helps the members on the lockout line realize that there are many people who stand up and support them.”
At first, thirty workers were locked out. Eight have since crossed the picket line, according to MacDonald.
CESSCO is listed on the database of companies that have received the Canada Emergency Wage Subsidy (CEWS). The wage subsidy was introduced at the pandemic’s outset to subsidize 75 percent of employees’ wages for businesses that experienced a significant decline in revenue.
The database of CEWS recipients does not detail disbursement dates or how much recipient companies collect. Whatever the amount of CESSCO’s takings, the fact remains that the company was awarded the wage subsidy while many of its employees were not drawing wages. MacDonald says the Boilermakers were astonished to discover that CESSCO received CEWS funds while they were locked out.
The Trouble with CEWS
The Canadian government brought forward two major COVID-19 benefits in the pandemic’s early days — the aforementioned CEWS and the Canada Emergency Response Benefit (CERB). The latter provided $2,000 per month to those who had lost their jobs as a result of COVID restrictions.
As of December 19, 2020, the total cost of CEWS was $99.13 billion, compared with $81.64 billion for CERB, which ended in October 2020. While right-wing media ruminated about CERB turning unemployed Canadians into “welfare slackers,” or encouraging gang violence, some major material flaws with CEWS became apparent.
In December 2020, the Financial Post reported that at least sixty-eight companies that received federal wage subsidies continued paying out dividends to shareholders, including some of Canada’s biggest firms, such as oil companies Imperial Oil, Suncor, and Canadian Natural Resources Ltd. The sixty-eight companies received a combined $1.03 billion in CEWS support while paying out $5 billion in dividends.
“Think about what’s happening: taxpayers are indirectly subsidizing payments to shareholders,” York University professor and corporate governance adviser Richard Leblanc told the Post. “That is completely unacceptable. Even if the government didn’t drop the ball, which they did, these noteworthy companies should lead by example.”
An early 2022 report from the progressive Canadian Centre for Policy Alternatives (CCPA) reveals that CEO pay increased from 2019 to 2020. The CCPA notes that more than one-third of Canada’s one hundred top-earning CEOs lead companies that received CEWS funds.
“Many of these companies probably didn’t need [CEWS], but if there’s federal money available, they were going to apply and they were going to take it,” CCPA senior economist David Macdonald told the CBC. “That was not what this program was meant for.”
As of October 28, 2021, the federal government folded CEWS into two programs that were more targeted: the Tourism and Hospitality Recovery Program and the Hardest-Hit Business Recovery Program.
CEWS Scab Pay
On January 11, 2021, Heather McPherson, a legislator with the left-leaning New Democratic Party (NDP) who represents a riding in the city of Edmonton, where CESSCO is located, wrote a letter to finance minister Chrystia Freeland. In the letter, McPherson expressed concern that the CEWS funds were being used to hire scabs. Freeland has yet to respond.
McPherson wrote:
I think all Canadians would be appalled to learn that their tax dollars are being used in this way. But I don’t believe that your government intended COVID-19 economic relief programs for this purpose. In fact, I trust that you find this situation as appalling as I do.
McPherson sees the CESSCO situation as an extension of conservative Alberta premier Jason Kenney’s scorched-earth assault on the province’s labor movement. The Kenney government has passed legislation that forbids striking workers from peacefully blocking workplace entrances.
McPherson brought the issue of the scab subsidy up in Parliament on several occasions throughout the course of 2021. On February 17, Prime Minister Justin Trudeau provided a boilerplate response to her line of questioning, saying,
We continue to know that there are many Canadians across the country who continue to need support. We will be there for them. As I said from the beginning, we will be there for Canadians as long as it takes, whatever it takes.
All five parties represented in Parliament supported the introduction of CEWS, with the NDP successfully pushing the governing Liberals to increase the subsidy from 10 percent to 75 percent.
McPherson, explaining the situation to Jacobin, said that when “COVID happened . . . we were trying to get money out the door very, very quickly.” She went on to add:
I get that there can be loopholes, but there’s an opportunity to fix those loopholes when the program’s been in place for months and months. Not fixing them has to be either because you don’t care or you don’t really see it as a problem. Maybe they don’t think it’s a problem to use taxpayer dollars to pay for scab labor and lock out workers. I can’t see it any other way.
McPherson maintains that CEWS was an important program to keep local businesses afloat, but its flaws should have been addressed as and when critics raised them.
Worker Fatality on the Picket Line
On July 5 last year, while walking the CESSCO picket line, worker Raymond Mudryk, a welder who had been a Boilermaker Lodge 146 member since 1976, died unexpectedly at the age of seventy.
“Brother Mudryk was a proud member of Lodge 146 who put the needs of others before his own. He always did his part to secure better wages, benefits and working conditions,” reads his memorial page on the Boilermakers website. On August 25, 2021, which would have been his seventy-first birthday, the lodge held a celebration of his life on the picket line.
Mudryk’s wasn’t the first CESSCO worker to die in the line of duty in recent years.
In May 2019, CESSCO pled guilty to a single charge of failing to ensure the use of fall protection, which led to the death of Barry Maitland on January 19, 2016. According to the Edmonton Journal, Maitland fell from the top of a liquified natural gas storage vessel on which he was preforming a weld.
The Boilermakers aren’t surrendering anytime soon. Despite the hardships of the picket line in northern Alberta’s subzero temperatures and the fact that CESSCO isn’t returning the local’s calls, MacDonald says the workers will continue picketing out of a sense of justice:
We know this is wrong. We know this is an example of corporate greed. What CESSCO has done here is harsh and unfair, especially during a global pandemic. . . . We’re just asking for fair wages for an honest day’s work. . . . We’re not going to give up, we’re going to stay strong and see what happens.