The Alberta Federation of Labour has observed with grave concern the recent decision by the Fort McMurray Catholic Board of Education to dismiss all school custodians and replace them with the services of non-unionized, for-profit companies.

As the 'voice of labour' in Alberta, it is the Federation's job to speak out on behalf of union members, and in fact, on behalf of working families in general. In this case, the Federation would be remiss in its duties if we did not at least make the attempt to dissuade the Board from this course of action.

We contend that 'contracting-out' or 'outsourcing' jobs will not provide appreciable savings in the long-run, that there will be no administrative advantage to the Board, and that the quality of the work done will deteriorate. Simply put, the evidence from other such experiments has proven that claims of economic savings are fallacious.

Further, we contend that the neo-liberal notion that laying-off long-term employees in favour of cheaper labour is acceptable because that is what the 'marketplace' dictates is a moral and ethical fallacy. Balancing budgets through cheap labour policies is exactly the kind of unethical behaviour that is most unforgivable in public and Christian institutions. We hope that the Board will take the time to consider our arguments. Contracting-out appears, on the surface, to be a quick-fix to immediate budgetary crises. However, in the long run, it has extremely negative consequences for labour relations, productivity, quality of service and efficient management. It is not too late for the Board to reconsider its options and to abandon this heavy-handed and short-sighted decision.

The Hidden Economic Costs of Contracting-out

Most analyses of the economic 'advantage' of contracting-out work are hopelessly simple and just plain wrong. There may well be initial cost-savings, but it will generally be at the expense of quality of service. Remember, private companies must make a profit. Any investor will expect a minimum rate of return of ten per cent on investment. Further, private companies must charge GST on services - adding seven per cent to the cost of the service.

So, right from the start, there is a substantial amount of the total cost of the contract that does not pay for the actual service being provided.

Given this redirection of service dollars, how do contractors remain ":competitive":?

First, and most obviously, contractors operate on lower labour costs. Typically, these firms run non-union and consequently get away with substantially lower wage and benefit (if any) costs than decent employers. Often the wages are at or very near Alberta's dismal minimum wage regulation (the second lowest in Canada). Quite aside from the moral implications of supporting this exploitation of workers, low wages normally result in high labour turnover. In can hardly be in the best interest of any employer to have services provided by a parade of changing faces who may hardly have learned the job before they have moved on.

Secondly, ":corner-cutting": is another way for contractors to reduce their costs. Examples of corner cutting include replacement of normal materials and equipment with inferior, less-expensive substitutes; straightforward reductions in the standard of work performed; or allocation of impossible workload demands on staff (short-staffing) that leaves work parameters unmet.

This practice of corner-cutting creates another hidden expense: the administrative expense of ":policing": the contract. There are many additional administrative expenses that are mistakenly not considered to be part of the cost of the service. First, the tendering process itself is expensive and time-consuming, like any other formal legal process. This is a recurring expense that is charges every time the contract is retendered.

Secondly, the service provided must constantly be monitored- a process which can take an unexpectedly large amount of staff time and expense. Think about it. Any dissatisfaction with the service provided must go through formal channels to the contractor. Then the resolution agreed between the administrator and the contractor to any problem (quality of service, behaviour of personnel, work scheduling, etc.) must itself be supervised.

Finally, if there are unresolvable differences of opinion about the specific requirements of the contract, then expensive civil litigations are the only available avenue.

The current pilot project at the Edmonton Public School Board shows just how real all of these concerns are when considering the contracting-out of custodial services in public schools. Five schools were contracted-out, and the results were monitored by a joint management/union team.

The bottom line? Contract cleaners have been unable to do the job in public schools in Edmonton. Buildings have been left insecure. Cleanliness standards have fallen to the point where the contractor had to be warned. Basic functions like blackboard cleaning and emptying of garbage cans continue to be missed on a daily basis. Staff turnover has been so extreme that principals have no idea who will be showing up at their school on any given day. Administration costs for building upkeep have increased 500 % during the project.

To date, the cost of the contractors at all five schools is higher than the cost of in- house staff at the 'control' schools.

Loss of Administrative Control

One problem area seldom considered when considering contracting-out is the loss of administrative control over employees. Most public employees have strict and appropriate screening processes in place during hiring that eliminate potential personnel problems. That has not been the case with small contract firms who do not have the time or expertise to do appropriate screening. What would the legal consequences be for the Board if a contractor mistakenly hired a latent paedophile or someone with a criminal record who later committed an offence in a school?

As well, the employment relationship dictates that an employee obey their employer. That makes the role of local school authorities clear. However, an independent contractor does not have the common law duties of good faith and obedience. Contracted custodians do not have to obey direct orders of principals or superintendents. Their relationship is with their employer - not the Board or its representatives. Employees can be disciplined or dismissed - contract workers can not.

Similarly, an employer can require skills training and upgrades from employees, but not from independent contractors.

The Ethics of Low-wage Policies

The Federation has always maintained that public employers have an obligation to meet community standards in their treatment of employees. That includes providing a living wage and decent benefits and working conditions. In virtually all cases that also means encouraging union representation.

The Canadian Conference of Catholic Bishops strongly endorsed this principle in a statement released in Halifax just two short weeks ago:

":Where trade unions represent workers, there is less salary differential between men and women, wages are usually higher and working conditions better, than in non-unionized workplaces. We reaffirm our call to all members of the Christian community to support, strengthen, and revitalize the contributions of the labour movement directed toward the eradication of poverty.":
The Struggle Against Poverty: A Sign of Hope for Our World. Page 8. Canadian Conference of Catholic Bishops. October 17, 1996.

For a public and Catholic employer like the Fort McMurray Catholic Board of Education, such policies are doubly inexcusable - especially in a high cost-of-living area like Fort McMurray.

Conclusion

The Alberta Federation of Labour urges the Fort McMurray Catholic Board of Education to reconsider its decision to contract-out custodial jobs in the Catholic school system in Fort McMurray.

We are convinced that, in the long run, this policy will not save significant amounts of money; that it will result in a decline of the overall quality of the school environment; that it will be an administrative nightmare; and that it will create real dilemmas in the personnel and human resources area.

Finally, we believe that the Board must put its actions under an ethical and moral magnifying glass. Is the pursuit of cheap labour appropriate to a Christian and public body? We say not.

Respectfully submitted,

Executive Council
Alberta Federation of Labour