BUSINESS

Corporate bashing

Gazing down from their plush corner offices, Canada’s CEOs can smell trouble

ROSS LAVER March 4 1996
BUSINESS

Corporate bashing

Gazing down from their plush corner offices, Canada’s CEOs can smell trouble

ROSS LAVER March 4 1996

Corporate bashing

PERSONAL BUSINESS

Gazing down from their plush corner offices, Canada’s CEOs can smell trouble

ROSS LAVER

Back in the 1980s, when this magazine began to conduct annual state-of-the-nation polls, an interesting trend started to emerge. Over time, the percentage of Canadians who said they depended on governments to look after their economic interests shrank, while the number who relied on business rose. The era of deregulation, free trade and government-bashing had begun in earnest, and millions of workers bought into its central tenet: undo the chains that bind corporate Canada and the result will be more jobs, increased competitiveness and improved prosperity for all. The rising economic tide, it was said, would lift all ships.

Well, the tide rose—spectacularly, by some measures—but darned if a lot of those boats haven’t been swamped by the waves.

The statistics speak for themselves: corporate profits totalled a record $95.2 billion last year, 19per-cent higher than in 1994. Exports are booming, up 17 per cent in the first 11 months of 1995.

And stock market investors are euphoric, propelling North American indexes to record highs on expectations of continuing growth. One analyst, Josef Schächter at Richardson Greenshields, predicts that profits will rise an average 16 per cent this year at companies that comprise the Toronto Stock Exchange 300 Index.

But while Bay Street parties, the mood on Main Street is getting ugly. Five years into the recovery, unemployment is at 9.6 per cent and big corporations continue to hack away at their payrolls—750 jobs cut at Southam Inc., 1,450 white-collar positions slashed at CP Ltd. and 8,300 due to be eliminated at Bell Canada. Even those who have jobs are not sharing in the spoils: Statistics Canada says that wages for unionized workers rose 0.9 per cent in 1995, which is a polite way of saying that the average working stiff had less money in his pocket after inflation. No wonder consumer spending is in the doldrums. And no wonder so many people feel burned. Having learned to love the free market, they now find that their reward is stagnant incomes and job insecurity.

Gazing down from their plush corner offices, Canada’s CEOs can smell trouble.

And they’re not alone: in the United States, big business is taking it on the chin—not only from rabble-rousing extremists like Pat Buchanan, but even from longtime friends such as Bob Dole. At the recent World Economic Forum in Davos, Switzerland, the topic on everyone’s lips was the growing backlash against globalization and the corporate establishment.

Identifying the problem, however, is far easier than devising a solution. As mad as they are, few people would like to see governments tell bosses how to run their companies. And given that Ottawa itself is eliminating tens of thousands of jobs, the feds are in no position to lecture corporations on the evils of massive layoffs.

Instead, it looks like it will be up to the business community to find some practical answers. In that context, Canadians can only welcome last week’s meeting in Ottawa of 25 corporate leaders and cabinet ministers to discuss a new private-sector-led internship program for high-school, college and university graduates. Dubbed “First Jobs,” the proposal is aimed at creating as many as 50,000 one-year positions in large and medium-sized companies, with individual firms encouraged to hire interns to a level of one per cent of their workforces. An outline of the plan, written by David Pecaut, senior vice-president of The Boston Consulting Group in Toronto, says that more than 100 business and community leaders across the country have already been consulted, and a charter group of about 30 executives is being assembled to spearhead the effort.

A cynic might suggest that this is nothing more than a public relations ploy by a business community that is rolling in profits and anxious to fend off public criticism. But so what? If the idea gets off the ground, it will at least give thousands of young people some badly needed experience at a time when entry-level jobs are in chronically short supply. “The corporate community has been having a pretty good run of it lately,” admitted one senior business leader who attended last week’s meeting. “Maybe it’s time we gave something back.” He won’t get any argument on Main Street.