Discussions of Canada’s network of sub-poverty social assistance systems very often revolve around matters of humanitarian concern. But the deepening hardship of those who must exist on income support payments is also an issue that, more than ever, has a very direct impact on workers and trade unions.
I was an organizer with the Ontario Coalition Against Poverty (OCAP) in 1995 when the Conservative government of Mike Harris cut provincial social assistance rates by 21.6 percent. The Tories then froze the income of people on assistance until they were voted out of office in 2003. Since that time, no Ontario government has provided an increase that matched the rate of inflation, ensuring that poverty has greatly intensified since Harris’ day.
The newly re-elected Ontario government of Doug Ford has kept the rates frozen since 2018. Of late, the onset of stagflation (a combination of high inflation, low growth rates and rising unemployment) and an international cost of living crisis has consigned those on assistance to shattering levels of poverty and privation. A City of Toronto fact sheet informs us that someone paying 80 percent of average market rent would be paying $980 a month for a bachelor apartment. If they were living on Ontario Works (OW) benefits, they would be receiving a maximum of $733, while on the Ontario Disability Support Program (ODSP), it would be $1169. There is no hope of getting adequate nutrition and remaining housed on such a miserable income.
During his recent and regrettably successful bid for a second term in office, Ford suggested that he would increase ODSP by five percent, which would mean an extra $58.45 per month for a single person. If he honours this pledge, it will be a pathetically inadequate measure, given the severe poverty that his government and those that came before it have inflicted on social assistance recipients.
The impact on workers
Meanwhile, Canada’s system of unemployment insurance has also been so seriously degraded that many people have no choice but to turn to provincial social assistance programs. Already in 2021, polls showed that more than half of Canadians were $200 away from financial insolvency each month. That social assistance has become so deficient is not accidental or the result of ill considered policy directions. The role of systems of income support in capitalist societies has always been to provide enough to stave off unrest and social dislocation, while ensuring that no viable alternative to low paying employment exists. This approach preserves the economic coercion that the job market rests on and tilts the balance as far as possible in favour of employers. That is why the state of income support is very much a workers’ issue.
Under neoliberalism, every effort has been made to reduce workers’ bargaining power and to intensify levels of exploitation. Trade unions have been attacked and substantially weakened, and a major portion of the workforce has been driven into low-wage and precarious forms of employment. This undertaking has been greatly facilitated by a direct assault on social benefit systems, driving people deeper into poverty and generating hardship, uncertainty and a climate of desperation that further undermined unions and ensured a sustained supply of low-wage workers.
This ongoing initiative included an effort to ensure that disabled people and injured workers would be compelled to participate in the scramble for the worst jobs on offer. In Ontario, disability benefits have been undermined and access to ODSP has been limited as much as possible. The Workplace Safety and Insurance Board (WSIB) mandated to provide compensation to workers injured on the job has become a prime austerity target. The WSIB adopted a practice of “deeming,” which means that injured workers are simply pronounced ready and able to take particular types of employment, without regard to their real ability to secure and retain such work. Having bureaucratically ordained the impossible, the system then reduces or eliminates their benefits.
The infamous work capability assessment in the United Kingdom has been responsible for enormous levels of death and hardship. Under it, disabled people are declared “fit for work” by an assessor, often with total disregard for compelling medical evidence. The very notion of secure income for disabled people is being replaced by precarious benefit systems that set them up for exploitation and abandonment.
The drastic weakening of social benefits for unemployed and disabled people has been a central component of the whole neoliberal agenda. It has contributed enormously to the intensification of exploitation, the growth of a vulnerable and low-paid workforce and the undermining of union strength. The present moment, however, makes the need for stronger income support systems an even more vital working class issue.
We are supposedly emerging from the global pandemic and this has led to disruption in the supply chain and an uptick of inflationary pressure. Russia’s invasion of Ukraine has greatly intensified the problem and generated the threat of a crisis of stagflation. We are now seeing the world’s central banks implement interest rate increases in an avowed effort to bring this problem under control.
The approach being taken by the central bankers and their allies leaves no doubt as to the class loyalty that informs their thinking. The assumption that rising wages are driving the cost of living crisis is hardly based on sound empirical evidence. In Canada, two-thirds of workers have seen their incomes fall behind over the last two years and this is in line with the international pattern. While profits have spiralled upward, a concerted attack on working class living standards is now underway and it can only be expected to intensify.
The US Federal Reserve has now implemented the largest rate increase since 1994 and the Bank of England has followed down the same path. It is now fully expected that the Bank of Canada will conform to this pattern with a major increase next month. Household debt is especially high in Canada and a recent survey found that nearly one quarter of homeowners say they will have no choice but to sell their home if interest rates go up further. Still the Bank’s governor, Tiff Macklem, has made it clear that such considerations won’t convince him to change course. As he puts it, “Our primary focus is getting inflation back to target. You know, monetary policy is not housing policy.”
The economists at the Deutsche Bank were notable rate hawks early in the game and, in April, they stated, “We regard it…as highly likely that the Fed will have to step on the brakes even more firmly, and a deep recession will be needed to bring inflation to heel.” Fed Chairman Jerome Powell is taking care to stress (with dubious sincerity) that he still hopes a recession can be avoided but he makes clear that driving up interest rates is intended to “get wages down.”
The central bankers have emerged as a veritable killer elite in a cold and deliberate class war offensive. The already rampant cost of living crisis has produced strong indications of an upsurge in working class militancy. Flagship operations of intense exploitation, most notably Amazon, have faced vigorous organizing efforts that they find deeply threatening. In this situation, the mainstream media has been full of lamentations about a “tight labour market,” as very significant numbers of workers resist, not a return to work, but a return to conditions of appallingly low pay, with no benefits or job security. For the grandees of global capitalism, decent wages, job security and social benefits are unacceptable expectations.
The drive to raise interest rates is aimed precisely at crushing any such revival of combativity, and it will use conditions of induced economic downturn, with increasing levels of unemployment, to intimidate workers into accepting a major cut in their standard of living.
In this situation, those who currently depend on social benefit systems will be joined by a great many others who are thrown out of work. The adequacy of those systems becomes a vital consideration when it comes to survival but also speaks to the ability of workers and their unions to resist in the face of such an attack. The battered system of unemployment insurance and the patchwork of desperately inadequate provincial social assistance programs won’t offer any support for such a fightback. This can’t go unchallenged.
Appeals to central bankers and governments to adopt a more humane and rational approach will be quite futile. Whether we like it or not, we are in for a major struggle. Unions will be called upon to act in the face of a major employer offensive. Unemployment will be turned into a weapon against workers who challenge the bid to drive down their wages. The fight to raise social benefit levels must be a strategic imperative in any serious working class mobilization. Strengthening income support systems very considerably will be central to building a movement that defends past gains but leaves no one behind.