The Future of Work in Canada
As we enter a new year, the landscape of work is changing. A recent article in the Wall Street Journal highlighted the trend of massive downsizing of middle management positions in the United States. This phenomenon is not limited to the US; Canada is also bracing itself for a similar wave of layoffs.
The Drive for Efficiency and Profits
The driving forces behind this trend are multifaceted. The relentless pursuit of efficiency, higher profits, increased international competition, and the impact of artificial intelligence have all contributed to the elimination of many middle management positions. U.S. managers now oversee three times the number of employees they did in 2017, according to research firm Gartner. Meanwhile, LinkedIn’s Workforce Confidence survey found that close to one-third of employees claim to have bosses who are too stressed to support them.
The Canadian Context
While the situation is dire for US employers, it is even more pressing for their Canadian counterparts. The Liberal government’s declining productivity and the resulting increased productivity gap with the US, along with higher taxes, reduced foreign investment, and the Trump government’s emphasis on reshoring have made the plight of Canadian employers worse – much worse – than their US counterparts.
Demotions: A Complex Issue
In many states in the US, demoting middle managers is a feasible option for employers. However, in Canada, such demotions would be considered constructive dismissal, allowing employees to resign and sue as if they had been fired. This reality makes demotions unworkable for most companies, with outright termination being an economically unviable choice.
Advance Notice: A Viable Solution
One possible solution to this conundrum is advance notice. Providing employees with advance notice of a demotion can make sense in the context of retaining valuable employees while also reducing liability. The length of notice for a demotion is identical to that of a dismissal, and its purpose is to provide an employee with a reasonable opportunity to find alternative employment.
An Unanticipated Corporate Crisis
An abundance of management layoffs will result in far fewer comparable positions for laid-off employees to secure. This will lead to greater severance pay, further exacerbating the plight of Canadian employers and setting up an unanticipated corporate crisis for the next government to contend with.
Expert Insights
Howard Levitt, senior partner at Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta, and British Columbia, has spoken out on this issue. He notes that "downsizings are coming to Canada’s often long-tenured middle management ranks" and that employers will ultimately have no economic choice but to implement these changes.
Conclusion
As the landscape of work continues to evolve, Canadian employers must prepare for a wave of layoffs that will impact not only employees but also the economy as a whole. By understanding the complexities surrounding demotions and advance notice, employers can begin to develop strategies for navigating this uncertain future.
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