Business Case for Licensing and Self-Regulating Silvicultural Contracting in B.C.

Brief presented to Graham Bruce Minister of Skills Development and Labour 26 July 2001

The Case for Licensing and Self-Regulating British Columbia Silvicultural Contractors

Presented to Graham Bruce Minister of Skills Development and Labour by the Western Silvicultural Contractors’ Association. July 26, 2001

Red Tape: The excessive use or adherence to regulations and formalities leading to the obstruction of commerce and public business. By inference; the unneccessary intrusion of government into the legitimate affairs of private enterprise.

Appropriate regulation effectively implemented is not red tape. Regulation that is not enforceable or not enforced is red tape.

Background:

There are an estimated 15,000 seasonal workers employed in core—planting, spacing, brushing etc.—silviculture activities in B.C. totalling 3,500 person years of employment. Almost all workers are paid on a piece-work basis equalling approximately $200-million in direct wages.

The B.C. silviculture industry is essential to maintaining the province’s $13-trillion forest resource. For the past decade government and industry have spent an average $310-million annually in silvicultural investments.

Estimates vary from 300 to 900 as to the number of silvicultural contractors in the province. About 75 contractors do 80 per cent of the work in the B.C.. Most of these contractors are members of the WSCA. All are small businesses.

The history and nature of silvicultural work has lead to practices unique to the industry.

For the past two years the ministry of labour and the WSCA have collaborated in an employer-initiated process to bring the silvicultural contracting industry into compliance with the Employment Standards Act. The long term goal of this joint initiative is to have contractors eventually regulate themselves through their own professional regulatory body.

The first step towards self regulation was to amend the Employment Standards Act regulations to better reflect the legitimate piece work payment methods of the industry. In April, 2000 following a year-long government, employer, and employee consultation process, including a stakeholder table and remote site visits and workshops around the province, the then minister of labour announced new employment standards regulations for the silvicultural industry.

The new regulations reduced red tape for both industry and government by simplifying rules around piece-work wage calculations and allowing needed flexibility in hours of work and shift patterns. The new rules also eliminated a potentially industry-crushing liability built up over the years on the issue of overtime payment. The silvicultural regulations went into effect in May 2000.

The second step towards self-regulations was taken in July, 2000 when the B.C. Legislature passed a law calling for the licensing of silvicultural contractors. The terms and conditions of the licensing are to be determined by regulation. The amendment to the Employment Standards Act passed unopposed by the Liberal opposition working in cooperation with the Western Silvicultural Contractors’ Association.

Based on opinions gathered in workshops during the implementation of the new regulations last year, and at the WSCA’s last two Annual General Meetings, there is general support for licensing contractors from responsible silvicultural firms. These contractors see licensing as a way of effectively implementing the Act’s regulations. They also view it as a necessary component of making sure all contractors are competing from the same employment standards base.

In practice the silvicultural market place and previous regulatory regimes have often failed to sort out qualified from unqualified providers. Because of the history of this highly competitive industry contractors are concerned about competitors who will shirk employer obligations to gain a bidding advantage. No contractors want to be disadvantaged because they are legitimate. A collaborative licensing scheme is seen as a remedy to this problem.

The development of an implementation strategy and negotiations around the terms of licensing — including the establishment of a stakeholder advisory committee chaired by the director of Employment Standards Branch — are on a critical path to have licensing in place by next year. Because of the seasonal business cycles of the silvicultural contracting community much of this work will have to be completed in the next weeks. Silvicultural contract negotiations and bidding for next year’s work begin in late August.

Licensing will benefit government by:

— lowering government involvement in the industry; WSCA will intercept complaints and act as an agent for voluntary compliance;

— increasing regulatory influence through collaborative role of WSCA providing access to and understanding of industry practices and patterns; this will lead to improving overall adherence to employment standards minimums;

— discouraging incompetent or unqualified contractors and reducing involvement of other agencies often engaged in enforcement, investigations, and expenses involving the silvicultural industry including: WCB; Provincial Coroner; RCMP; Canada Customs and Revenue Agency; Crown Counsel; Medical Services Plan of B.C.; Ministry of Transportation and Highways; Ministry of Forests.

Licensing will benefit business by:

— fostering fair competition by ensuring all market participants are competing from the same minimum employment standards base; fostering free enterprise as opposed to a free-for-all in the market place; licensing will not limit entry to the industry;

— encouraging legitimate competitors and discouraging those proven unfit to be in business. Silvicultural contracting has suffered from the chronic failure of the market place, government regulations, government agencies, forest company clients, and even the Courts to prohibit unqualified, fraudulent, and incompetent contractors from participating in the industry;

— reducing business’s exposure to direct government intrusion and the application of its regulatory processes through voluntary compliance and self-regulation; in practice an actual reduction of red tape; government regulation will decrease while compliance increases;

— creating a comprehensive data base of all industry participants that could act as a medium for information and education extension; the industry, after three decades, is still poorly documented, often hampering it’s proper recognition in terms of policy development;

— establishing an important step towards industry self-regulation; a long term scheme aimed to improve professional compliance and performance in other areas as well as employment standards such as safety, environmental certification, work quality, workforce training, competitive practices, etc.;

— enhancing the image of the forest sector in general by reducing the number of employees (particularly impressionable, educated, young workers) who receive a bad impression of the industry because of unprofessional treatment;

Failing to license contractors will:

— lead to a general policy and regulatory failure with regard to current employment standards for the industry because of the lack of effective enforcement;

— increase costs to the Branch as it deals with complaints and its own attempts to unravel the silvicultural industry patterns and practices; general increase in regulation and intervention into industry as branch pursues contractors end-running legislation;

— cause more worker frustration as they seek remedies to abuses and rights violations they are now increasingly cognizant of; backlog builds; morale declines in Branch and industry;

— create more bad press for the industry; urban elite perceives whole industry as not taking care of workers—generalizes this to resource as well;

— result in a market failure as legitimate firms are punished competitively for compliance; shirkers will have the advantage;

— continue the hidden costs to government through the operating practices of unqualified firms;

— deteriorate standards of employment and working conditions fostering union organization.

Action Recommended:

Support the work-in-progress to license silvicultural contractors as part of a long term plan to self-regulate silvicultural contracting as asked for by the industry and supported so far by the Liberals.

As soon as practicable instruct the Director of Employment Standards and other appropriate ministry staff to continue their collaborative initiative to establish a joint licensing model with the Western Silvicultural Contractors’ Association and other stakeholders.