In response to the request of the
officers of Western Canadian
Regional Council No. 1 the staff of
the International Department of
Research, Education and
Collective Bargaining Coor-
dination prepared Economic
Reports for presentation to the
delegates attending the three
Regional wage and contract
conferences — Coast, Southern
Interior and Northern Interior.

The purposes of the report were
(1) to present delegates with
pertinent information concerning
the economy, industry, cor-
porations, settlements, and issues:
(2) to arm them with facts and
analyses that might be useful in
deliberations at the conferences
and in discussions with fellow
members of their local unions: and
(3) to help them use the best
available knowledge in directing
the power of the IWA in for-
theoming negotiations so that IWA
strength may be used in the short-
term and long-term best interests
of IWA members.

Each member of the professional
staff of the department prepared
one or more sections of each
report. They had, of course, the
valuable assistance of other
members of the International
office force.

The Coast report was presented
by International Research and
Education Co-ordinator Roy
Ockert, Research Economist
Denny Scott, Assistant Co-ordinat-
or Dick Spohn and International
Research and Education Associate
assigned to Canada Doug Smyth.
The other two reports were
presented by Brothers Ockert and
Smyth. The delegates asked many
questions concerning the reports —
‘for further clarification, for fur-
ther development of facts and
analyses, and for further in-
formation relevant to their
deliberations. The intention of the
reports was to present as clearly
and concisely as possible the
economic information that was
relevant to the purposes of the
conferences.

In the expectation that the
material contained in the economic
reports will be useful to all IWA
members in Region I, Brothers
Ockert, Scott, Smyth and Spohn
have summarized the major
points. They do so in the full
knowledge that it will be necessary
to supplement the data contained
in the reports with later in-
formation as it becomes available
and with data relating to
developing issues.

LOST EMPLOYMENT

9.5

9.0 - CANADA

1964-1973

Exployed ,Civilf

Canadian rate.

The Energy Crisis

Prior to the final quarter of 1973,
perhaps the biggest question af-
fecting the future of the Canadian
wood products industries in 1974
was whether the high rate of
housing starts could be sustained
in view of continued high interest
rates and the drying up of
available mortgage funds in many
areas. Since then, however, the
most difficult question has been
how the current energy crisis will
affect the industry.

It well may be that the energy
crisis will have a harmful impact
on the wood products industry
because it may cause a shortage of
transportation facilities, a decline
in overseas markets as foreign
economies are slowed down by the
energy pinch, and a slowdown of
U.S. and Canadian construction
due to the shortage of resins, paints
and other petroleum-based
products.

On the other hand, the energy
shortage may hasten the trend
toward substitution of wood
products for other materials. The
shortage of petroleum, for
example has caused many
manufacturers to consider swit-
ching from plastic to wood
products containers. And wood
makes an excellent substitute for
metals in some cases because the
production of lumber requires
much less electricity than an
equivalent amount of steel or
aluminum.

Lost Employment

The effect of the energy crisis on
the economies of a number of
foreign countries will have serious
implications for the unemployment
rates of Canada and British
Columbia, both of which have been
at unacceptable levels for the past
decade. During the three-year
period of 1970 through 1972 the
unemployment rate for Canada
was 6 per cent or higher, while the
unemployment rate for British
Columbia was, on the average, one
full percentage point above the

Employment in British
Columbia may be adversely  af-
fected by developments in the
United States economy because
almost 80 per cent of the province’s
lumber production is exported to
that country.

During the first half of 1974 a
mild recession is predicted for the
United States. The downturn in the
U.S. economy should provide only
a temporary setback, however, for
unemployment levels in Canada
and British Columbia because the
U.S. economy will probably revive
during the second half of the year.

Inflation

The Canadian economy promises
to be in a much healthier state than
the American economy during
1974. Unfortunately, both
economies will continue to suffer
from incredible high rates of in-
flation. The rate of increase in
consumer prices across Canada
shot up from an average annual
figure of 3.3 per cent in 1970 to 7.6

THE WESTERN CANADIAN LUMBER WORKER

CONSUMER PRICE INDEX
Total Index. for Canada
1961 = 100

150
140
130
120

110

100 :

1964 1965 1966 1967 1968

160

155

150

145
140
135

130

per cent in 1973. And the latest
monthly increases have been at
annual rates of 9 per cent or
higher.

What does all of this mean to the
average woodworker in British
Columbia? Let us assume that in
June of 1972 he received $4.60 per
hour under his new contract.
During the 19-month period to
January 1974 the prices of the
consumer goods and services he
must buy in order to live rose by
13.8 per cent, a remarkable in-
crease for a year and -.a half.
Assuming that the worker in this
case had no other wage increases
during that time, his hourly pay
would now be worth 13.8 per cent
less, or 63.5 cents. In other words,
the $4.60 per hour that he earned in
June of 1972 would now buy only
$3.965 worth of goods and services
($4.60 minus $0.635). If the worker
had another increase of 36% cents
in June of 1973 he would still be
shortchanged 27.0 cents an hour
(63.5 cents minus 36.5 cents)
during the last year of the two-year
contract. If the purchasing power
of the average woodworker’s
wages were fully protected he
should have been making $5.235
($4.60 plus $0.635) by January of
1974.

The Canadian Government
measures the increase in con-
sumer prices by means of the
Consumer Price Index (CPI).
Each month - Statistics Canada
samples the increases in consumer
prices in large and small cities

throughout the country. Then one

year is picket as a base or
reference year and given a value of
100. The annual Consumer Price
Index figure for 1973 of 150.4 means
that, on the average, retail prices
of goods and services increased by
50.4 per cent over 1961 (150.4 minus
100 equals 50.4 per cent).

A 50.4 per cent increase in
consumer prices in just 12 years
has significant implications for the
British Columbia woodworker.
Even more significantly, one-
fourth of this increase came during
the last two years. The increase in
the average annual CPI jumped
from 2.9 per cent in 1971 to 7.6 per
cent in 1973. Moreover, the average
annual increase in consumer
prices promises to be from 7 to 8
per cent again in 1974.

This increase will be paced by food

Apr May June July

1969 1970 197 1972 1973

Dec

Nov.

Aug Sept Oct

prices, which rose by 14.6 per cent
in 1973, and the effect of sharply
rising oil prices on a whole host of
non-food items, which rose by 5 per
cent last year. In January 1974 the
CPI has already jumped at an
annual rate of 9.6 per cent.

At this rate of inflation the level
of prices would double in less than
ten years. This means that the IWA
member must be prepared to
protect wage increases negotiated
at the bargaining table against
further erosion of purchasing
power.

Cost-of-Living
Escalator Clauses

If consumer prices continue to
increase at the present rate the
average woodworker under
current IWA contracts will have
lost about 70 cents an hour by June
of 1974. This means that the
original. average hourly wage of
$4.60 negotiated during June of 1972
will purchase fewer goods and
services and the average wood-
worker will have lost about 70 cents
in purchasing power.

Unions have attempted to
negotiate various contract
provisions to protect the pur-
chasing power of the across-the-
board increase won at the begin-
ning of the contract. Some have
tried to negotiate deferred in-
creases which take place at the
beginning of the second year of the
contract. Unfortunately, it is
impossible to predict the rate of
inflation and most deferred in-
creases negotiated over the past
few years have fallen far short of
protecting the worker’s purchasing
power. ;

Another tack which a few unions
have tried is an automatic wage
reopener at the end of the first year
of the contract. A reopener, of
course, means that the union must’
be prepared to make the sacrifice
of entering into negotiations more
often and to strike again if
necessary. And the date of the
reopener may fall long after
economic conditions would permit
a good settlement and long after
inflation has eroded the worker's
wages. :

For these reasons many unions
have been negotiating cost-of-
living escalator clauses which

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