Exam 2: Section 4: Economic Forces: Oh Canada, What Is Your Economy Like

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The Neoclassical Perspective argues that the forces of supply and demand, if left to operate freely with limited state interference, will ensure optimal assignment of skills and expertise throughout the economy as well as the fairest distribution of wealth. The "invisible hand of the market" will guide actors towards economic and social prosperity. Canadian governments-indeed, governments around the world-are misguided in their attempts to 'protect workers' through regulation such as minimum wages, overtime pay, human rights laws, health and safety rules, and laws that permit or even encourage unionization and collective bargaining. Neoclassicalists are not concerned about working conditions being driven down too low in the absence of worker protection legislation. They believe that the invisible hand of the market will ensure this does not happen. Any attempt by governments to intervene in this process of free bargaining by employers and workers will disturb these 'market-clearing' processes, producing harmful effects.
The Industrial Pluralist Perspective emphasizes the imbalance of power between workers and employers, and the value to society and economies of striking a reasonable balance between the efficiency concerns of employers and the equity concerns of workers. For the Pluralist, the relationship between a business/employer and a worker/employee involves the bearer of power, on one hand, and subordination, on the other hand. In most cases, workers lack the necessary bargaining power to engage in meaningful bargaining about conditions of employment with the result that the business purchasing their labour can in practice set the terms unilaterally. Pluralists support an activist government that intervenes in the work relationship in order to promote decent working conditions and worker 'voice' in the determination of those conditions. Most importantly, the Pluralists believe the most effective way to ensure worker voice, and to promote a healthy distribution of wealth throughout the economy, is to promote collective bargaining and unionization

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Since the twentieth century, the dominant model of organizing work has been "employment". Employment is a form of work in which a person (an 'employee') is dependent upon, and mostly subservient to, an 'employer'. In an employment relationship, the employer is assumed to have control over the methods of production, the unilateral authority to decide what and how much to produce, and the right to direct when, where, and how the employee is required to perform their job. The employment relationship is governed by an employment contract, which may set out specific rules, obligations, and rights applicable to the employer and employee, and is usually enforceable in a court of law, like other contracts. At the core of the employment relationship is a basic exchange: the employee sells their labour in exchange for compensation, usually in the form of wages and perhaps benefits of some sort. Employment can be full-time or part-time, indefinite in duration or for a fixed period of time.

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Understanding this relationship sheds a light on the nature of our economy and our society, its standards of fairness and well-being. Employment standards legislation entitles "employees" to a minimum wage, overtime pay, mandatory time off and holiday pay, notice of termination, among other benefits. None of these entitlements apply unless the arrangement is characterized as employment. Similarly, human rights laws prohibit discrimination "in employment", and access to unemployment insurance, public pension schemes, and workers' compensation benefits are often contingent upon a worker having been 'employed' for a period of time prior to making their claim for benefits. From a business perspective, there may be advantages to using workers who are not employees of the business. A business that uses independent contractors or "temporary placement" workers may avoid employment standards laws, or the requirement to pay insurance premiums to workers' compensation systems, for instance. By not employing workers, businesses can avoid some potentially costly requirement and adjust more quickly and with less cost to economic downturns. On the other hand, this can have an adverse impact on individuals who fail to achieve job security.