Greed gouging and bad citizenship of Canadian
retailers 2007
KEN GEORGETTI
Special to Globe and Mail
Update
What have Canadians gained
from our loonie's parity with the U.S. greenback? A
more valuable currency should make the things we buy from other countries
cheaper.
But, over the past five
years, as the value of the Canadian dollar has appreciated against the American
dollar, that has not been what's happened. Canadian retailers have not lowered
their prices — instead, they have used the rising dollar to gain excessive
profits at the expense of consumers and the whole economy.
Their profits have soared.
Return on their investment is even higher than in the booming oil and gas
sector, jumping from a healthy 11 per cent to an even higher 16 per cent. In
dollar terms, the last-quarter retail profits are running at $4-billion, almost
twice the level of 2002.
While consumers are getting
no breaks, big retail companies are not sharing these profits with their
employees. In fact, they have actually cut wages. Average hourly earnings fell
by 5 per cent in retail over the past year, even though an average retail
worker makes 25 per cent less than the national average hourly wage.
Retailers in
The Bank of Montreal
estimates that, even with the Canadian dollar worth as much as the U.S. dollar,
a typical basket of consumer goods costs 25 per cent more before taxes on this
side of the border. While retail prices should not necessarily be identical,
there is no justification for such a huge markup.
The government also has
clearly failed workers and consumers. Both the Conservatives and Liberals plan
across-the-board cuts to corporate taxes, which would boost retail and
wholesale profits even more.
We need answers about why
profit margins are so high and prices are not coming down. We also need a
higher minimum wage to make sure a fair share of the gains go to retail
workers.
Lower prices would be a boon
to working families. They would also allow the Bank of Canada to ease up on
interest rates, taking some of the steam out of the soaring dollar and making
it cheaper for manufacturers and other businesses to invest in
The negative impact of high
retail prices recently was confirmed again this week as the Bank of Canada
refrained from lowering interest rates, as the Americans have done recently, on
the grounds that inflation is too high.
For months, the Canadian Labour Congress has expressed concern that the rising
dollar is undermining our manufacturing and resource processing sectors by
driving up the price of Canadian-made products in foreign markets. Indeed,
nearly 300,000 well-paid manufacturing jobs have disappeared during the loonie's surge from 65 to more than 100 U.S. cents.
Lower retail prices won't
save manufacturing jobs on their own. But they would mean lower inflation.
Evidence of lower inflation would allow the Bank of Canada to reduce interest
rates and provide some shelter from the high value of our dollar.
Ken Georgetti
is president of the Canadian Labour Congress.