Wage cuts and contracting out of health support jobs harming workers and health care system: reports

April 26, 2005

(Vancouver) On the first anniversary of BC’s health care strike, two new studies show that wage cuts and contracting out in BC’s health support services are having negative impacts on workers, workplace morale, and the quality of patient care. The studies also suggest that the hoped-for savings from these policies are offset, if not erased altogether, by lower productivity, higher turnover, and other hidden costs to the health care system.

The studies, released today by the Canadian Centre for Policy Alternatives, used polling and in-depth interviews with workers to assess the impacts of the wage cuts and contracting out on health support services (which includes care aids, lab technicians, licensed practical nurses, trades, clerical workers, cleaners and kitchen staff).

Both studies find that workers feel demoralized and financially strained, and are experiencing high levels of stress. Both in-house and contracted-out workers report declining quality of care, pointing to issues such as overwork, decreased cleanliness, less time for human contact with patients, and low workplace morale.

The Hidden Costs of Health Care Wage Cuts in BC, by Marc Lee and Marcy Cohen, investigates the experiences of 500 health care workers who were subject to a 15% hourly wage cut, using a poll commissioned from the McIntyre and Mustel Group.* Of those surveyed:

  • The vast majority (83%) reported that the wage cut forced them to reduce or defer personal expenses, with significant numbers reporting that they are working longer hours, taking on more debt or reducing savings. One in ten report some change to their housing and/or mortgage situation.
  • More than 40% report that their family relationships have been affected, and more than a third say the wage cut has affected their ability to participate in community and volunteer activities.
  • Personal and financial impacts were greater for the two-thirds of respondents with dependents.
  • Over 40% report an increase in staff turnover since the wage cut, just under half report decreases in productivity, and 60% report increased absenteeism and increased friction between workers.
  • Almost 70% report that their job satisfaction was negatively affected by the wage cut, and about 40% say their commitment to the organization has been negatively affected. These results were consistently worse for workers with higher levels of formal education, a finding with worrying implications for recruitment and retention of skilled workers.

“The irony is that wage cuts are extremely rare in the private sector,” says CCPA economist Marc Lee. “The management literature tells us that employers are very reluctant to cut wages because they understand that the impact on productivity is generally greater than the savings from the wage cut.”

“The survey suggests that the wage cut, designed to save $200 million in health care costs, may not actually achieve this goal once these hidden costs are considered,” says Lee. “We believe these costs should be evaluated by the Auditor General.”

The second report, The Pains of Privatization: How Contracting Out Hurts Health Support Workers, their Families, and Health Care, by Jane Stinson, Nancy Pollak and Marcy Cohen, follows up on the contracting out of approximately 8,500 health support jobs and the resulting pay cut of more than 40%. It used in-depth interviews with 24 workers (cleaning and food preparation staff) now employed by private firms but working in public hospitals and long-term care facilities.

This study finds their working conditions to be unacceptably harsh and sub-standard in all respects: low pay, meagre benefits, heavy workloads, poor training, and no job security. Among the key findings:

  • A privatized health support job in BC is virtually synonymous with poverty. More than three-quarters of those surveyed — and all those with children — have incomes below Statistics Canada’s Low Income Cut-Off.
  • Most of the people in this sample are immigrant women, the majority of whom (71%) have post-secondary educational credentials that would qualify them for better-paying jobs if not for the barriers that limit opportunities for internationally-trained professionals.
  • Over 40% have at least one other job to help make ends meet.
  • Understaffing, poor supervision and management policies result in nearly all participants describing their workload as hectic, exhausting and stressful. They often feel too rushed to work safely. Over four-fifths of participants report that their physical health is negatively affected by the job.
  • Quality of care is being compromised. Participants in the study detail examples of inadequate training and supervision, and improper cleaning (including of rooms with antibiotic-resistant infections). Participants report that excessive workloads have eliminated time for contact with patients/residents, and in some facilities, the company prohibits talking with patients.

“Good quality care depends on a well-trained and well-supported staff,” says Marcy Cohen. “Contracting-out is jeopardizing the health and well-being of workers, their families, and patients and residents in BC facilities.”

“Wage cuts and contracting out impact a group of people––mainly women––who are already economically vulnerable,” says Marc Lee. “Why do we require these workers to support families on less than $16 an hour, when the government itself admits that a higher wage is needed to provide a decent income in BC?”

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To arrange an interview with the studies’ authors, or with affected health care workers, call Avi Goldberg at 604-801-5121 ext 229.

The Pains of Privatization is part of the Economic Security Project, a joint research initiative of the CCPA and Simon Fraser University, funded primarily by the Social Sciences and Humanities Research Council of Canada (SSHRC).

* The McIntyre and Mustel poll is considered accurate within +/- 4.35 percentage point, 19 times out of 20.