Good afternoon, everyone. I now call this meeting to order.
Welcome to meeting number 28 of the House of Commons Standing Committee on Industry, Science and Technology. Pursuant to Standing Order 108(2), and the motion adopted by the committee on Thursday, June 18, the committee is meeting to study the subject of front-line grocery store workers.
Today's meeting is taking place by video conference, and the proceedings will be made available via the House of Commons website.
As a reminder to members and witnesses, before speaking, please wait until I recognize you by name. When you are ready to speak, please unmute your microphone and then return to mute when you are finished speaking. When speaking, please speak slowly and clearly so the interpreters can do their work. As is my normal practice, I will hold up a yellow card when you have 30 seconds left in your intervention, and I will hold up a red card when your time for questions has expired.
I would like to now welcome our witnesses.
From Empire Company Limited, we have Michael Medline, president and CEO. From Loblaw Companies Limited, we have Sarah Davis, president. From Metro, we have Eric La Flèche, president and CEO.
Each witness will present for 10 minutes, followed by rounds of questions.
We'll start with Mr. Medline. You have the floor for 10 minutes.
Good afternoon, Madam Chair and honourable members of the committee.
There is nothing more important to me than discussions about our people, and I thank you for the invitation to speak to you today. I've never appeared before Parliament before, so please set me straight if I get any of the protocols wrong.
I know we all agree that the real heroes are the Canadians who stepped up during this crisis, as my teammates did. They did so in the Canadian way with grace, confidence and excellence. We are truly blessed to live in such a great country.
Our company began as a meat delivery business founded in 1907 in Stellarton, Nova Scotia, by J.W. Sobey. J.W.'s focus was on supporting Canadian families, and that has been our goal ever since.
When COVID-19 hit, we doubled down on our commitment to ensure that Canadian families could count on us. I have never been more proud of our 127,000 teammates, franchisees and their teams. We put every resource we had into safety, sourcing personal protective equipment on our own for our teammates with no help. We were the first in North America to install thousands of protective plexiglass screens inside our stores. We also compensated our teammates who weren't able to work because of their personal circumstances, and we did so before government support programs began. For example, we compensated our teammates who had to quarantine because of travel or stay home to care for sick family members or for their children. All in all, we have invested tens of millions of dollars to protect our teammates and our customers.
In addition to our existing philanthropy, we also launched our community action fund during the peak of the pandemic, distributing millions of dollars to support local initiatives in your ridings across the country. Food banks, women's shelters, meal programs, children's breakfast programs, all of these vital community resources were supported by, and continue to be supported by, our stores. We see this type of community outreach as integral to the way we operate. We're a family retailer that plays an essential role in every community where we operate. That's 900 communities across Canada. Our teammates are a vital part of these programs.
At our Sobeys Belmont store in Edmonton, we started a food drive, “Heroes Against Hunger”, to help get food to school-aged children in need after the shutdown of their local breakfast and lunch programs. We started initiatives in Parry Sound and Moncton that donated thousands of dollars in gift cards to local food banks and supplies to help the Salvation Army in its time of need.
During the hardest months of the pandemic, we put in place a bonus program for our teammates. Our teammates were among a select group of Canadians going to work, because food is essential. Governments did so much for this country during this pandemic, but nothing for food workers. It was up to us to recognize these essential workers, these heroes, during the height of the pandemic. Through our hero pay bonus program, we distributed over $105 million in bonuses to our front-line teammates. We did this not because we were legislated to do so, but because it was the right thing to do.
It was a temporary program during the heat of the pandemic and it was communicated that way. We extended the bonus program several times. Even as almost every other retailer discontinued their bonus programs, we kept ours going. At the end of May, we shared with our teammates that we were extending the program to June 13 and would reassess the program at that time. We delivered on that promise, and at the same time we announced that we would provide our front-line and distribution centre teammates with a one-time bonus equal to two weeks of hero pay. We also announced that we would be launching a meaningful employee discount program to our teammates.
It is interesting that food retailers that did not pay a hero pay bonus or those who discontinued their programs early are not being assailed by you. I'm disappointed that Loblaws, Metro and Empire, three Canadian companies that continued their bonus programs longer than almost any other in the industry, are the only companies being invited to speak with you on this issue. Let's remember that in Canada our three major grocers compete against two of the largest American corporations in the world, one online and one omnichannel. I'm interested that they are not being called to this committee, as their programs ended long before ours.
I want to make it perfectly clear that we do not believe this pandemic has gone away. It has not. We must remain vigilant.
Due in large part to excellent and responsible responses from our provincial governments and public health authorities and the actions of Canadians who genuinely care about each other, our country is now controlling the virus as best it can. This has led these trusted provincial governments to start lifting much of the lockdown in an effort to open up the economy and get Canadians back to work and enjoying life as much as possible in what is now unfortunately our new normal.
We instituted hero pay when the government wisely went into lockdown. We ended hero pay when the lockdowns were eased.
We observed the economy, customer patterns and, not surprisingly, the behaviour of others in our industry. Of course, we watched what other retailers were doing. Every good business does the same. We did not collaborate or coordinate with our competitors. We never discussed this with our competitors. We would never do that. Let me be absolutely clear: We did not coordinate our decisions with other retailers.
In late May, we shared with our teammates that we were extending the program to June 13, and we delivered on that promise. The decision was our own, but let me tell you something else: Should this terrible virus rear its ugly head to the degree that provincial authorities in certain regions of a province go back to lockdown like we experienced in March and April, we will put hero pay back into our company stores in those regions or cities. That would be the right thing to do.
I’d also like to comment on the misconception that all grocery employees earn minimum wage. That’s just not the case at Empire. All of our full-time, front-line teammates earn above the minimum wage requirements set by the provinces. I’m not saying that retail is the highest-paying industry, but many of our teammates earn significantly above provincial minimum wage, including all of our distribution centre teammates and more than 60% of our part-time front-line teammates. On average, national salary, including benefits, is approximately $30 an hour for full-time teammates and $18 an hour for part-time.
The retail sector plays an important role in Canada. Our sector is the biggest employer in the country after the government. Many Canadians choose retail as their career. I am proud of the accomplishments and incredible talent we have in Canada, talent that is often leading the global industry in terms of innovation and customer service. The sector also plays an important role in helping students and others to gain meaningful experience and support their needs while in school or during the summer.
Health, safety and the strength of our company are of vital importance to all of our stakeholders: employees, suppliers, communities and shareholders. By the way, shareholders include pension funds and mutual funds widely held by a large number of Canadians—teachers, firefighters and the older couple next door.
This crisis has affirmed the essential role of our food supply chain, and we are proud of our 113-year tradition of supporting Canadian families and the Canadian economy.
Good afternoon, honourable members. I am Sarah Davis, the president of Loblaw Companies Limited. Thank you for the opportunity to share my opening remarks and to answer your questions.
I am here first and foremost to confirm that Loblaw made the decision to start and end our temporary pay premium independently and did not coordinate with any other company. I am also keen to address the inaccurate interpretations about the purpose of the Loblaw pay premium.
In March, as pandemic complications set in, we implemented our temporary two-dollars-per-hour increase for front-line colleagues for one simple purpose: We wanted to acknowledge the extraordinary volatility and uncertainty in our stores and supply chain, and the hard work they created. The premium pay was never about safety. If our stores were not safe, we would never ask our colleagues to come to work, period. We dramatically adjusted our operations to ensure that they remained safe. We closed departments such as seafood, deli, bakery and meat, and in some cases we closed stores.
As an essential service, our job was to make sure that we got food and drugs to Canadians. We could not do that without our colleagues. Our first priority was to keep them safe and in turn keep our customers safe. Paying our people two dollars more an hour did not make them safer. The tens of millions of dollars we have invested in protections and new protocols did. We made these investments voluntarily and proudly. They were the right thing to do and they worked. In fact, the infection rate in our colleague population is considerably lower than the rate in the general Canadian population. Our nearly 200,000 colleagues have families and concerns of their own, and I cannot emphasize enough how proud we are of their hard work in serving Canadians in difficult circumstances. That was the reason for the increase.
I believe it is worth spending a few minutes to talk about how COVID-19 impacted our business and how incredibly our team has responded.
It was five months ago that we first sat down to set up a pandemic business plan. We looked at global experiences and anticipated different scenarios should the coronavirus reach Canadian soil. Looking back, it's incredible how quickly we moved from business and scenario planning to reality. Our leadership met many times daily, communicated to customers and colleagues often, and executed swiftly—a large company demonstrating agility at its best. We not only communicated well but listened well. Many of our best ideas came from discussions with our people and feedback from stores and distribution centres nationwide.
Early on, we implemented safety measures to protect customers and colleagues, such as plexiglass shields for cashiers, new sanitization protocols, customer limits in stores, social distancing ambassadors, access to PPE and more. We were similarly quick to introduce dedicated seniors' hours, make online shopping free and rapidly ramp up staffing to meet new demands. I'm not sure whether people know this, but Loblaw hired more than 20,000 people to keep customers well served and safe during the early months of the pandemic.
It seems like old news now, but in March and early April unimaginable volumes of people passed through our stores. We moved from rushes on masks and hand sanitizer to panic buying of toilet paper and flour, all while introducing and tweaking operational changes based on feedback and ideas from the front line. Our store distribution centre teams worked long days to keep us in the best shape possible, as worried Canadians prepared for the uncertainty and governments deemed us an essential service. Throughout, we have been energized by stories of strong leadership at every level: stores supporting neighbours, colleagues donating to seniors, pharmacists working tirelessly for patients, our technicians building digital retail services for vulnerable people and more.
I'm not sure I can express how proud I am to lead this incredible team of people in a business that I love. Over the past many months, our people on the front lines have reached out routinely to me to pass along their perspectives and their stories. I thought I'd share a couple.
In an open letter to colleagues, one talked about understanding the difference between hazard pay and a company, saying, “Thank You to the front line workers who got up each day and served the community during a crisis.” She said, “Loblaw stood up to the plate to make sure not only the staff but also the customer was safe.” Reading some negative comments about the removal of the premium, she said, “all I could do was shake my head”. Another letter read, “The craziness started March 11. Absolute insanity on March 12. I have never seen anything like this in almost 30 years. It was tough and ever changing. But we had jobs and support. For that I’m more than thankful.”
I am similarly proud of our industry, which has truly stepped up. I know Canadians have a new appreciation for the industry we work in, which brings us to recognition.
As I mentioned, on March 21 we introduced our temporary pay premium to recognize the extraordinary efforts of our people at the height of the pandemic. It was two dollars per hour, an average bump of 15%, retroactive to March 8, when panic shopping first began. After three extensions, we spoke to our largest union on June 8, and on June 11 announced internally and publicly that the premium wouldn't be extended beyond the final date of June 13 and would conclude with a thank-you bonus in July. These details, dates and decisions were ours alone.
After we made our decision and communicated it to our colleagues, I did send a courtesy email to Walmart, Save-On-Foods, Metro and Sobeys notifying them of our decision, recognizing that after telling 200,000 employees, the news would be public immediately.
We know the pandemic continues. We also know it's in a new phase, as determined by governments and public health experts. While our stores aren't operating in the way they did pre-COVID, they have stabilized into a new normal routine, very different from the levels of activity we saw in the early stages of the pandemic.
With the nation reopened, most other businesses are now open. Employees are back to work in shops, cafés, salons and other services, carefully and at their normal wages, so our approach is consistent with the rest of our industry and the rest of the country. Still, it's been suggested that our industry, perhaps our industry alone, should continue with premium pay. This is at least in part because people think we have outsized profits from COVID-19, and this is a false assumption. On our April's earnings call we announced higher profits from COVID following an unprecedented two-week customer buying binge, but we also said we would be investing $90 million per month for incremental pandemic costs and that these costs would offset any benefits from higher sales and would last much longer. Quite simply, we have not been putting profit ahead of our people.
Finally, I want to wrap up by addressing some of the themes raised in Monday's committee session specific to retail work. Loblaw represents a network of stores, about 2,500 in total. Some are operated corporately, but most are independent, run by individual business owners. Combined, we are the largest private employer in Canada, with nearly 200,000 employees.
Since becoming president of Loblaw, my top priority has been making sure people love working in our business. Our team includes tens of thousands of Canadians in full-time roles supporting families and making retail their career. It also includes the tens of thousands of people in part-time roles, who value flexibility and work with us for supplementary income or while putting themselves through school. A big part of my job is to make sure we meet their expectations. That includes a great place to work and opportunities to grow, and yes, it includes fair compensation.
There have been attempts to connect the pandemic pay conversation to the larger conversation about retail wages. People have asked whether retail workers make enough. This is a fair question, but the answer does not lie with any one company or within any one sector. Minimum wage is a broader question.
Defining a living wage is a national issue with huge regional nuance and implications. Like you and the union representatives you heard from on Monday, we believe government should explore these topics. As the nation's largest employer, we want to be part of those conversations, but they can't be our conversations alone. We are part of a highly competitive industry that is increasingly global, including some of the world's biggest retailers and e-commerce giants. Any solution needs to take account of the impact on all stakeholders.
As I close, let me reiterate three points. First, I am extremely proud of the decisions and actions we have taken in this pandemic. We have made them independently and without coordination. Second, we are not profiting from COVID-19. Third, we will continue to support our colleagues with investments in safety measures and with our commitment to good jobs and progressive pay over the long term.
I look forward to your questions. Thank you for your time.
COVID-19 created extreme challenges for our business from the outset, especially for the safety and needs of our employees and customers. It is our responsibility to help maintain the supply of food and medication to Canadians, one that we assumed as we kept stores and distribution centres open while ensuring employee and customer safety. We kept our people employed and even hired close to 1,200 additional staff from other non-essential organizations.
We quickly made personal protective equipment available and implemented health checks for our employees. In stores, we limited the number of customers, reduced third party supplier visits, added front entrance greeters to control traffic and provided hand sanitizers and clean shopping carts. We increased sanitization throughout. In only one week, we installed plexiglass shields at all checkouts in about 600 supermarkets throughout Quebec and Ontario. We facilitated social distancing, providing employees with “keep your distance” t-shirts, and much, more more. To address surging online demand for delivery, we added new delivery windows to increase our online grocery capacity and better serve the people in our communities who need it the most.
Whenever we encountered a suspected or confirmed case of COVID-19 in either our stores or distribution centres, we acted swiftly, according to a strict protocol endorsed by public health, to inform our employees, deep clean the facility and monitor the situation closely. As panic buying increased, our store and distribution centre employees worked extra hours, taking on new and unfamiliar tasks. I am extremely proud of their commitment and sense of duty in stepping up for customers at the peak of the pandemic. Together we made an immense undertaking, all within a few short days and weeks, and we did it without any financial assistance from the government. At all times, safety and speed—not potential cost—were our primary concern.
To acknowledge the additional work and new tasks performed by its teams at the height of the pandemic, Metro provided a temporary premium of $2 an hour to 50,000 employees in its stores and distribution centres.
The truth is simple. We made an independent decision to implement safety measures and provide a temporary wage premium, in the same way that we make decisions in all circumstances. We take into account the information available in our environment.
In the case of the current crisis, our decisions took into account measures implemented by governments, public health and other major employers in Canada, the United States and elsewhere, including other grocery chains, the Retail Council of Canada and union partners.
On the basis of all the information available, on March 21, we announced the start of the temporary premium. We were careful to specify that this measure would end on May 2. This temporary premium came on top of the wages established by collective agreements negotiated in good faith with our union partners over the past decades. The temporary premium was then extended twice, from April 18 to May 30, and from May 22 to June 13.
Here's the note that we sent to employees on May 22:
In this context of a gradual return to normal, we will continue to pay the temporary wage premium of $2 an hour provided to employees in METRO's grocery stores and distribution centres until June 13, which is two weeks longer than planned.
As an additional form of acknowledgement, on June 12, we announced a $200 premium for full-time employees and a $100 premium for part-time employees, the equivalent of two weeks of additional premiums.
In full compliance with the Competition Act, I asked my counterparts whether they planned to maintain the temporary wage premium. They told me that they had not made a final decision. In any event, these calls were part of a much broader decision-making process and merely provided a rationale for our decisions on when or how to end our temporary premium.
We made all our decisions independently. There was never any agreement or collusion among competitors.
We made the decision to end the temporary wage premium independently and in response to the gradual return to normal customer shopping behaviour and business volumes, following the surge we experienced from March through May.
When the committee considers the decisions we have made about the wage premium, it must apply the same standards to Metro as it has to other retailers, many of whom have also discontinued wage premiums, some before us. Others have simply not offered a bonus.
I think Mr. Meinema from UFCW raised an interesting point on Monday, that it was odd that only Canadian grocers were invited to appear today, which does not take into account what happened in the industry as a whole during the pandemic, particularly with our non-unionized American competitors.
Our revenues have certainly increased but so have our expenses. We took them on because they were justified and necessary. As customer shopping habits and business volumes gradually return to normal, we will continue to pay for many of these new expenses, particularly those related to health and safety.
In conclusion, I would like to add that Metro is proud to have contributed to ensuring a safe supply of food and pharmaceutical products for its customers during the crisis.
I again thank all our employees for their professionalism and dedication throughout the pandemic. We truly have a great team.
In closing, I want to congratulate and thank all our employees, our affiliated stores and our pharmacist-owners. Throughout the pandemic, their outstanding professionalism and dedication have enabled us to meet the needs of the public. We have a truly extraordinary team.
Thank you, Madam Chair.
I want to thank the witnesses for joining us. I also want to thank them for emphasizing, in their presentations, the role of their employees.
Like you, I believe that it would have been worthwhile, given the current circumstances, to hear from representatives of Walmart or other major American chains. I want to highlight your transparency, your honesty and your way of presenting your perspective. Perhaps your discussions led to easier decisions. However, I can see that each of you has implemented a very independent decision-making process.
I now want to address the working conditions of employees, particularly the conditions identified on Monday. It was pointed out that, in the 1970s, a job in a grocery store constituted worthy work. A grocery store employee earned enough each year to be able to purchase a house. The Teamsters Canada representative said that 50% of employees represented by the union earn minimum wage. Many grocery store workers therefore have precarious jobs. They are mostly students and part-time workers who have limited or no group insurance and pension plans. In other words, these aren't middle-class jobs.
Many of these front-line workers are working women. In this context, we're not talking about pay equity, and we acknowledge that these jobs are precarious. The COVID-19 pandemic has shown us that these jobs are an essential service. In reference to what my colleague Mr. Erskine-Smith just said, I want to point out that the chief executive officer of Loblaw, Mr. Weston, stated the following:
I continue to be a strong believer in a progressive minimum wage and would support any government-led effort to establish a living wage.
We still need to know what constitutes a living wage. Should this living wage enable a worker to at least buy a home? According to “BILAN-FAIM Québec 2019,” 13.5% of the public earns minimum wage, and people aged 18 to 64 use food banks.
Would you be comfortable knowing that some of your grocery store employees use a food bank in order to eat? I find the irony here a little shocking.
From a legislative standpoint, to provide a better framework for your measures and to ensure equal competitiveness—this expression was used on Monday—would the government need to issue an order in council—this wouldn't be an agreement between you, but a government obligation—to ensure that salaries are increased and that this step is taken?
I'll conclude by saying that Costco initially pays its employees $15 an hour. However, after six years, it can pay them $28 an hour. In the long run, there are benefits to providing a more worthy wage. The whole recruitment process must be very difficult because of the precarious nature of the jobs.
In short, would you be open to the idea of an order in council that would further require companies such as yours to increase the wages of their employees?
I want to hear from the Metro representative first.
Thank you for your questions, Mr. Lemire.
With regard to the statements made last Monday by the Teamsters Canada representative, I don't know where he obtained this information. We aren't seeing this at all at Metro in terms of statistics. In Quebec, this certainly isn't the case. In our stores, 13% of employees earn minimum wage, not 50%. Obviously, the minimum wage is a subject that goes beyond the context of this discussion. It should be understood that a worthy career is possible in the food industry. First and foremost, at Metro, many of our management colleagues come from the stores. They stayed in the stores and built great careers.
There's a fundamental difference between full-time and part-time work. Full-time workers have pension and insurance plans. They make a good living. They can purchase a house and borrow money to buy a car. In short, they can lead a normal life. On the other hand, depending on the number of hours worked, obviously part-time employees may earn less. These jobs aren't precarious. Instead, they're student jobs, first jobs, transitional jobs and supplementary jobs. We must tell it like it is. Most part-time workers don't plan to pursue a career in the food industry. These jobs are transitional employment for them. Some of our employees have part-time jobs for longer periods, but these employees are far from the majority.
In terms of the order in council, the minimum wage falls under provincial jurisdiction. There are significant differences between the regions of Canada. I think that caution must be exercised in this area. We're in favour of a reasonable and predictable minimum wage and manageable increases that vary according to the cost of living. We've always said this. We're not in favour of sudden and large increases in the minimum wage. We've already seen this in one province. That said, in general, the minimum wage increases over the past few years have exceeded inflation, but they're manageable. We can absorb them without increasing prices for our customers. At the end of the day, we must remain competitive and offer our customers competitive prices.
Thank you very much, Madam Chair.
I would like to thank the witnesses for being here today.
We've heard a lot of testimony on the concept of the competition and the discussions that have taken place, but I'd like to direct my question to each of the witnesses in a little different fashion.
We heard testimony a few days ago concerning workers in the food retail sector and the great job they're doing to help ensure food remains available during these unprecedented times. I think each of us has seen in the grocery stores we've gone to just how much care and consideration the workers and the companies have taken to make sure things work properly and safely, but I'd like to talk about things from just a slightly different angle when we talk about getting our food to our tables.
Certainly food retail workers play an essential role in getting this food to Canadians, which is why they're designated as essential workers. The same is true for farmers, who have also been designated essential workers. When we talk about paying a decent wage or a decent price in this sector, I think we also have to look at what the farmers get paid for the products that end up on the grocery store shelves. We know the prices of most farm products have remained at a near-constant level for many years. Mr. Lemire mentioned the salaries back in the seventies. I remember when my brother was cutting meat in the grocery store. He was making more money than I was as an entry-level teacher. The salaries haven't necessarily maintained that same level throughout.
Recently there has been a lot of talk in the media about record-high food prices, but it's clear the farmer is not the beneficiary in this regard. The link between the farm gate prices and the retail checkout is broken. What the unions are saying, and what we heard on Monday, is that just a few extra pennies on a grocery item will be adequate to compensate the workers. Now whether this is to come out of the pockets of the consumers or the retailers' bottom line is a moot point to them. I suppose if the discussion ever gets to the stage where we're going to talk about how the money comes in for the products that you have, I think we want to make sure we recognize those who produce the food as well.
Since there is this great disconnect between the consumer and those who produce the food we eat, when the media talks about the rising food prices, the public assumption is that the farmers are the ones raking in the profits. This isn't so, as we know. We remember well when the wheat prices rose dramatically and the price of bread skyrocketed. It was impossible to explain how the value of the wheat in that loaf of bread had gone up only a few cents, yet the consumers were paying dearly. If, as the unions say, it's just a few extra cents per article, maybe we could be discussing, or it's a valid time to discuss, what the actual return is that farmers get on that produce, while we're addressing prices and wages.
I really have three points that I'd appreciate your commentary on. What can we do to address the price escalations in the processing and retail side of the equation, whether they be due to COVID or just the fact that COVID costs are more dear in processing and so on, or whether that's due to the escalation of shareholder returns, just to make sure the producer is not forgotten?
Again, we've heard many stories about how difficult it is to get shelf space for local producers in the major chains. These are the products that are produced by the same folks who shop in your stores. Since it's prudent to keep our local economies viable at this time of upheaval, will you also consider modifications to these practices?
First of all, could we start with Empire?