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© Copyright 2000 Rogers Media. The following article first appeared in the February 2001 edition of
BENEFITS CANADA magazine.
Editorial: The R-word
There are no free bus rides.
None that last anyway.
The Americans' newly crowned President George Bush II is providing plenty of entertaining television. One
of the best moments came in December, after a meeting with Alan Greenspan, chairman of the U.S. Federal
Reserve.
The president felt it important to state publicly his faith in the chairman's abilities. Greenspan laughed.
Out loud. One of those I can't believe this guy thinks himself qualified to judge me laughs. It
reeked of honesty.
This came as Bush was doing his best to pin warnings of a U.S. recession on now former president Bill
Clinton. Bush did his all to sell the idea that a downturn was already happening at the end of 2000, and it
had nothing to do with him.
It was politicking at its most irresponsible. Bush was still fighting the election long after the last
hanging chad went uncounted.
Perhaps during their next meeting, Greenspan can explain to the new young president how his comments can
sometimes impact consumer confidence inside and outside the United States.
Bush's carelessness meant that rumours of recession were lent credence at a terribly delicate time. By the
end of December, market volatility (led by a rash of corporate profit warnings) was providing a new focus
for consumers and investors.
Here in Canada, it is clear that our economy's current strength would mean little in the face of a
significant U.S. downturn.
Let's assume the worst for a moment. If we do see a recession, what will happen to benefits plans across
Canada? What if a slowdown went long enough to substantially loosen the labour market?
Ron Sawatzky, director, pensions and benefits at Enbridge Inc. in Calgary has an interesting perspective.
He learned a valuable lesson during the 1970s oil boom. Employers there, not unlike many of today's bosses,
were jumping through hoops for talent.
"Each company was trying to come up with something more unique than the next to attract," he says. "[It
got] to the point where they gave bus passes away to every employee, whether they needed one or not."
Pierre Trudeau's National Energy Program put an end to the boom, and the free bus rides. "Those things
quickly fell off the table," says Sawatzky.
Will it be different this time? Sawatzky thinks so. He says there are two reasons why Canadian employers
will not pull back on benefits the way some have in the past.
First, the war for talent is real. Human resources are critical to organizational success in the new
economy, and no slowdown is going to change that.
Second, there aren't a lot of free bus passes out there. We've all heard the stories about pool tables in
the lunchroom. But throughout mainstream corporate Canada, plan design in recent years has focused on the
flexible provision of core benefits.
"I'm seeing a great prevalence of stock options, and larger bonus numbers driven down to different levels
in the company," says Sawatzky. "These are the benefits that might stand the test of time. You need to
maintain your competitive workforce. You need to keep your key people around."
It will take a long and painful recession--something on the order of the early 1990s--before plan design is
overhauled. Even then, there is little evidence that plan sponsors will pull back substantially on their
investment in employee benefits. There is too much to lose.
--Kevin Press
kpress@rmpublishing.com
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