Residents of Cornwallis last week received an unwelcome Christmas gift: The town's largest employer, Convergys Corporation, announced that it would soon close its call centre operation, throwing 300 people out of work. This isn't the first time Convergys has disrupted a Nova Scotian workforce; in June, the company shut its Millbrook operation, which had employed 200 people.
Convergys is closing in Cornwallis as a $3.8 million payroll rebate program with the province expires; the company had received $3.9 million in payroll rebates for its Millbrook location. A similar $3.18 million agreement for Convergys' New Glasgow location, with 350 employees, runs out in September.
As these Nova Scotian payroll subsidies end, the company is vastly expanding its overseas operations--- already the largest private employer in the Philippines, with 20,000 employees, Convergys announced December 9 it is hiring 3,000 more people.
This is how "job creation" works in Nova Scotia: A bunch of mucky mucks get together in a back office at Nova Scotia Business, Inc. and decide to go after highly portable jobs like those at call centres. They then offer a multi-million dollar kickback to a company to locate here, issue a press release congratulating themselves on "economic development" and find some other company to give millions to, justifying their own six-figure salaries.
Meanwhile, in the real world people sign leases, enroll their kids in school, form long-term commitments in their communities. But as the provincial kickbacks run out, the companies up and leave, taking those highly portable jobs to some low-wage paradise on the opposite side of the globe where people work for peanuts and governments give even bigger kickbacks. Nova Scotians are left reeling by the real-world consequences.
This happens time and again. A handful of examples (there are more): Earlier this year, the Indian firm Aditya Birla Minacs laid off 200 people in Port Hawkesbury. The company had received $780,000 in payroll rebates. It has recently announced that it will expand its Indian call centre workforce by 2,000 people.
In April 2008, Teletech Holdings (promised up to $11.8 million in rebates) laid off 485 people in Halifax, just as it expanded in South Africa.
In October 2009, Acrobat Research Ltd. ($1.27 million in rebates, $450,000 in loans) closed its call centres in Cheticamp and Canso, putting 86 people out of work, months after advertising for data analysts in Nairobi, Kenya.
In June 2006, Lightbridge Inc. ($1.6 million in rebates) closed its Liverpool operation, putting 200 people out of work, then expanded in Costa Rica.
Thankfully, the province is "reviewing" its strategy of going after call centre jobs. But it's full-steam ahead on an equally stupid strategy of going after highly portable jobs in the financial services industry. The province has promised Bermuda-based Butterfield Bank $9.1 million, Bermuda-based Olympia Capital $1.5 million and Cayman Island-based Citco Fund Services $7.35 million to set up shop in Halifax.
Sure, with salaries around $70,000, jobs at these companies are more attractive than near-minimum wage call centre jobs. But while NSBI puts out a lot of nonsense about these companies moving here because of our university-educated workforce and---really!---our time zone, make no mistake: Besides the lure of government kickback dough, the companies are moving their operations here primarily to save on labour costs---the same jobs would pay $200,000 in New York.
And, when the kickbacks run out, just like the call centres, the financial service firms will up and leave and set up shop overseas. People in India and South Africa and the Philippines and Kenya speak English and go to university, too, and thanks to the wonders of the internet can service clients in North America. They might even figure out those pesky time zone issues by, gee, I don't know, working at night?
Fact is, paying for jobs is a sucker's game. There is no silver bullet for real, long-term economic development. It takes investing in our own people, not foreign corporations with no allegiance to anything but the bottom line.
And it starts with the mundane necessities of life: agriculture; energy efficiency; education; social services. Only after that solid foundation is built, can the private sector grow strong above it.