By Bitwave 
Introduction
A front-page article in the Wall Street Journal on December 31st foreshadowed a grim future for Canadian employees. The massive downsizing of middle management positions has become a reality in the United States, and it’s only a matter of time before this trend reaches our borders.
The Perfect Storm of Efficiency, Profitability, and AI
The drive for greater efficiency, higher profits, increased international competition, and the impact of artificial intelligence have converged to eliminate many middle management positions. U.S. managers now oversee three times the number of employees they did in 2017, according to research firm Gartner. LinkedIn’s Workforce Confidence survey found that close to one-third of employees claim to have bosses who are too stressed to support them.
The Canadian Context: Declining Productivity and Higher Taxes
While the situation is dire in the United States, it’s even more critical in Canada. The Liberal government’s policies have led to declining productivity, a widening productivity gap with the U.S., higher taxes, reduced foreign investment, and the Trump administration’s emphasis on reshoring. This perfect storm has made the plight of Canadian employers worse than their U.S. counterparts.
Demotions: A Costly Option for Employers
The Wall Street Journal reports that many U.S. employers are demoting middle managers instead of terminating them outright. However, in Canada, such demotions would be considered constructive dismissal, allowing employees to resign and sue as if they had been fired. This reality makes demotions unworkable for most companies, with the added cost of severance pay.
Advance Notice: A Reasonable Opportunity for Employees
In some cases, advance notice can make sense in the context of demotions where employers wish to retain employees. The length of notice for a demotion is identical to that of a dismissal. Its purpose is to provide an employee with a reasonable opportunity to find alternative employment if they don’t wish to accept the change.
The Unintended Consequences: An Abundance of Management Layoffs
As management layoffs become more frequent, there will be fewer comparable positions available for laid-off employees to secure. This will result in greater severance pay, further exacerbating the plight of Canadian employers and setting up an unanticipated corporate crisis for the next government to contend with.
Conclusion
Howard Levitt, senior partner at Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta, and British Columbia, warns that downsizings are coming to Canada’s often long-tenured middle management ranks. Employers will ultimately have no economic choice but to adapt to this new reality.
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