Submission: Legislative Committee hearing on Bill 7

Thank you for the opportunity to speak to you today. I hold the Errol Black Chair in Labour Issues at the Canadian Centre for Policy Alternatives. On behalf of the Chair, I wish to speak in opposition to Bill 7, The Labour Relations Amendment Act.

I will first explain why unions are beneficial for all workers and for Canadian society, and so should be afforded a strong legislative and regulatory framework. I will also offer evidence that lower union density in Canada and across the developed world has led to greater inequality and contributed to slow economic growth.

Next I will offer evidence on how eliminating the Card Check will make it more difficult for workers to organize and potentially cause Manitoba’s union density rate to decrease. Given that unions are essential to industrial and electoral democracy and fair wages, I conclude that Bill 7 is not in the best interests of Manitobans.

Unions Boost Democracy

The democratizing effects of unions are indisputable. Collective bargaining is integral to industrial democracy, itself a correlate of political democracy.

Former U.S. Supreme Court Justice Louis Brandeis once notably declared:

Collective bargaining is today the means of establishing industrial democracy – the means of providing for workers in industry the sense of work, of freedom, and of participation that democratic government promises them as citizens.

Industrial and political democracy are closely related. When union density is high, other democratizing influences such as progressive taxation and better income security programs such as unemployment insurance are also more prevalent. Workers who participate in democratic processes at work are more likely to vote in political elections, and be more informed about issues affecting society at large. Even the Conference Board of Canada believes that:

Labour’s influence has produced public policy improvements in workplace health and safety in the workplace, pension benefits, wellness, and literacy, to name just a few areas. However, labour’s ability to exert pressure on behalf of workers will undoubtedly be impacted by a declining base of members and the resulting loss of union dues[i].

So, to attack and weaken unions is to subvert the institutions Canadians most value, and to challenge democracy itself. It is also to attack workers’ financial security and, in the process, the country’s economic health.

Shared Prosperity

More and more empirical evidence is emerging showing that all workers’ wages are tied to union density. If you draw your attention to the graph, prepared by economist Jordon Brennan, an interesting story emerges. This graph plots Canada’s union density and the national wage bill over a 90 year period. The national wage bill is the total amount of wages paid/year to the bottom 99% per cent of all workers, unionized or not as a percentage of gross domestic product (GDP). The first thing that jumps out is how similar the trajectories of the two lines are. The correlation coefficient is 0.78, which means that we can be confident the two issues are related. The fact that we see the same relationship over almost a century speaks to the strong likelihood of causation. As Brennan states, “It isn’t an historical accident that average hourly compensation stagnated and the national wage bill declined from the mid-1970s onward. The main driver of shared prosperity for all workers – unionization – declined after 1975.”

The same phenomenon is found in other developed countries. Such noteworthy economists as Nobel Prize winning Paul Krugman and Joseph Stiglitz have written about the link between growing inequality and declining unionization.  The OECD, IMF[ii] and Conference Board of Canada have all recognized that declining unionization is increasing inequality around the world[iii].

I will now turn to evidence showing how eliminating the Card Check system negatively impacts the labour movement.

The Trouble with Eliminating Card Check

Eliminating automatic certification on the basis of proven support by most workers will make it harder for workers to unionize and easier for employers to intimidate workers before and during the vote. According to Senator Joan Fraser who looked at studies from Canada and the US:

Study after study shows two effects (of eliminating card check). One is that there are fewer applications for certification; another is that the success rate of those applications that are made diminishes.

According to Canadian research done by labour expert Chris Riddell when studying unionization in British Columbia:

It has been argued that mandatory elections reduce certification success. A key factor believed to underlie the effect of voting is management opposition to the certification bid. [. . . ]. Management opposition – as measured by unfair labour practices – was at least twice as effective in the voting regime as in the card-check regime[iv].

Research by the Economics Department of McMaster University found that:

The evidence suggests the type of union recognition procedure has a substantial effect on certification success and therefore it is likely more difficult for unions to maintain or to expand membership under mandatory representation votes than under card check. This helps explain why the labour movements in North America and the U.K. have supported card check recognition procedures while business has preferred mandatory votes. The evidence also provides empirical support for the argument made by other researchers that differences in recognition procedures between the U.S. and Canada may provide a potential explanation for why Canada’s unionization rate is higher than that of the U.S[v].

Further testimony comes from Osgoode Hall Law School’s Dr. Sara Slinn in her report to the Ontario Ministry of Labour[vi]. Dr. Slinn found that during certification votes, management use of ULPs increased the likelihood of election delay and that the delay had a negative correlation with the likelihood of certification. She also cites research from Bentham demonstrating that:

[. . .] employer resistance to unions is prevalent and specific forms of employer resistance have significant negative effects on certification success, early decertification, first contract settlement and likelihood of third party assistance in first contract negotiations.

Andrew Sims, Q.C., Professor Rodrigue Blouin and mediator Paula Knopf made up the task force that reviewed the Canada Labour Code[vii]. Their oft-cited report found that

In our experience, Canadian trade unions exhibit a high level of internal democracy and genuinely represent the interests and wishes of their members. [. . .] the submissions we received from representatives of both management and labour convince us that trade unions continue to demonstrate creativity, responsiveness and democracy.

On the topic of Card Check, the task force found that:

We are not convinced that the statute should make representative votes mandatory. The card-based system has proven to be an effective way of gauging employee wishes and we are not persuaded that it is unsound or inherently unconvincing to employers. [. . .]. It reduced the opportunities for inappropriate employer interference with employees’ choice.

Secret Ballots

We hear time and time again that if the secret ballot vote is sufficient for political elections, it should be good enough for union certification votes. This is a specious argument; certification votes are not the same as elections. First of all, politicians cannot intimidate voters before an election and cannot punish voters after an election. Politicians need to convince thousands if not millions of citizens to vote for them; a certification vote can involve very few people under the control of an employer who controls a primary aspect of workers’ lives: their access to work. ULPs can and do influence the way workers vote.

Conclusion

Unions play a crucial role in the interaction between electoral and industrial democracy. This conclusion has been drawn time and time again by the Supreme Court of Canada. There is also compelling scholarly evidence that unions are a strong countervailing force against inequality and economic stagnation. Given the evidence that this bill will make it more difficult for workers to unionize, we urge you not to pass Bill 7.

At minimum we would strongly suggest that this government assemble a committee of experts to review employment standards and labour relations legislation and that changes to the certification process wait until after the review. Such a review was undertaken in Ontario. I would urge to you to pay particular attention to clause 4.3.1.1 Card-based Certification of the committee’s interim report[viii].

Lynne Fernandez is the Errol Black Chair in Labour Issues at the Canadian Centre for Policy Alternatives Manitoba. Submission made October 27, 2016.

References

[i] Conference Board of Canada 2011. Are Unions Relevant in Canada Today? By Karla Thorpe. Available at: http://www.conferenceboard.ca/topics/humanresource/commentaries/11-11-09/are_unions_relevant_in_canada_today.aspx

[ii] IMF – Finance & Development March 2015, Volume 52, No. 1: Power from the People by Florence Jaumotte and Carolina Osorio Buitron . Available at: http://www.imf.org/external/pubs/ft/fandd/2015/03/jaumotte.htm

[iii] According to Jaumotte and Buitron: “Bargaining power of workers and top income shares: Lower union density can increase top income shares by reducing the bargaining power of workers. Naturally, top income shares are mechanically influenced by what happens in the lower part of the income distribution. If deunionization weakens earnings for middle- and low-income workers, this necessarily increases the income share of corporate managers’ pay and shareholder returns. Intuitively, the weakening of unions reduces the bargaining power of workers relative to capital owners, increasing the share of capital income—which is more concentrated at the top than wages and salaries. Moreover, weaker unions can reduce workers’ influence on corporate decisions that benefit top earners, such as the size and structure of top executive compensation”

[iv] Riddell, C. (2004). Union Certification Success under Voting versus Card-Check Procedures: Evidence from British Columbia, 1978-1998. Industrial and Labor Relations Review, 57(4), 493-517. doi:1. Retrieved from http://www.jstor.org/stable/4126680 doi:1

[v] Canadian International Labour Network, 2001.  Labour Market Institutions and Outcomes: A Cross-National Study CILN is a collaborative research venture between the Social Sciences and Humanities Research Council (SSHRC) and McMaster University. Additional funding was provided by the University of British Columbia, the University of Toronto, Queen’s University, York University and Human Resources Development Canada (HRDC).

[vi] Slinn, Sara. 2015. Changing Workplaces Review. Research Project. Collective Bargaining.

[vii]Andrew Sims, Q.C., Rodrigue Blouin and Paula Knopf:  Seeking a Balance. Available at:http://cpress.org/pdfs/SeekingaBalancefull.pdf  

[viii] https://www.labour.gov.on.ca/english/about/cwr_interim/chapter_4_3.php

 

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Filed under budgets, collective bargaining, democracy, economic well-being, Labour, labour market, Manitoba, Uncategorized, unions

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