Air Canada Bargaining and the Fight for Middle Class Jobs

NYC received this notice from Air Canada:

Dear customer, We are committed to averting a strike and are hard at work to reach a settlement with the Canadian Auto Workers (CAW), the union representing Air Canada's call centre and airport customer service agents in Canada.

What will happen if a strike occurs?

Rest assured that we will continue to operate our regular schedule. Existing bookings will be honoured and future bookings welcomed. We are also implementing a contingency service plan to minimize impact to our customers in the event of a strike.

The best choice is to not use Air Canada if a strike happens!

By Jim Stanford 
Progressive Economics Forum
June 11th, 2011

Air Canada workers rally at Pearson Airport June 9, 2011.

CAW members at Air Canada are coming down to the wire in their bargaining with the company, with a strike deadline set for this Monday at midnight.

It’s really the first “normal” round of bargaining the workers have been able to undertake since 2000. Since then, they’ve been through two rounds of CCAA court-supervised restructuring bargaining, one arbitrated wage settlement in 2006 (since a condition of CCAA exit was no strikes for 6 years), and an emergency contract extension in 2009 (when the global financial crisis threatened to put Air Canada right back into CCAA).

Over that decade, the workers have lost 10% of their real wage, several non-wage benefits (including considerable paid time off), and watched their pension fund become precariously underfunded due to repeated contribution holidays negotiated to address Air Canada’s cash flow challenges.


One round of bargaining can’t repair all that damage, of course, but the CAW members (like other Air Canada workers) are darned determined to at least start heading in the right direction. Air Canada, in contrast, seems to have become “hooked” on repeated concessions as a core feature of their business model. Despite decent profits, a lock on high-yield business travelers, and a growing global reputation for quality, the company has made enormous demands for still more concessions, including outsourcing, more part-time work, and pension reductions (including eliminating defined benefits for new hires, which inevitably means eliminating them for everyone).

The union has portrayed the fight at Air Canada as symbolic of the broader challenge we face to defend middle class jobs in the whole labour market. If you can’t count on a decent wage, benefits, and pensions at a world-class company like Air Canada, where can we possibly hope for them? (The same could be said of the current confrontation at Canada Post, the fight against privatization of public services, and many other current union campaigns.) Of course, a so-called “middle class” job is simply a working class occupation in which those doing the work have managed to win a decent standard of living. And that’s exactly the point: the continued exercise of union power (and other instruments of labour market regulation) is essential to preserve the very idea that workers are entitled to a decent income — rather than scrabbling at the bottom of a “deregulated” labour market.

To that end, here is an op-ed from today’s Vancouver Sun by Ken Lewenza, defining the fight at Air Canada as a fight for the middle class everywhere:

Stormy Skies for Canada’s Middle Class

By Ken Lewenza

The Canadian middle class is in crisis. Each year, its share of our national income shrinks, relative to that of the richest few. Recent reports show Canada’s wealthiest one per cent accounted for 32 per cent of all income growth between 1997 and 2007 – the most in recorded history. Thanks to skyrocketing executive compensation levels and an aggressive attack on well-paid, family-supporting jobs, the gap between the rich and the rest of us grows ever wider.

Nothing epitomizes this situation more than the recent history of Air Canada. In the last decade, Canada’s national carrier has suffered unprecedented financial turbulence, including run-ins with bankruptcy protection. According to the Canadian Auto Workers’ internal research, over the same period Air Canada’s CEO at the time, Robert Milton, pocketed $86 million – while thousands of front-line employees were forced to take cuts, to the tune of about $10,000 per year, including an erosion of real wages, lost vacation, paid lunch breaks and other benefits.

Air Canada workers made major sacrifices. The company plowed ahead with plans to do more with less. Work intensified and productivity skyrocketed. Measured in seat miles delivered per employee, labour productivity at Air Canada jumped 75 per cent. Yet many who had earned a good (albeit modest) salary saw their quality of life and working conditions decline.

This storyline has played out in too many workplaces across Canada. “Good” jobs are on the wane, in all sectors – whether in factories, service shops, office buildings, or among the professional classes. Many have come to accept the logic that jobs in the “new economy” are inherently insecure. Pension plans exist only in fairy tales, and personal sacrifice has become the new norm. We accept the mantra that the next generation of workers will be worse off, and assume they simply aren’t in a position to demand better.

This attitude must change – for everyone’s benefit. The squeezing out of Canada’s middle class has major implications for our collective prosperity. Middle-class incomes drive economic growth, pay for public services, support healthy families, and build communities. Society cannot subsist on crumbs left over by the rich. Workers cannot accept the logic that relentless cuts and constant sacrifice will bring better days ahead.

Air Canada employees have already drawn a line in the sand during their current contract talks. They’ve resolved to make up ground on lost wages. They’ve rejected a program of two-tiering, which would make second-class workers of future generations. And in a recent show of solidarity, the CAW, the Canadian Union of Public Employees, and the International Association of Machinists and Aerospace Workers (three unions representing the lion’s share of Air Canada employees) rejected a company proposal to undercut and eventually eliminate the current defined benefit pension plan. By saying “no” to these demands, Air Canada employees are facing down the corporate-led riptide that’s pushing Canada’s middle class to the brink.

With the company’s return to profitability in 2010 and a brighter future on the horizon, Air Canada’s demands for more cuts, fewer full-time jobs, and outsourcing appear baseless. It’s made worse by CEO Calin Rovinescu’s hefty 76 per cent pay hike that landed him $4.55 million in compensation last year, a defined benefit pension that would pay him $351,000 per year at age 65, and a $5 million retention bonus he would be paid just for staying on the job until March 2012. His insistence that workers accept less reeks of hypocrisy.

Not surprisingly, the frustration and anger among Air Canada employees is reaching a breaking point. Demonstrations have been taking place in communities across Canada, with impressive turnouts. CAW members recently voted 98 per cent in favour of strike action, as a last resort. They know that what’s at stake in these negotiations goes far beyond their own self-interest.

Air Canada is recognized as a world-class carrier and has received dozens of awards for quality service, largely because of its hard-working employees. It’s time they receive their fair share.

The Air Canada battle is a principled fight about fairness and justice. It’s about reclaiming workers’ rights to good jobs, as well as our collective ability to demand better from employers and government. It’s about closing that ever-widening wealth gap and strengthening the middle class, for all Canadians.