The Velvet Glove Comes Off Harper Government’s Labour Relations Agenda

By Jim Stanford 
Progressive Economics Forum
June 22nd, 2011

The Iron Heel by Jack London

Even though labour relations is largely a provincial responsibility in Canada, we were worried about what would happen in this field under a Harper majority. And it didn’t take long to find out.

In the disputes at both Air Canada and Canada Post, the government waded into the fray in a pre-emptive and utterly one-sided manner. With both the timing of its intervention, and the details of its proposed legislation, the government in both cases was clearly acting to assist the respective employers to take away long-standing features of the existing contracts, and facilitate the downward ratcheting of compensation.

At Air Canada, the CAW (which represents 3800 customer service and reservations agents) and the company had been bargaining toward a new contract for several months. But by the time the two parties reached the deadline of midnight June 13, they were at loggerheads. The main sticking point was the company’s demand for dramatic changes in pensions: including major cuts in pension benefits for existing workers, and the complete abolition of the defined benefit pension system for future hires.

Just a few hours after the strike began, the Harper majority government indicated that it would intervene to end the strike and arbitrate an outcome. This was an unprecedented intrusion into free collective bargaining.

Air Canada, of course, is a private corporation. These were free, legal negotiations between two private parties, and the work stoppage was fully legal.

The government’s claim that the work stoppage at Air Canada would jeopardize Canada’s economic recovery was laughable. I doubt you could find two economists in the whole country who believe that this strike was truly threatening the recovery (such as it is!).

For a government that supposedly believes in the virtues of private business and the free market, this intrusion was surprising. Worse yet, the government’s intervention clearly supported the company’s position, by setting in motion a loaded arbitration process that would clearly have assisted the company in reducing pension benefits.

The two sides continued bargaining, despite the complication posed by the government’s intrusion. By June 21 a tentative agreement had been reached that largely preserved pension benefits for the existing workforce. The matter of pensions for future hires will be sent to a mediation and arbitration process that will be more neutral than the one contemplated by the government legislation.

Harper government officials claim that their actions led to a quick settlement of the strike. In reality, the government’s intervention made this bargaining more difficult, and probably contributed to the strike. And the intervention will likely contribute to work stoppages at other bargaining tables in the future, because of its impact on the normal processes of collective bargaining.

Even before the CAW reached the June 13 strike deadline, it was clear the company was backing away from trying to reach a deal. Now we know why. The company was in contact with government officials, and had a strong indication of what the government had in store.

They knew that the government’s intervention would tip the bargaining field in their favour. In this way, the government actually contributed to the strike, by hardening the company’s position. Now that companies know the government will take their side in this way, the dynamics of future collective bargaining will be altered, and the risk of future conflicts exacerbated.

In essence, the government was willing to do Air Canada’s dirty work for them. It has taken an even more Machiavellian approach to the dispute at Canada Post, where the union was careful to avoid a full work stoppage. But when management locked out the workers, then the government jumped in again – proposing wage increases that were even lower than the company was already offering!

Every single worker in Canada, whatever sector they work in, is threatened by the government’s unprecedented actions. Public sector or private sector. Essential service or not.

The government has thrown away any guise of neutrality. It has abandoned the principle of leaving free collective bargaining up to the private parties. It invokes phony arguments about the economic recovery, to justify virtually anything it wants to do.

We must also remember that the government could play a more constructive role in resolving the underlying problems that have contributed to theconflicts at Air Canada, Canada Post, and many other bargaining tables.

We need to expand the Canada Pension Plan, which is the most universal, portable, efficient, and secure pension system in the land. We need stable, long-run funding rules for defined-benefit pensions, and an insurance system to backstop pension plans when companies get into trouble.

These are things that government could do to strengthen workers’ pensions, and improve the chances that hard-working Canadians can retire with dignity and security. Instead, this government just jumped right into the middle of collective bargaining, clearly on the side of corporations, to help take pensions away from workers.

I was under no illusions about how this majority government would wield its power. But even I am shocked.