Job losses to overseas labour markets leave unions little room to manoeuvre, report says
This will Be the year management negotiators can go into collective bargaining and make demands for productivity improvements while unions, happy just to hold onto jobs, may have no choice but to listen, according to a report from the Conference Board of Canada.
“Every indication points to a tough year for unions, with the pendulum of power remaining firmly in management’s camp,” states the business think-tank’s Industrial relations outlook: Job security versus productivity.
Globalization and trade liberalization have been changing the context for Canadian labour negotiations in recent years. Businesses are feeling the pressure of low-cost and high-productivity competition from around the world and need help from unions to meet the threat. According to the Conference Board report, there are signs unions may be willing to co-operate.
Union leaders are increasingly willing to accept that higher base salaries and inflexible work rules lead to plant closures and jobs lost to other countries.
“Thus, unions will come to the bargaining table in a weakened position right from the outset. In addition, unions are troubled by declining membership and raiding disputes,” states the report.
To contain fixed costs, many employers are trying to introduce more variable pay. According to Conference Board research, about 37 per cent of unionized employers have some annual incentive or bonus plan to link monetary rewards with performance.
Unions are more willing to accept variable pay plans on top of general negotiated wage increases.
Plans that are introduced are usually group-based, focusing on group, team or organizational performance as opposed to individual performance.
Employers are also looking to contain benefit and pension costs, which are rising due to increased use of benefits by an aging workforce and poor stock market returns that hurt pension funds.
But unions are eager to improve retirement plans and health benefits for an aging membership. (Unions represent almost 40 per cent of all workers over age 45, while representation is at less than 30 per cent for workers under 45.
Prem Benimadhu, vice-president of organizational performance at the Conference Board, said unions have no choice but to be more flexible and willing to consider management proposals for steps to improve productivity. “The only way they can maintain jobs is by improving productivity.”
If labour is unwilling to accept proposals to improve productivity, companies will end up closing and many jobs will be lost, he said. “Both employers and employees are in the same boat. They have to be able to row together in such a way that eventually both of them will come out winners.”
Union leaders have shown some willingness to accept variable pay proposals but in most cases it is on top of base pay increases which have become difficult for employers to provide. “The whole issue of inflation plus one (per cent) or inflation plus two (per cent) is untenable in this kind of environment.”
He said fundamental flaws in the Canadian industrial relations system are in part to blame for the ongoing posturing between labour and management. The labour relations legislative framework is out of step with the modern economy, he said. It was fine in a closed economy, but now has to change.
“The industrial relations system in Canada promotes adversarialism, it doesn’t promote co-operation,” he said. “It is just not sustainable.”
David Côté, a Toronto-based lawyer with Baker & McKenzie, said he has seen little indication unions are willing to adjust their bargaining positions to reflect changes in the economy.
The only way union leaders can get more security for their members is by ensuring the company is successful, he said.
“Far too often, unions are still back in a 1950’s mentality and I don’t think they are prepared to be flexible. I don’t think they are prepared to be creative,” said Cote. “I think if they don’t start becoming more flexible they risk becoming irrelevant.”
Union leaders must be more willing to consider ideas that in the past have made them uncomfortable. “Pay for performance is one of those ideas,” he said.
Employers may be willing to link productivity improvements to pay increases, but unions for the most part want nothing to do with it, he said. Seniority remains the most important factor in union bargaining, which is inconsistent with pay for performance. “If you are a trade unionist, the more you agree to ideas like pay for performance, the more you are moving away from that talisman of seniority.”
Unions continue to demonstrate a stubborn refusal to listen whenever management tries to explain the challenges facing the company, he said. Whether it is greater competition from the U.S. or abroad or difficulties with fluctuating exchange rates, the union tends ignore them.
“It would be very helpful if unions would be prepared to really listen to what the employer is saying.”
Union leaders just automatically oppose anything that appears to be not in the best interest of their members.
“I don’t think that is a meaningful model for productive labour relations,” he said.
“Without some imagination and creativity, ultimately what will happen is the unions will become irrelevant.” Employers will either leave or go out of business, he said.
Union intransigence is what devastated the Canadian manufacturing sector in the 80’s, he said. It is also making it difficult for labour organizers to break through into the service industry and high-tech sector, he said.
“Unless they are prepared to listen and collaborate more with management, I am convinced that you are going to start to see some pretty significant decreases in the percentage of Canadian employees who are unionized over the next four or five years.”
Peggy Nash, assistant to Canadian Auto Workers president Buzz Hargrove, doesn’t agree that unions are in a weakened state or that they will be happy just to bargain for job security. “Our job as a union is to fight as hard as we can to protect the jobs of our members,” she said, but that doesn’t mean they can’t also be bargaining for improvements to wages and benefits.
The world has changed but not necessarily in a good way, she said. Globalization and free trade encourage manufacturers to go to the sites of cheapest labour. The ability to produce product in China for pennies a day is why businesses left Canada, not because workers are asking for unreasonable base pay increases, she said.
Still unions have responded to the changing economic reality with changes in bargaining positions, asking for more investments in plant infrastructure which lead to productivity improvements.
General Motors invested in its Oshawa, Ont. operation, and it now runs three shifts with high productivity and high profitability. “Our job as a union is to get more of those operations.”
So is the CAW more willing to consider pay for performance provisions? “No, absolutely not,” said Nash. There is no point in tying workers’ salaries to something that workers have little if any ability to influence, she said. “We don’t have any control over those productivity increases,” she said.
“If you are working on an assembly line, how do you make the assembly line go faster? I’m not saying workers don’t have any input into productivity, but the big gains in productivity are in the way work is organized and that is the control of engineers and supervisors.”
She bristles at suggestions the union movement in Canada is out of date and becoming irrelevant.
“Labour flexibility is often a code word for no union or a very meek union,” she said.
When management says they want the union to be more flexible and more co-operative, they actually mean they want workers to give up gains they won in the past. “If we truly want to become less relevant (to workers), then we should stop fighting on their behalf.”
“Every indication points to a tough year for unions, with the pendulum of power remaining firmly in management’s camp,” states the business think-tank’s Industrial relations outlook: Job security versus productivity.
Globalization and trade liberalization have been changing the context for Canadian labour negotiations in recent years. Businesses are feeling the pressure of low-cost and high-productivity competition from around the world and need help from unions to meet the threat. According to the Conference Board report, there are signs unions may be willing to co-operate.
Union leaders are increasingly willing to accept that higher base salaries and inflexible work rules lead to plant closures and jobs lost to other countries.
“Thus, unions will come to the bargaining table in a weakened position right from the outset. In addition, unions are troubled by declining membership and raiding disputes,” states the report.
To contain fixed costs, many employers are trying to introduce more variable pay. According to Conference Board research, about 37 per cent of unionized employers have some annual incentive or bonus plan to link monetary rewards with performance.
Unions are more willing to accept variable pay plans on top of general negotiated wage increases.
Plans that are introduced are usually group-based, focusing on group, team or organizational performance as opposed to individual performance.
Employers are also looking to contain benefit and pension costs, which are rising due to increased use of benefits by an aging workforce and poor stock market returns that hurt pension funds.
But unions are eager to improve retirement plans and health benefits for an aging membership. (Unions represent almost 40 per cent of all workers over age 45, while representation is at less than 30 per cent for workers under 45.
Prem Benimadhu, vice-president of organizational performance at the Conference Board, said unions have no choice but to be more flexible and willing to consider management proposals for steps to improve productivity. “The only way they can maintain jobs is by improving productivity.”
If labour is unwilling to accept proposals to improve productivity, companies will end up closing and many jobs will be lost, he said. “Both employers and employees are in the same boat. They have to be able to row together in such a way that eventually both of them will come out winners.”
Union leaders have shown some willingness to accept variable pay proposals but in most cases it is on top of base pay increases which have become difficult for employers to provide. “The whole issue of inflation plus one (per cent) or inflation plus two (per cent) is untenable in this kind of environment.”
He said fundamental flaws in the Canadian industrial relations system are in part to blame for the ongoing posturing between labour and management. The labour relations legislative framework is out of step with the modern economy, he said. It was fine in a closed economy, but now has to change.
“The industrial relations system in Canada promotes adversarialism, it doesn’t promote co-operation,” he said. “It is just not sustainable.”
David Côté, a Toronto-based lawyer with Baker & McKenzie, said he has seen little indication unions are willing to adjust their bargaining positions to reflect changes in the economy.
The only way union leaders can get more security for their members is by ensuring the company is successful, he said.
“Far too often, unions are still back in a 1950’s mentality and I don’t think they are prepared to be flexible. I don’t think they are prepared to be creative,” said Cote. “I think if they don’t start becoming more flexible they risk becoming irrelevant.”
Union leaders must be more willing to consider ideas that in the past have made them uncomfortable. “Pay for performance is one of those ideas,” he said.
Employers may be willing to link productivity improvements to pay increases, but unions for the most part want nothing to do with it, he said. Seniority remains the most important factor in union bargaining, which is inconsistent with pay for performance. “If you are a trade unionist, the more you agree to ideas like pay for performance, the more you are moving away from that talisman of seniority.”
Unions continue to demonstrate a stubborn refusal to listen whenever management tries to explain the challenges facing the company, he said. Whether it is greater competition from the U.S. or abroad or difficulties with fluctuating exchange rates, the union tends ignore them.
“It would be very helpful if unions would be prepared to really listen to what the employer is saying.”
Union leaders just automatically oppose anything that appears to be not in the best interest of their members.
“I don’t think that is a meaningful model for productive labour relations,” he said.
“Without some imagination and creativity, ultimately what will happen is the unions will become irrelevant.” Employers will either leave or go out of business, he said.
Union intransigence is what devastated the Canadian manufacturing sector in the 80’s, he said. It is also making it difficult for labour organizers to break through into the service industry and high-tech sector, he said.
“Unless they are prepared to listen and collaborate more with management, I am convinced that you are going to start to see some pretty significant decreases in the percentage of Canadian employees who are unionized over the next four or five years.”
Peggy Nash, assistant to Canadian Auto Workers president Buzz Hargrove, doesn’t agree that unions are in a weakened state or that they will be happy just to bargain for job security. “Our job as a union is to fight as hard as we can to protect the jobs of our members,” she said, but that doesn’t mean they can’t also be bargaining for improvements to wages and benefits.
The world has changed but not necessarily in a good way, she said. Globalization and free trade encourage manufacturers to go to the sites of cheapest labour. The ability to produce product in China for pennies a day is why businesses left Canada, not because workers are asking for unreasonable base pay increases, she said.
Still unions have responded to the changing economic reality with changes in bargaining positions, asking for more investments in plant infrastructure which lead to productivity improvements.
General Motors invested in its Oshawa, Ont. operation, and it now runs three shifts with high productivity and high profitability. “Our job as a union is to get more of those operations.”
So is the CAW more willing to consider pay for performance provisions? “No, absolutely not,” said Nash. There is no point in tying workers’ salaries to something that workers have little if any ability to influence, she said. “We don’t have any control over those productivity increases,” she said.
“If you are working on an assembly line, how do you make the assembly line go faster? I’m not saying workers don’t have any input into productivity, but the big gains in productivity are in the way work is organized and that is the control of engineers and supervisors.”
She bristles at suggestions the union movement in Canada is out of date and becoming irrelevant.
“Labour flexibility is often a code word for no union or a very meek union,” she said.
When management says they want the union to be more flexible and more co-operative, they actually mean they want workers to give up gains they won in the past. “If we truly want to become less relevant (to workers), then we should stop fighting on their behalf.”
