Chasing the Jobs Away

A very broad coalition of Nova Scotian employers has expressed concern about the proposed binding arbitration for first contracts. The premier says that their concerns are ridiculous. He should pay more careful attention to them and to the employers who we don’t hear because they have decided against being here.

For restaurants and other employers entirely dependent on local business the possibility of an externally imposed wage settlement threatens their viability if the cost cannot be passed on to customers. The public sector award of 7.1% to nurses will make it even harder for health authorities to deal with their 3% cuts. It illustrates the separation of the arbitration process from economic realities.

But a much bigger concern is with multinational employers who have lots of choice about where to put their plants. In a globalized economy these companies must evaluate all of their future costs when choosing a location. Attracting them to Canada with its relatively high wage rates and expensive currency is not easy. It can only hurt our efforts if legislation adds considerable uncertainty to future labour costs.

The premier has argued that similar legislation is found in many other provinces. Perhaps he has not noticed that the manufacturing sector in Canada has been shrinking rapidly in those provinces. Our competition is not so much in Ontario and Quebec; rather it is in Latin America, Eastern Europe, China, and Southeast Asia.

Thus it is reported that Michelin, arguably our most important rural employer, has expressed concern about the proposed legislation and downgraded Nova Scotia in its attractiveness ratings. If there is another economic downturn where will they look first if a plant has to close? If things turn up why would they invest more here?

Attracting DSME to Trenton had to overcome the ridiculous application of successor rights to a location in an entirely different business that had gone bankrupt years earlier. No wonder buckets of taxpayer money were required to get them to set up shop.

This kind of legislation might be good for unions but not for employees. In the last decade union-friendly Michigan has become an industrial wasteland as GM and Chrysler went bankrupt and Ford nearly so. In the meantime BMW, Mercedes Benz, Honda, Kia, Nissan, and Volkswagen have all built new plants in the more accommodating environments of Alabama, Georgia, and Tennessee.

This step by Nova Scotia’s government is part of a pattern (no doubt to be continued) of union-friendly legislation. If a major industrial employer was considering the establishment of a Nova Scotian plant it might begin by talking to Michelin and DSME . They will hear that our labour legislative environment is unfriendly and likely to get worse. These are voices we will never hear from because they will invest elsewhere.

Is the proposed legislation solving a problem so big that it is worth these risks?