Union Woes

It has been a bad week for organized labour. Michigan has become the 24th state to adopt “Right to Work” (RTW) legislation, which allows individual employees to opt out of union membership. The thinly disguised goal is to diminish union influence.

Some would argue that Michigan had no choice. For the past decade while automobile plants have been shuttering in the rust belt states such as Michigan, Ohio, and Indiana there have been new plants built in southern states that have had RTW legislation for years.

Union leaders are understandably upset. Michigan, birthplace of the United Auto Workers and the very cradle of organized labour in the United States, may be the tipping point leading to a major long term change in North American labour relations. Faced with weakened unions, employers will find ways to reduce pay rates. For example, Caterpillar announced in January the closure of its locomotive plant in London, Ontario and sent the jobs to Muncie, Indiana where the workers will make half as much.

The harsh reality is that there are lots of workers in the US willing to work for less than UAW wages. And employers are glad to have not only the savings in pay but also the freedom to make the management choices they feel are needed.

The only silver lining for employees is that their factories should become more competitive and therefore less vulnerable to closure the next time there is a downturn in car sales. In fact there may be a reversal of the downward trend in manufacturing jobs south of the border.

The impact in Canada will be felt first in Ontario. If RTW legislation allows carmakers to drive down US pay rates, all of the auto plants in Ontario will be at risk. Ontario Progressive Conservative leader Tim Hudak, currently leading in the polls, says he will implement similar legislation if elected.

Even if RTW will increase the number of manufacturing jobs, one can question whether the growing trend is welcome. What cannot be questioned is that it is here and will have a profound impact on employer choices about where to make new investments in North America.

Thoughtful union leaders here and elsewhere support management efforts to keep their plants productive and competitive. This works well in Germany, which has been able to maintain a strong number of well-paid unionized manufacturing jobs.

Others seem to be stuck in a historical narrative of class struggle. If its website is any indication the Canadian Auto Workers is, unfortunately, in the latter camp.

Nova Scotia must accept that labour legislation is an important factor in attracting jobs.  The recent imposition of first contract arbitration, opposed by virtually every large private employer in the province, sends the wrong signal to others thinking of coming here and to those already here who are considering expansion. Supporters of the legislation point out that there have been exactly zero applications so far. If so, why create an irritant to solve a non-existent problem?

At a broader level it must be accepted that the emerging RTW trend will represent a threat to manufacturing jobs here that could be done elsewhere. The best way to deal with that threat is for employers, union leaders, and government to constantly look for ways to improve competitiveness.

The same cooperative commitment to productivity could bring enormous benefits in the public sector, where unionization rates are much higher.

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