Collective Bargaining: Neither Anachronistic, Nor Unsustainable

March 1 st 2003

The Larry Sefton Memorial Lecture is organized annually by the Centre for Industrial Relations at the University of Toronto in memory of the contributions made by this prominent leader of the United Steelworkers union and its Hamilton area Local 1005 during the 1950s and 1960s. The 21st Sefton Lecture was delivered on March 6, 2003 by Tim Armstrong, Q.C., a prominent Ontario arbitrator, former Labour Board chair, deputy minister of labour and industry, and Ontario agent general to the Pacific Rim. This edited summary of the address is reprinted with the permission of Mr. Armstrong.

Rather than focus on a single topic, I intend to pose five questions relating to contemporary industrial relations. I will give you my views on each of them, in the hope that I am able to provoke some lively discussion.

1. Has the case for unionization and the nature of collective bargaining in Canada changed since Larry Sefton's days? If so, in what ways? To the extent that there has been a decline in union density, what are the reasons?

The popular conception is that globalization and the resulting increased competition from low wage, developing economies has cast serious doubt on the viability of the collective bargaining systems in the developed OEDC countries. This thesis is examined at some length in a 2002 World Bank study, "Unions and Collective Bargaining: Economic Effects in a Global Environment." The authors observe that if the right to collective bargaining can be inconclusive, there are some cautiously-stated positive observations in support of collective bargaining regimes.

The study notes that there is a positive correlation between higher GDP and the presence of freedom of association and collective bargaining. The question of the extent to which collective bargaining contributes to the superior GDP performance is, however, difficult to isolate.

There is a clear implication that for unions to maintain their relevance—and the support of existing and potentially new members—they must move away from their traditional adversarial postures and adopt more cooperative, collaborative, and flexible approaches to collective bargaining and contract administration. Some say this is already happening and that by permitting flexibility in workplace organization, unions in return are being given a significant role in strategic business decisions.

When employees are convinced, through experience, that their union is capable of successfully protecting and enhancing their legitimate interests, they will be much more likely to accept the union's call for support for productivity-enhancing management initiatives that might otherwise be resisted.

Indeed, in this particular period, when less reliance can be placed on government to intervene, either by statute or through enhanced programs, to provide support for workplace standards and their enforcement, it may be argued that organized labour has an even more critical role to play in guarding against the deterioration of equity, fairness, and safety in the workplace.

2. Aside from providing equity for the workers and efficiency and competitiveness for the enterprise, how well is the broader community—i.e., the public interest—being served by collective bargaining?

Remember that we all have a stake in the outcome of orderly collective bargaining in the key sectors of our economy, public as well as private. From a public interest perspective, it is important that key conflicts are resolved equitably and expeditiously, without the economic loss, inconvenience, and disruption that occurs when bargaining fails and strikes or lockouts ensue.

3. Apart from the bargaining process and the effect it is having on wage levels and working conditions, both directly for the organized employees and indirectly for the unorganized, how effective are existing mid-contract dispute resolution processes working—i.e., the grievance and arbitration processes—and what scope, if any, is there for improvement?

An enormous body of arbitral jurisprudence has developed over the years since I was first involved as a counsel in rights arbitration in the early 1960s. This development, in my view, is a mixed blessing.

On the one hand, there is merit, psychological and practical, for both sides to have the benefit of clearly articulated written reasons for decisions. Also, there is a troubling tendency on the part of those of us who arbitrate to apply overly legalistic reasoning to some issues—a tendency not in keeping with either the intent of our labour legislation or the interests of the parties.

A couple of years ago, Justice Winkler made the case for simplifying and streamlining the labour arbitration process. Short, snappy reasons, issued with the least possible delay, serve the best interests of both parties.

I also agree with a related Winkler theme, namely, the desirability of a more interventionist, facilitative role by arbitrators. More often than not, it becomes clear from the opening statements what the contours of a fair solution are likely to be. Barring objection from counsel, arbitrators should be encouraged to engage in active mediation efforts in those cases where they have a pretty clear idea what the outcome of a fully-litigated case would likely be.

4. Do the parties approach organizational change and the participation by employees in matters traditionally thought to be within the exclusive prerogative of management?

The central question can be formulated as follows: Is it better to follow Taylorism, where the command and control style of management prevails, maintaining a clear demarcation between the role of managers and workers? Or are those proponents of organizational change correct when they advocate greater employee involvement in work design and redesign, with semi-autonomous, multi-skilled work groups or teams having responsibility for work assignment and self-assessment?

Over the past decade, I have detected little appetite on either side for the revival of organizational change experimentation involving structured union-management collaboration. Where change has occurred, my sense is it has by and large been imposed by management, sometimes with the union's passive acquiescence and sometimes over its objections. I would be less than frank if I were to say that my experiences at Interlink and Algoma have convinced me that employee ownership is the wave of the future.

Even in the early years following the first restructuring at Algoma in 1992, I saw no radical move towards a new system of co-management, either on the shop floor or in the executive suite. There were certainly improved communications, more open information flows, greater cooperation in safety and environmental matters, but traditional collective bargaining continued, as did the grievance and arbitration process, as well as the other hallmarks of a traditional adversarial relationship.

I believe that whatever the future may hold, employee ownership will remain a ripple on the surface of Canadian industrial relations, at least for the foreseeable future.

5. What role are unions currently playing in formulating, or influencing, public policy in Canada, not only in reference to labour relations laws, but also on the broader spectrum of laws that are of principal interest to union members—e.g., health care, education, social assistance, the environment and, since Enron, corporate governance?

I should declare my strong bias on this issue up front. I am an enthusiastic, unreconstructed and unapologetic neo-corporatist. I believe that in the long run—when, as Keynes reminded us, we will all be dead—the most satisfying, productive, efficient, and equitable societies will be those where public policy is formulated in a truly collaborative manner—where governments, management, and labour sit down together and work through a policy agenda where the interests of stakeholders are, to the extent possible, balanced and reconciled in a fair and workable manner.

With rare exceptions, the federal government has not had a convincing record of engaging in meaningful consultation.

Critics of tripartite or multipartite consultation argued that it "panders to special interest groups." The federal government, in particular, seems to favour town hall type forums, e-mail dialogue, and other methods of so-called grassroots consultation. This approach, to me, is a poor substitute for drawing upon the very considerable store of institutional knowledge and expertise in a systematic, structured way. Holding public meetings, soliciting e-mail comments, and other ad hoc populist and staged consultation events are all essentially public relations exercises.

I referred earlier to the Japanese consultative model involving labour and management. I have written and spoken elsewhere about how this system operates in practice. Sceptics will say that the Japanese economic system has broken down and is now largely dysfunctional. For those who know Japan, and are familiar with its resilience, this is at best a premature judgment on an economy which, in the 50 years following the Second World War, experienced the most rapid economic growth of any nation in history and is still the second largest and most powerful economy in the world. And the participatory role played by both labour and management, collaborating with the Japanese government in broad policy formulation, contributed to that remarkable success story.

In closing, let me address the thread that runs through all five questions, namely, the evolution of collective bargaining in Ontario and its present state. The assumption that globalization has made collective bargaining in the developed nations anachronistic and unsustainable is not borne out by any empirical evidence of which I am aware. To the contrary, the study by the World Bank—some would say an unlikely source of support for the merits of unionization—indicates otherwise. Nevertheless, most agree that there is a need for the parties and for the system to adapt to and accommodate rapidly changing conditions—and especially to address the need for flexibility and innovation, the imperatives dictated by the new global context in which we are all operating.

 

Tim is a former Ontario arbitrator, Labour Board chair, deputy minister of labour and industry, and Ontario agent general to the Pacific Rim. He is the Toronto Liaison Officer for the Japan Bank for International Cooperation.

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