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Competition or Regulation? Reforming Labour Relations in Canada

Canadian labour relations policy requires a new paradigm to adjust to the realities of labour in the twenty first century. Governments should focus on increasing competition between trade unions, not on expensive and intrusive regulation. A policy focused on competition recognizes the proper limit and role of government and unions, make unions more accountable and responsive to their members, and drives innovation among labour organizations.

Executive Summary

This paper examines the current labour relations policy environment in Canada. In particular, we survey the recent tendency of conservatives to favour increased regulation of labour unions over policy more closely in line with principles which are traditionally associated with conservatives.

We note that both traditional labour unions and conservatives in Canada misinterpret the core task and function of trade unions as political. We argue that recent conservative policy has solidified this misinterpretation. In particular we use Bill C-377 as a case study of the tendency to consider trade unions as political institutions rather than socio-economic institutions. Such an approach leads conservatives to expand government oversight and increase regulation on what should rightfully be understood as private organizations responsible to their members. Bill C-377, we argue, sets a worrying precedent for other private organizations, and is out of line with conservative principles. Further, its contents, even if passed, will not accomplish the stated and desired policy ends of its supporters. It is more likely, we argue, to develop into an expensive and intrusive piece of legislation similar—if not in scope, then in function—to the gun registry.

We argue that competition rather than regulation is the proper response to the antipathy and overly political character of traditional trade unions. Competition, we argue, will compel unions to focus on their rightful task—representing workers—and will mitigate the negative effects of trade unions’ use of their members’ dues. It will also have the positive effect of driving unions to be more accountable to their members, more innovative, and more likely to serve as positive contributors to economic life in Canada.

Introduction: The Current Labour Relations Landscape

Conservative Labour Relations Policy—Context

There is no love lost between traditional labour unions in Canada and the conservative government. The relationship between labour unions and conservatives is marked by mutual suspicion, distrust, and enmity.

If you believe Ken Georgetti, the president of the Canadian Labour Congress, “There is a class war going on out there.” For Georgetti, and for the Canadian unions and union federations and councils he represents, the sides in this war are clear. “For too long we’ve been on the losing end. . . . We have to get our members prepared for a major fight against the goals of the new majority Conservative government.”

Labour unions point to conservative legislation that affects what they consider their legitimate work—collective bargaining—as reason for their distrust. They point to conservative interference in the collective bargaining process as evidence that conservatives are explicitly targeting unions. The conservatives have ended several labour disputes with back-to-work legislation since 2006, most recently in the case of Canadian Pacific Railway Workers, but also in that of workers at Air Canada and Canada Post. Union leaders see back-to-work legislation as one aspect of a larger programme that includes the cuts being made to the federal public service, various provisions in the omnibus budget bill including the repeal of the Fair Wages Hours of Labour Act, changes to the temporary foreign worker program, and changes to employment insurance. These make up the key moves in what the CLC and its sub groups believe is a “war on labour“.

This rhetoric has not been lost on Canadian conservatives. Nor have they failed to notice the CLC’s strong and vocal support for the NDP-Liberal-Bloc coalition in 2008, including support from unions representing public sector workers who are by definition supposed to provide neutral advice to, and implement the program of, the government. Likewise they are well aware of the institutional ties the CLC and its member unions have with opposition parties—particularly the NDP. Conservatives—both federal and provincial—know that in elections and in the day-to-day hurly burly of politics, labour unions claim to act on behalf of working people, but are de facto political operatives for the opposition. Union representatives leave their bargaining units to campaign on behalf of the opposition, and union funds fuel the campaigns against them. Conservatives point to organizations as the “Working Families Coalition” in Ontario as the best example of how labour acts as a proxy for opposition parties. Labour unions, they say, function not as economic institutions, but as extensions of the party across the aisle.

Competing Conservative Paradigms: Regulation or Competition?

Despite this, conservative policy has tended to prioritize national economic growth, and the implications of their policy on labour unions have been tangential, not central. Labour relations law—particularly insofar as it directly affects union organization—has not, until very recently, been high on the conservative agenda.

Where conservative policy has overlapped with labour relations it has come in the form of back-to-work legislation. The government’s rationale for such legislation is that the affected industries are of key importance to broad swathes of the Canadian economy. The Parliamentary Secretary to the Minister of Human Resources and Skills Development and to the Minister of Labour, Kellie Leitch, sums up the government’s approach succinctly. This is in response to the labour dispute between CP Rail and the Teamsters:

We are again faced with a work stoppage that could do enormous damage to our economy. Once again, we have to take measures to protect our national interests in this period of economic uncertainty. . . . We need to be careful if we are to maintain our progress and promote economic growth. We cannot afford to have major labour disruptions. We have so much potential. A labour stoppage in any key sector of our economy would be a serious impediment to our growth and recovery.

Many Canadians doubtless appreciate the government’s zeal for a strong and growing economy, and in difficult economic times the Canadian public tends to feel less sympathy for unionized employees engaged in such disputes. Some might go so far as to welcome government regulation of disputes between private interests, especially when many other private interests—workers’, business owners’, and others’—are at stake.

However, the movement of Bill C-377: An Act to Amend the Income Tax Act (Requirements for Labour Organizations)—through parliament takes the government’s approach to regulation of labour relations in Canada in a different direction. While it should be noted that Bill C-377 is a private members bill and thus not the official policy of the government, it moves beyond the stated scope of protecting the economy and into the realm of regulation of private associations and markets. However, the back-to-work legislation and Bill C-377 have one thing in common: they both serve as examples of government regulation—some might say interference—in labour markets, and the businesses and unions which are key players in these markets.

What is missing in the current context is recognition by all parties that collective bargaining is an economic activity and that the institutions engaged in collective bargaining—unions as well as business—should treat it as such. Both conservatives and trade unions appear to accept the premise that unions are more political organizations than socio-economic ones. But is that premise valid?

We suggest that discussion of labour relations in Canada requires a re-evaluation of this premise and the recovery of the labour union as socio-economic institution. If this premise is accepted, we argue that a new range of policy options will become available to the government. The introduction of market forces—particularly the innovative force of competition—rather than regulation should serve as the mark of labour relations policy.

If the aim of government policy—and particularly that of Bill C-377—is to make unions more accountable and, as a desirable side-effect, to significantly reduce the amount of time and money unions devote to political activities, then existing accountability measures are indeed inadequate. The solution, however, is not to impose onerous public reporting requirements on unions, but to make them more accountable to union members whose interests they exist to represent and protect. There are numerous methods of accomplishing this—including ensuring that knowledge of union spending on political activities is made available to their members. But the most effective way to accomplish this is to increase competition among unions. Workers ought to be empowered to replace unions that spend their union dues on partisan political projects with those that do not. Doing so would make Canada’s system of collective labour representation self-regulating, which is far preferable to even greater government interference in the operations of the labour market.

Unions must be accountable to their members, but not, we believe, to anyone and everyone. To force them to report all of their expenditures to the government is to grant the very premise—that unions are primarily political organizations—which the government rightfully wishes to avoid.

Proponents of Bill C-377 suggest that the deduction of dues from the taxable income of union members, as well as the exemption of trade unions from paying taxes, is sufficient reason for the reporting requirements listed in Bill C-377. But it is clear from other areas of the tax code that tax deductions and exemptions do not transform private institutions into public ones. A variety of organizations enjoy tax benefits of one kind or another, including professional associations, corporations, and charities, but still their financial information is not made available to the public. If public disclosure is required, it is of the broad sort that aims to ensure that the public’s interest is maintained. Government has traditionally believed that shareholders, donors, and members will hold these organizations accountable and protect their own interests. And rightfully so. Like unions, these are private, economic, not public, political institutions. The monies given to trade unions should be considered personal contributions to economic success, just as funds contributed to any professional association are considered a part of a business’s overall program of success.

Proponents of C-377 suggest that labour unions—because their ability to draw dues monies from their members is protected by law—are different from these voluntary organizations. Terrance Oakey of Merit Canada, a key backer of the bill, suggests that “In terms of Bill C-377, there’s a key distinction between any voluntary member organization and a labour organization. It’s not a condition to run a business in Canada to be a member of Merit Canada.”

While it is true that there is a distinction, it does not follow that this distinction is grounds for the public reporting of expenditures sought in Bill C-377. Workers are still free under Canadian labour law to decertify their union or to change unions. In fact, what follows most closely from Oakey’s argument is to increase the ease and ability of workers to choose the organization which can best represent their interests in the workplace. In other words, competition, rather than intrusive regulation which sets worrying precedents for other civil society institutions like business, industry associations, and charities, is the best policy.

Before we proceed, it is perhaps best to review the contents of Bill C-377 and to explore the various philosophical approaches to labour relations in Canada by conservatives.

Below, we explore the contents and rationale for Bill C-377 and the legislative debate surrounding the bill. We then proceed to present a case for collective representation of labour in Canada and elaborate on ideas of how to improve labour relations in a way that is consistent with conservative principles of governance, labour, and economics. Toward the end of this paper, we reiterate the benefits of taking a substantially different, yet positively more conservative approach to the problems that Mr. Hiebert’s bill intends to solve.

Bill C-377: Contents

It is generally acknowledged by conservatives that the bill extends public reporting for unions far beyond that which is required for other institutions which enjoy the same tax benefits as unions. The rationale for this singling out of unions is provided by the main proponents of the bill. For instance, Terrance Oakey, president of Merit Canada, claims that the bill aims to and will in fact improve unions by “restoring the rights of workers to know and control how their dues are spent.” Merit is a coalition of open shop construction associations and a prominent interest group advocating for the passage of the bill. Various construction and other unions are, not surprisingly, opposed to the bill. Also in favour is the Canadian Federation of Independent Business (CFIB). Both Merit and the CFIB point out that many workers are forced to pay full union dues regardless of whether or not they want to be union members and believe that this bill will help to solve this problem.

Russ Hiebert’s private member’s bill, “Bill C-377: An Act to amend the Income Tax Act (Requirements for Labour Organizations),” which passed second reading on March 14 of this year, is intended to make unions more transparent and accountable to the public for the tax benefits they enjoy. To that end, the bill would require that unions not only provide annual balance sheets and income statements to the Minister (s. 1.(3)(a)), but also detailed statements of “all transactions and all disbursements” over $5000 (s. 1.(3)(b)). The latter includes, inter alia:

  • all disbursements on labour relations, political, lobbying, organizing, collective bargaining, and legal activities;
  • conference and convention activities, education and training activities;
  • contributions, gifts and grants; and
  • a record of the percentage oftime dedicated to political and lobbying activities by all officers, directors, trustees, employees, and contractors.

S. 1.(4) further requires that this information be made available to the public by the Minister “in a format that allows for word searches to be performed and for cross-referencing of data” online.

The Legislative Debate

Despite the opposition to this bill from various unions, the NDP and the Liberal party, Russ Hiebert maintains that it is a pro-union bill. In his words, “Public financial disclosure will build public confidence [in unions].” Hiebert has said that the fact that some provincial labour codes require financial disclosure to union members only is irrelevant to his bill, since its purpose is disclosure to the general public. Opposition parties claim to not have anything against union transparency in principle, but call into question the targeting of unions while private business associations and other institutions which receive tax benefits are not included. Hiebert’s response to this criticism is that it is open to other members to seek “financial disclosure by other types of organizations that receive a public benefit” (March 13, House of Commons. Hansard 146(95), 41st Parl., 1st session).

Other common arguments against this bill being made by unions and opposition parties include (see Feb. 6 & March 13, House of Commons. Hansard 146 (74,95), 41st Parl., 1st session.):

  • The bill is part of the Conservatives broader “war against organized labour” and a poorly disguised attack on the viability of unions.
  • The bill will make privileged information available to businesses and government, giving them unfair competitive and political advantages.
  • The information made available by the bill will be of no use to ordinary Canadians, but only to businesses and government to use against unions.
  • Employers would have access to reports revealing exactly how much the union can spend on a grievance, whether the union can afford an organizing drive, and how much is in the strike fund.
  • The Canada Labour Code already requires that financial statements be available to members. Where those statements are not routinely provided to all members, individual union members can request them from their locals and directly from labour boards.
  • Unions are accountable to their members, just as comparable not-for-profit and tax-exempt entities, like think tanks, professional associations, and trade boards are accountable to their members.
  • The bill’s provisions are particularly onerous and go far beyond what is expected of charities.
  • The NDP claims that the bill will create an estimated 17.5 million hours of paperwork.
  • Since the bill would also apply to trust accounts of unions, unions would have to post amounts being withdrawn by all individuals, creating privacy concerns.
  • It creates burdens for others as well. For example, a small contractor doing business with a union would have to post what he draws from the union for services rendered.

Collective Representation: A Conservative Case

As Ken Georgetti’s statements at the beginning of this paper show, class struggle is the dominant paradigm for labour relations in Canada. This paradigm sees labour relations as a zero-sum activity where there are distinct winners and losers; it is distinctly adversarial.

However, the adversarial paradigm is not the only paradigm available. Other successful free-market economies, including, for instance, Germany and the Netherlands, have longstanding and successful labour relations environments in which labour unions and workers’ councils are seen as key partners in the business enterprise. Labour law in such countries combines high levels of union security with high levels of worker choice. It is notable that, with some exceptions, labour unions there tend to work more cooperatively with government and business partners.

In addition, those who profess a libertarian stance on markets have suggested the possibility that unions might have a positive role in the promotion of liberty, the limiting of state involvement in markets, and the fair distribution of wealth by non-political actors. In both cases, it is clear that there are other models for labour relations policy which move beyond the current paradigm of class struggle and government regulation. Might there, perhaps, be a conservative case for trade unions which could inform a conservative approach to labour relations policy?

Defining Conservativism

Before setting out our arguments in defense of collective representation, we begin with a brief explication of what we take “conservatism” to mean.

Conservatives believe that the task of government is limited. Our framework on this subject defines three tasks for government: to create the space for the institutions that make up a civil society; to defend weak individuals and institutions against those who would use coercive power against them, without prescribing outcomes that properly are the decisions of other institutions; and to take care of a limited number of matters that society has in common which fall into the proper sphere of the state. Other conservatives draw on different frameworks, but we share in common a view of limited government.

Conservatives also affirm that the market should be the primary organizing principle for economic life. By this we do not mean that conservatives slavishly believe in the right of markets to run roughshod over all areas of life. Many conservatives share a concern about what markets do to people in feeding materialistic addictions and the abuses of markets by powerful actors, but the misuse of something does not invalidate its proper use. Both markets and profits are positives whose proper use should be celebrated.

Conservatives find an objective reference point for political action beyond personal preference. Some conservatives appeal to history, others to religious truth claims or tradition, and from this stems our belief in and emphasis on the freedom and dignity of the human person. Freedom is an a priori principle that finds authority outside of individual preferences.

This brief definition of conservatism serves as a common starting point from which to frame the discussion of collective representation of workers that follows.

In Support of Collective Representation

For all of the diversity and pluralism in Canada, only a relatively narrow range of opinion is represented in our labour organizations. We at Cardus have a history of advocating fundamental change in our industrial relations system. While we explain the importance of collective representation in what follows, we seek neither to defend the status quo of either our industrial relations system or the organizations within it. Rather, we believe there ought to be meaningful choices available to workers, not only as to whether they want to be represented by a union, but also regarding the type of union that they wish to join.

We understand why antipathy towards unionists and their policies often prevails among conservatives, given the general ideological direction of the North American labour movement. Nevertheless, we remain convinced that having independent organizations dedicated to representing workers’ concerns is an important good worth promoting. A compelling conservative case can be made at both a philosophical and practical level in support of policies that encourage workers to join and participate in the activities of institutions formed for the purpose of representing workers.

We propose four core arguments in support of the collective representation of workers:

  • First, collective representation institutions are a preferred and more effective alternative to government in enforcing minimum employment standards.
  • Second, the nature of working in a modern economy creates a natural demand for worker-representative institutions, specifically in organizations of a significant enough size where formal structures are necessary.
  • Third, the economic argument addresses the contention that it is strictly a matter of individual choice whether one should be bound to the terms negotiated by a group. It also identifies gains in efficiency that are possible with the collective representation of workers and notes the benefits provided by unions such as training and other services.
  • Fourth, the pragmatic argument is that conservatives must develop economic policy that gets beyond identifying itself with big business and investment capital only. It is increasingly clear that “human resources” are the driving force of the Canadian economy. It shapes our tax policy, our immigration policy, and many other areas of government policy. In the current context of labour shortages, major infrastructure deficits, and with an economy that is struggling to find innovative solutions to economic weakness, it is incumbent upon governments of whatever stripe to explore the most effective means of leveraging those human resources. This is particularly true as the knowledge economy finds its way into trades and professions (i.e. construction) which require greater training and ancillary services.
A Superior Alternative to Government

One of the few areas of agreement between government critics across the political spectrum is the ineffectiveness of government agencies in the enforcement of employment standards. We assert that collective representation institutions are a preferred and more effective alternative to government in enforcing minimum employment standards.

For most businesses that are well-meaning and intent on obeying the law, legislated enforcement requirements tend to be bureaucratic and create red tape that often interferes with the efficient operation of the business. On the other hand, for the minority of bad-apple employers who are engaged in the sort of practices that the government regulations were intended to limit, such enforcement procedures are rarely effective. It is only a matter of time before the loopholes of wide-ranging regulations that apply to diverse business practices are found. Enforcement is usually slow to find the real problem cases and often quite slow and ineffective in reaching a solution.

A system of employment enforcement that relies on employee representative institutions to apply employment standards with customized approaches that suit the particularities of each individual workplace will result in a system that is more efficient, both from the perspective of the real social objectives of employment regulation as well as from an economic cost perspective. A preference for market solutions does not mean a blind acquiescence to corporatism. The freedom and creativity prerequisite for prosperity can be smothered as easily by corporatism as it was by statism. It is by the diffusion of rights and responsibilities throughout the various institutions of civil society, including worker representative institutions, that these excesses can best be avoided.

Collective Representation and the Modern Economy

What is it about the nature of the modern workplace that creates the natural demand for worker-representative institutions? Rather than a class struggle argument, which pretends the workplace is a battleground in a larger war for equality, our argument stems from the positive nature of work and the satisfaction it can give to workers. Whether one references Maslow’s hierarchy of needs or Herzberg’s two-factor theory of motivation, we must build on the premise that human beings need more than economic reward in order to be satisfied by their work; but, at the same time, meeting basic economic needs is a prerequisite for achieving satisfaction. In other words, productivity and worker satisfaction are linked.

This starting point about the nature of work is important and needs to be emphasized. If we reduce the workplace to the making of money or define success with only economic measurements, those measurements will not be what we like them to be in the long run. Ideas, relationships, and workforce skills are every bit as much a part of economic growth as is the availability of physical capital. It is when our intellectual, human, and social capital are developed in proportion to the investment of physical capital that conditions we describe as economically prosperous are created. This means that we need to create a working environment where workers are recognized, achieve the self-actualization that Maslow talks about, and are inspired to apply their creative energies and efforts to improving the product or service that they are being paid to provide. Providing a voice to these workers is not only necessary to ensure informed management decisions, but also because the process of being given a voice and being listened to is essential to workforce motivation.

Why might this require a third-party organization such as a union in certain settings? Collective bargaining structures are an institutional method for a civil society to deal with the economic and social questions that a market economy produces. It is sometimes possible for progressive-minded management practices to ensure that workers’ voices are heard. However, it is also true that much of the energy expended toward these progressive programs is motivated by a desire to keep unions out of the workplace. In our society, remaining non-union is perceived as a mark of success and the existence of a union a reflection of management failure. While we understand why this has developed, we maintain that we would be better served by an environment where the value added by worker organizations and the benefits they provide is recognized as a key part of Canadian economic life.

The principles of democratic choice and diversity of options that underpin this argument make it clear that we are not advocates for any one-size-fits-all solution. We emphasize that an independent institution such as a union provides certain benefits that an employer-created structure cannot. The independence of the institution could create trust and provide a condition for more honest answers. Bruce Kaufman, a professor of economics at Georgia State University specializing in labour economics and industrial relations, states the case well:

Although many non-union firms say they have an open-door policy, and many managers express a desire for feedback from subordinates, workers worry that speaking up will brand them as trouble makers or people who aren’t team players, resulting in a bad image with the boss, lower performance evaluations and pay increases, and perhaps discriminatory treatment or even termination. A union can thus enhance efficiency because it replaces an ineffective individual voice with a stronger collective voice, leading to an increase in the supply of workplace public goods closer to the social optimum.

We would add one other aspect to this argument. The modern economic time is one in which the development of worker skills and staying current is vital for ongoing employability. An independent institution formed by workers which is driven by the mandate of looking after the workers’ interests can play a valuable role in ensuring that skills are upgraded and developed in a manner that enhances employability and maximizes the portability of those skills. Training programs administered by unions are often of very high quality and contribute to a skilled Canadian workforce.

The Economic Case

Since support for free markets is a hallmark characteristic of conservatism, then advocating for collective representation protections, often portrayed as interfering in the free labour markets, must confront the argument head on. The argument against collective representation based on its negative economic effects in North America is not in itself a compelling reason to oppose it.

There are two viewpoints that are usually raised in this connection. First, some agree that the protections afforded by collective representation are necessary to protect workers from certain bad-apple employers who otherwise would take advantage of them. However, since they believe that unionization brings with it negative economic effects, they advocate policies whose effects are designed to lower unionization rates, with the expectation of corresponding improvements in economic measures.

The economic effects of unionism have been hotly debated for decades. The World Bank’s comprehensive study in 2002 concluded that “no general conclusions about the net costs or benefits of unions can be reached.” However, it also noted: “Depending on the economic, institutional and political environment in which unions and employers interact, collective bargaining as opposed to individual contracting can contribute to the economic performance of firms and to the well being of workers.”

An essay by Bruce Kaufman of Georgia State University, published around the same time as the World Bank study, outlined several additional economic arguments worth considering. Kaufman notes that union involvement can reduce turnover costs. A pure market model of employment assumes worker mobility, which in turn results in significant transaction costs associated with the recruiting, hiring, and orientation and training processes. As well, Kaufman cites evidence that the presence of a union focuses the company on profit levels and provides a counter-balance to the natural management drift toward organizational slack and empire building. Other arguments raised include the agency function provided by unions to firms, referring to the economy of scale savings that can be achieved through multi-employer arrangements for benefits and training, as well as labour market information.

Much of the economic analysis supporting the claims that a labour market unfettered by any collective representation would be more competitive and economically efficient is flawed in that it doesn’t account for the monopoly power that would accumulate to employers. While these analyses try to measure the costs of union monopoly representation on the supply side of the labour market, the absence of any unions would provide employers with similar uncompetitive advantages on the demand side. Workers assume costs in moving from one firm to another because some of their knowledge and experience is firm specific. Furthermore, the transaction costs associated with negotiating an individual contract with every worker would add significant costs when cumulated.

There are some conservatives who go much further than simply arguing economic consequences. Each individual worker, they suggest, is a free agent, and it is a matter of individual choice as to whether one should be bound to terms and conditions negotiated by the group. Those in this camp advocate policies that are often labelled “right-to-work.” It must be recognized that the core of this argument is not about economics but rather the nature and scope of economic institutions.

We agree that prevalent Canadian labour practices regarding closed shop and providing protection to individuals who do not wish to be involved with the union at a workplace are in need of reform. But there are plenty of ways to fix that problem without going to the right-to-work model, a model that has an inherent fundamental problem—it organizes the workplace as if it were a series of individual relationships between workers and the employer, without giving the relationships of workers with each other their due. It drives choices about work to be determined primarily by their economic component, forcing the reduction of complex questions to resolution through rational choice theory. And, while this may work in theory, in practice over time it will inevitably commodify work and plant the seeds for a social division whose costs and consequences far exceed whatever ills it intended to solve.

The Pragmatic Argument

To reiterate, the pragmatic argument is that conservatives must find a way to develop economic policy that gets beyond identifying itself with big business and investment capital only.

We in Canada have a system that was built on the premise that labour and capital are inherently adversaries. It isn’t historically surprising that we built an adversarial model for industrial relations considering that our established political and legal systems were constructed on adversarial premises. But what is good for politics is not necessarily good for the workplace. If we continue to view labour relations as a battle between labour and capital, then all we can do is pick sides. However, we believe that view is flawed. Productive economic activity ought to be viewed as the interaction of physical, human, social, and intellectual capital, and our structures to support economic activity ought to recognize and promote the interdependence and common interests of them all.

Canada must develop a renewed labour relations system that promotes the role of independent work institutions, provides for worker choice between various models of representative institutions that are flexible and provide services suited to the industry, and promotes a broad-based collaboration and partnership in support of shared economic and social goals. To be sure, such a system will also provide opportunity for adversarial-minded unions to represent workers when such unions are chosen, just as any free economy worthy of the name will have the space for less-than-ideal employers to form businesses and hire workers.

Workers approve of unions, but when surveying the landscape of available union choices, they disapprove of most options. Canadians are looking for a different kind of unionism, but most of the current providers of labour representation, for reasons of ideology, established practice, and systemic reinforcement, are not ready to provide it.

Toward a Better Canadian Labour Relations System

Challenges of the Existing System

Our current Wagnerian model of labour relations is premised on each workplace having its own community of interest. Unlike the European system, where workers can choose between competing unions, the North American system relies on the exclusivity principle. Both systems have features that commend themselves, but the strength of the North American system is the necessary focus unions must place on servicing their members.

A union must be able to protect itself from within by expecting loyalty from its members. Nevertheless, the individual’s right to try to rid herself of union representation or to change unions is not—but ought to be—recognized as having greater social value than the loyalty that a union may demand from its members. Dual union membership ought not to be grounds for union discipline as it currently is, whether those unions are common affiliates or rival unions espousing differing philosophies. The focus of collective bargaining is not exclusively on the protection of workers against the negative impacts of markets and abusive employers but also the development of workplaces where trust, communication, influence, and commitment can flourish. Those are the workplaces where workers will be able to maximize security and the enterprise will be economically successful.

The challenge to our system’s democratic credibility arises when union membership attracted in the context of local bargaining unit issues is used to endorse a broad social and political agenda. This system lacks credibility in ensuring that unions are speaking with a voice that is truly representative of their membership—if they were, one would expect that the politics of Canada would look very different.

The Anti-Conservative Monolith

The fact that there is only one umbrella organization, the Canadian Labour Congress, representing labour in English Canada ought to be a cause for concern to anyone who would prefer vibrant and diverse labour representation. A monolithic structure cannot capture the interests of even all unionized workers, let alone the majority of the workforce who have chosen not to join a union. For too long we have preferred to avoid this debate, but we would suggest that a basic rethinking of what is understood by “worker democracy” is a healthy and necessary prerequisite to a revitalized labour relations system. The government should look for ways to encourage unions to compete with one another for their members’ support.

Take, for instance, the movement of 30,000 Service Employees International Union (SEIU) members to the Canadian Auto Workers (CAW) which occurred in 2000. The workers left SEIU because they felt they could secure better representation with CAW.

A long and acrimonious legal battle ensued. Ken Georgetti, the president of the Canadian Labour Congress, of which the CAW is the largest private sector union, wrote to Buzz Hargrove, then CAW president, that Canadian unions should not be raiding each other because a breach in the CLC monolith would hinder the achievement of its objective ‘to defeat the agendas of right-wing governments and corporations.” This should send a clear message to conservatives that the best way to ensure that labour unions stick to their proper work of representing workers—and to avoid politics—is to encourage competition between them and institute policy provisions which prevent union collusion.

The Obvious Response: Increasing Competition

An increase in union choice would be a boon for working class Canadians, but that choice would only make a significant difference if workers get to choose between significantly different trade unions. A real choice would include unions that offer workers real trade union democracy through genuine freedom of association and unions that realize the wisdom of labour peace through mutual gains bargaining.

A rethinking of some of the prevalent practices of our system is in order. Rather than trying to regulate a monopoly through the back-door, as Bill C-377 does, we ought to move toward industrial relations policy and practice that makes forming, joining, and leaving a union easier, that ensures fair campaigns in which unions can compete for worker support, and that discourages the sorts of arrangements that result in virtual monopoly representation for unions in a particular sector. We regulate predatory pricing and collusive activities in the corporate sector where oligopolies and monopolies exist; it would be helpful to consider dealing with similar anti-competitive practices as they exist on the labour front.


Bill C-377 is far from the ideal means to achieve the goal of improving the future of collective representation for Canadian workers. In fact, it has the potential of creating a significant bureaucracy which will do little, or nothing, to achieve the government’s policy objectives. Given the detail and complexity of the reporting process offered in the bill, it is likely to be a highly expensive venture for the government to create and maintain. Also, given the complexity of data, it is unclear how the expenditure registry will be made easily accessible to shop-floor workers. Given the history of government registries, it is entirely possible, even likely, that the information required by Bill C-377 will be used more by those with the time and money to cipher the data. In other words, it is more likely to be a tool used for mischief rather than true accountability. Is it possible that Bill C-377 will take on the characteristics of that other piece of intrusive policy, the gun registry? The bill risks the forfeiture of any political goodwill this government may have built or be able to build with union members in the future. It is also far from ideal in terms of principle and policy, as discussed extensively above. It will impede smaller unions that spend their members’ union dues prudently from competing with larger, more established unions since the cost of compliance will have a disproportionate impact on the former, and can be leveraged by larger unions against smaller ones, thus defeating the purpose of making labour unions more attentive to their members, and thus more innovative. Such competition is what is desperately needed to improve our labour relations system, and Bill C-377 does nothing to promote competition. We agree with the goal of increasing accountability, but not in a way that involves unnecessary expense to unions and the negative externalities that we believe this bill will generate.

The precedent the bill sets is also disconcerting. Many charitable organizations, think-tanks, industry associations, and other groups play an important role in Canadian society and in providing advice to government on important issues facing Canadians. Such organizations serve their communities with efficiency and flexibility, and contribute to the marketplace of ideas that informs Canadian policy makers. Should this bill be passed, it will as a matter of course become a rhetorical weapon for imposing increasingly onerous requirements on such organizations by future governments which do not share the conservative desire of a limited government. We urge the government to take a long-term approach to this issue. Alternative policy measures, especially the opening up of existing unions to more competition, may not produce immediate results, but they contain the seeds that will produce deep-rooted improvements to Canadian labour relations and parallel political reward.


  1. Georgetti, Ken. (2011, Nov. 22) Remarks at the Ontario Federation of Labour 11th Biennial Convention. Retrieved from
  2. Leitch, Kellie. (2012, May 28) Edited Hansard (No.128). 41st Parliament, 1st Session. Retrieved from
  3. Bill C-377 passed second reading on March 14th, 2012 after being introduced on December 5, 2011, by MP Russ Heibert.
  4. Oakey, Terrance. (2012, May 29). Edited Hansard. (No. 063). 41st Parliament, 1st Session.  Evidence to Standing Committee on Finance
  5. Oakey’s letter to MP’s is available at
  6. See, for instance, the CFIB’s letter to Mr. Hiebert which states:
    “We therefore agree with the proposed requirement to grant special tax-exempt status only to those labour groups that disclose their financials annually.”
  7. See for instance, McGill professor Jacob Levy’s consideration of the usefulness and limits of unions in a free-market economy:
  8. Competition bureaus, for instance, exist to prevent collusion and the abuse of market monopolies.
  9. Canadian economist Nick Rowe notes that the current competitive environment between unions is marked by high difficulty and high cost, both of which are borne by workers. See