The Evolution of Canadian Trade Unions

1. The Evolution of Canadian Trade Unions Christopher J. Bruce

2. Why is This Topic Important? • An organization that allows employees to bargain collectively with employers over the terms and conditions of employment. • About one third of non-agricultural employees belong to a union and many other employees are indirectly affected by union negotiations through “spillover effects”. • No study of labour market conditions could be complete without understanding unions.

3. Characteristics of the Canadian Labour Relations System • Certification of a Bargaining Unit • Protection from Common Law • Resolution of Disagreements • Structure of Unions in Canada • Organization of Unions in Canada • Philosophy

4. Certification of Bargaining Unit • Employee group of appropriate size and commonality of interests. • Vote by employees – rules by provincial legislation. • Bargaining unit is exclusive to employees. • Either a closed shop or union shop. • Rand formula in place.

5. Protection from Common Law • Canadian law is derived from “Common Law”. • It is contrary to law to act in any way to inhibit conducting trade. • Early business could sue the unions for striking. • Legislation has been passed to exempt unions from anti-combine laws.

6. Resolution of Disagreements • The first step is negotiations. • If this breaks down there is a conciliator or mediator appointed. • If this fails arbitration or strike/lockout are used. • Interest disputes are contract negotiations while grievance disputes are disagreements about the application of a contract.

7. Structure of Unions in Canada • Canadian unions are generally affiliated with national organizations – 65% of unions are national and 30% are international. • While the structure is national, the decisions are made and contracts are negotiated on the local level. • What are the benefits or disadvantages to this situation?

8. Organization of Unions in Canada • Craft unions are organized by type of skill • Industrial unions are organized by industry or groups of employees.

9. Philosophy • Unions, in their short history, have often been associated with socialism or communism as organizing workers has been viewed as an opportunity by people in these groups. • Unions in Canada today are still associated with and supported by the NDP. • Business unionism means the union and employer work together for the good of both parties and has become the predominant union philosophy.

10. The Evolution of the Canadian Labour Relations System • Unions have developed differently around the world. • Australian unions use a “labour court”. • European unions often negotiate nationally. • Unions in developing countries often have a political agenda. • US unions often individual candidates rather than political parties.

11. The Evolution of the Canadian Labour Relations System • Studying the evolution of the Canadian labour relations system will help us determine where we are and where we may be going next. • Canadian labour unions were influenced by immigrants from Britain and by our larger neighbour to the south.

12. The Evolution of the Canadian Labour Relations System • There are a number of causes and effects that made the Canadian labour movement what it is today. • By studying these causes and effects the future of the labour movement is much clearer.

13. The Evolution of the Canadian Labour Relations System • From 1250 to 1750 economic conditions were remarkably stable. • Post-1750 was the development of the industrial revolution. • Urbanization and centralization of populations. • The development of factories.

14. Friendly Societies • Pubs and coffee houses became meeting places for skilled trades people. • Passing the hat to support agreements. • Labour cartels set a minimum wage for skilled labour. • This arrangement did not work for lesser skilled labour. • Increased centralization destroyed the labour cartels.

15. Socialist-Utopian Orders • Organizations for broad groups of workers formed to gain better employment conditions but also to promote other social issues. • The “Holy and Noble Order of the Knights of Labour formed in the US in 1869 and came to Canada in the 1880s.

16. Socialist-Utopian Orders • The “Knights” were appropriate for the Canadian situations since a wide geographic area and types of workers could be amalgamated into a single union. • It was difficult to achieve solidarity and the workers were often isolated from the abstract ideals of the leaders, they soon failed.

17. Craft Unions • The friendly societies failed because the larger societies could not control members from “cheating” and there were aggressive employers with Parliament on their side. • Three pronged approach to this threat • The strike was used as a weapon. • Craft unions were small for greater cohesion. • They bargained for fewer semi-skilled and unskilled workers.

18. Craft Unions • Some small craft unions developed in Canada but they lacked central directions until Samuel Gompers and the American Federation of Labor came into power. • Gompers believed unions should work with business and was a businessman himself. • The AFL also opposed the development of competing unions.

19. Craft Unions • The AFL was successful by using the three pronged approach and came to Canada in the late 1800’s. • The Trades and Labour Congress (TLC) lost a vote to represent Canadian labour unions in a 1902 vote.

20. Syndicalism and Anarchism • Poorly paid Industrial Unions could not raise enough money to run an effective strike. • Collective bargaining by riot – the “Luddites smashed machinery and the “Molly Maguires” would beat or murder foremen who were treating workers unfairly.

21. Syndicalism and Anarchism • Violence was apparently not a long term solution and leaders began to use syndicalism. • This was a class war were all the labour would strike at the same time in a general strike.

22. Syndicalism and Anarchism • Lack of cohesion drove them apart as well as the establishments fear of communism. • Violence in the Winnipeg general strike of 1919 made the unions very unpopular and they were gone within three years.

23. Industrial Unions • Success of the AFL left a large gap in unionism for the non-skilled and semi-skilled labour. • Unions could organize by industry but this would be difficult because they would be in conflict with the AFL’s dual unionism policy and they still did not have cohesion among the union members.

24. Industrial Unions • The United Mine Workers solved this problem by being from close and small communities. • In addition, a break off group from the AFL, the Committee for Industrial Organization (CIO) support the development of the UMW. • The Wagner Act of 1935 guaranteed workers right to negotiate and helped with the cohesion problem.

25. Industrial Unions • The CIO played the same role in Canada as the UMW did in the United States. • In 1943 the Canadian government passed similar legislation as the Wagner Act in US. • The number of unionized workers in Canada doubled to over one million in a couple of years.

26. Interest Arbitration • While Canadian unions relied on the strike to negotiate an agreement, unions in New Zealand and Australia relied on interest arbitration. • Arbitration did not come to Canada because it meant the could not reject the final outcome, they suspected government would be influenced by employers in the arbitration, and the workers who would benefit the most (smallest group) by arbitration would benefit the least by strikes.

27. Interest Arbitration • The unionization of the public service was the exception to the interest arbitration rule. • Even the public service relented and interest arbitration only applied to small groups and “essential services”.

28. Why Are We Where We Are Today? • Organizations of homogeneous workers prevailed. • The strike threat became the most popular negotiation tool. • Arbitration was reserved for essential services. • Dual unionism was abolished. • Business unionism became the dominant philosophy.

29. The Future of Unionization in Canada • Structural shifts in Canada differ from those in the US. • US legal legislation is less friendly to unionism. • US business leaders are most militant about unionism. • US government and employers are providing more security and fringe benefits. • US values rely more on individuals and the free market while Canada relies on government and collective action.

30. The Future of Unionization in Canada • The demand and supply of unionization as a model. • The demand for unions would fall if the wage differential between unionized and non-unionized workers fell. • The supply of unions would fall if legislation made it more difficult to organize unions.

31. The Future of Unionization in Canada • Empirical evidence indicates that two thirds of the difference in US-Canada unionization is supply and one third is demand. • It also indicates the economic differences are not very important. • Greater international competition or tougher legislation would reduce the level of Canadian unionization.

32. Unionization in Canada: A Retrospective Diane Mainville and Carey Olinek

33. Highlights • Canada’s unionization rate increased from 32.1% in 1994 to 32.3% in 1995, reversing a downward trend from 1991. • Between 1966 and 1995 female unionization increased from 15.9% to 30% while male unionization fell from 38.4% to 34.4%. In 1995 female unionization was at its highest point and male unionization was at its lowest point.

34. Highlights • The decline in male unionization can be traced to the movement of employment from the manufacturing to the service industries. • The rise of female unionization can be attributed to the growth of females in the public service, females in the male dominated unionized sectors, increased unionization of service industries and increased unionization of part time employees.

35. Highlights • In 1962 70% of unionized workers belonged to international unions and in 1995 30% of unionized workers belonged to international unions. • The number of larger unions has grown from 4 in 1966 to 18 in 1995 and the percentage of union members in these groups has risen from 22% to 55%.

36. Unions and the Economy: What We Know, What We Should Know Peter Kuhn

37. Overview • Unions increase wages by 15% and do not create job losses. • Efficiency losses are small, but investment may fall. • Union effects on productivity needs further study.

38. Introduction • One in three Canadian workers depends upon a union for wages and working conditions. • How does this affect these workers, other workers and the overall economy. • Exclude other ideas.

39. How Important Are Unions? • Union coverage higher in public sector than private sector. • Canada has twice the union coverage of the United States but less than half the coverage of many OECD countries.

40. Wage Levels • Union covered workers earn 15% more than non-union covered workers. • Consider “spillover effects” and non-union employers raising wages and other differentials.

41. Wage Dispersion • Unions compress wage differentials. • Unions pay less bonuses and merit pay. • Do they discourage effort? Do they reduce wage inequality?

42. Profits • Many studies show that unions lower profits. • Empirical studies do not show that unions drive firms out of business.

43. Employment • If unions and employers bargain, the efficient contracts will raise wages and maintain employment. • There is little good empirical evidence to support unions getting other benefits.

44. Economic Efficiency: Static • Allocative efficiency is not affected due to the large wage gap. • Employers make up for lost strike time. • Employees lose time queuing for union jobs. • Productive efficiency may be lower;

45. Economic Efficiency: Dynamic • Unions raise wages, firms sub capital for labour unless the labour is irreversible. • Do unions reduce investment in R&D? • Unionized employees are more likely to get good training.

46. Conclusions • Unions are important in most industrialized countries. • Unions raise wages and reduce profits. • Investors are less likely to invest in union companies.