REFLEXIONES FINALES DEL CAPITULO

There are several economic trends and issues that may affect labour relations.

Labour market changes In a competitive non-union labour market, the interaction of the demand for labour by firms and the supply of labour by individuals determines the level of employment and wages. The labour market is not perfectly competitive; however, labour economics provides a model that refers to the demand and supply of labour that will help explain changes in wages and levels of employment. A brief review of the effects of a change in the demand for or the supply of labour, holding other factors constant, follows.

Any factor that causes an increase in the demand for labour, such as an economic upturn, should lead to increased levels of employment and higher wages, and any factor that causes a decrease in the demand for labour, such as an economic downturn, should lead to decreased levels of employment and lower wages. On the supply side, any factor that causes an increase in the supply of labour will tend to increase levels of employment and reduce wage levels, and any factor that causes a decrease in the supply of labour will tend to decrease the level of employment and increase wage levels. To illustrate, shortages of employees in some occupational groups, such as computer animators, have led to higher wages and signing bonuses for employees. Governments are also involved in the labour market. Through legislation, the government establishes minimum terms of employment such as vacation and overtime rules, and it affects the supply of labour by providing educa-tion and training.

In the absence of unions, individual employees would have to accept the market wage, and it is likely to be low if workers do not have unique skills or abilities. Unions could be viewed as a way to avoid the effects of the labour market that would otherwise be imposed on individual employees. In a labour market without a union, many employees have little or no bargaining power when dealing with their employer. By joining a union, employees may be able to increase their power. Conversely, it is possible that the wage rates in the labour market might be pushed higher than the wages provided for in collective agree-ments, and this will pose a problem for both parties, especially employers. Recently, private MRI clinics have begun operations, offering wages to technicians higher than those paid by hospitals. Many hospitals have lost technicians to the private clinics, and this has meant that some hospitals are not operating at peak capacity.

Aging Workforce. The workforce is aging, and this may have significance for unions and employers.⁸ As the baby boomers (those born between 1947 and 1966) retire, there may be labour shortages, which will put upward pressure on wages and make it difficult for employers to recruit some types of employees. Older workers have preferences that may affect union demands and negotiations. They may be more concerned with increasing pen-sions than with current wage increases, and they may also be more concerned with job security as they approach retirement. Some employees, instead of working full-time until retirement, may wish to have the opportunity to work less in the final years of their work life. Others may wish to extend their careers beyond the traditional retirement age.

Younger Employees. Although the overall trend is toward an older workforce, relative to boomers and Gen X-ers, millennials have a different view of how work should get done and come into the workforce with a different set of expectations.⁹ Such differences might affect unions and employers.

Female Participation. In 1978 approximately 30 percent of the labour force was female, and by 2012 this had increased to 57.9 percent.¹⁰ Men used to be more likely to belong to unions, but that has changed. In 1981, the proportion of men in unionized jobs was 42 percent; by 2012, that had tumbled to 29 percent. By contrast, women’s

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unionization rate has hovered around 30 percent for the past 30 years—leaving them now more apt to be unionized than men.¹¹ The increased proportion of women in unions means that unions will have to be more concerned with issues, such as flextime, harass-ment, and daycare. Moreover, unions will have to be concerned with internal policies to ensure that women are adequately represented in union positions.

Diversity. Canadian society and the labour force are becoming more diverse. Diversity refers to a labour force that includes people of different religions, ethnicity, sexual orienta-tions, and disabilities. Unions and employers will have to deal with discrimination, harass-ment, and accommodation issues, which are discussed below.

non-standard Work. Non-standard work refers to work arrangements other than tra-ditional full-time employment, including part-time and temporary work. Statistics Canada defines part-time employment as a job that involves less than 30 hours per week at their main or only job. There has been a significant increase in the number of employees who hold part-time jobs. In the 1950s, only 4 percent of employees worked part-time, and in 2013, 18.9 percent worked part-time.¹² A significant portion of this part-time work, approximately 25 percent, is involuntary. The vast majority of involuntary part-timers tend to be among youths and women aged 25 to 54. Both of these groups display seasonal pat-terns: the number of young involuntary part-timers increases during the summer months when full-time hours are preferred, while the number of adult female involuntary part-time workers peaks in the fall, when children return to school. Involuntary part-time work rises and falls with the unemployment rate, an indication that people are forced into part-time work when economic conditions worsen.

Part-time employees pose a challenge for unions. Since they are generally paid lower wages and receive fewer benefits, employers have attempted to use non-union part-time employees to reduce costs. Unions have found it difficult to organize part-time employees for a number of reasons. Many are younger, and they do not have experience with unioniza-tion. Many work in industries where unions have not had a presence and unionization is not the norm. Part-time employees who work in smaller organizations may have a stronger connection with the employer than those who work in a larger organization where aliena-tion from the employer develops. Smaller part-time units are more costly for unions to organize. Where worker turnover is higher, there is less commitment to the workplace.

Many part-time employees are more likely to quit when they become dissatisfied and move to another job, so unionization is more difficult.

mergers There have been periods of significant merger activity in the past, which have affected labour relations. Mergers create the possibility of layoffs. This will affect negotia-tions between employers and unions, because the union will be concerned with protecting employees from job loss. Mergers in North America in recent years have also led to unique collaborations between unions seeking to secure their membership bases, particularly in the airline industry. These new union partnership arrangements, as seen in the proposed merger of US Airways and American Airlines, are also an attempt to prevent other unions from raiding membership ranks at a time when organized labour in the United States is reeling from membership losses.¹³

Globalization Globalization is the trend toward firms obtaining resources and produc-ing and sellproduc-ing their products anywhere in the world. It means that international boundaries have no significance for commerce: a firm may obtain resources in one country, produce in another country, and sell in many other different countries. Globalization also means that capital will move to wherever the highest return is provided. (Globalization is separate from and predates trade liberalization, discussed next.) This is significant, because it means increased international competition. Firms face pressure to reduce costs and prices, and will locate production where costs are the lowest. Note that when firms consider labour costs,

Diversity is a characteristic of a labour force that includes people of different religions, ethnicity, sexual

they have to take into account differences in productivity and not just the wage rate. There may be situations in which total labour costs are lower in Canada despite the fact that the Canadian wage rate is higher. One observer has noted that the globalization of goods depends on cheap oil prices and oil prices will rise as the world’s supply of oil diminishes. In a world of cheap oil, it is possible to ship iron ore across the Pacific to China to produce steel and subsequently ship the steel back to North America. Higher energy costs in the future may mean that this is no longer economically feasible. Jeff Rubin in Why Your World is about to Get a Whole Lot Smaller: Oil and the End of Globalization argues that higher energy costs and concerns over global warming will lead to a rejuvenation of local manufacturing.¹⁴ trade Liberalization Trade liberalization is the trend to international agreements that reduce tariff barriers between countries. The most significant such agreement for Canadian unions and employers is the North American Free Trade Agreement (NAFTA) between Canada, the United States, and Mexico that came into effect in 1992. Unions opposed NAFTA, because they feared Canadian employers could not compete with the lower wages in Mexico and parts of the United States, and would be forced out of business. Unions were also concerned that the agreement would lead to Canadian employers moving to Mexico or the United States. Finally, there were concerns that the other jurisdictions, in particular Mexico, had lower labour standards and that even these were not adequately enforced. This led to fears that there would be a harmonization of standards at a lower level than existing Canadian standards.

Proponents of NAFTA argued that the Canadian economy would benefit from access to markets in Mexico and the United States. The debate about whether NAFTA has been positive or negative for Canada is not resolved. However, a few things seem clear. NAFTA has added to the economic pressure that some employers face and in turn puts pressure on unions. Some firms have used the threat of their relocating to force unions to accept lower wage increases. It has been suggested that NAFTA’s effect on labour relations at individual firms will depend on whether it poses a threat or an opportunity to the firm. In firms for which the agreement poses a threat, the union and the employer will be concerned with job loss and possible plant closure. They will have to be more concerned with job security issues, including layoff notices, early retirement options, and work sharing. In firms for which the agreement presents opportunities, there will be concerns relating to possible expansion and change. The union and employer will be concerned with increased adaptability, reclassifica-tion, and the use of seniority as a criterion for promotion. It has also been suggested that NAFTA creates an incentive for employers and unions to cooperate on workplace issues because disputes cannot be tolerated in the more competitive environment.¹⁵

Deindustrialization Deindustrialization is the shift in the economy from the manufac-ture of goods to the production of services. This shift has significance for both unions and employers. In manufacturing, forestry, mining, transportation and other sectors, globaliza-tion and increased efficiency led to the eliminaglobaliza-tion of hundreds of thousands of high- paying unionized positions in Canada. About 18 percent of private sector jobs are now unionized, compared to 21 percent in 1997, and the proportion was declining even before then.¹⁶ Possibly the loss of manufacturing jobs has been a factor causing some unions to pursue the organization of workers in the service sector, to avoid a decline in total membership. If so, deindustrialization has affected employers in the service sector by indirectly leading to the organization of their employees.

Downsizing Downsizing refers to the elimination of jobs for the purpose of improving efficiency and improving economic returns. Downsizing has been a frequent strategic move in recent years. A 1992–94 survey covering 336 firms in the private sector, accounting for 42 percent of the private sector labour force, found that there was a major downsizing in 25 percent of the workplaces in the 10-year period preceding the survey.¹⁷ A more recent study found that 56 percent of employers and 57 percent of union local officials surveyed

Trade liberalization is the trend toward international agreements that reduce tariff barriers between countries.

Deindustrialization is the shift from the manufacture of goods to the production of services.

Downsizing is the elimination of jobs for the purpose of improving efficiency and improving economic returns.

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reported a permanent reduction of employees within a two-year period.¹⁸ This study found a negative impact on employee satisfaction and the labour relations climate. Specifically, downsizing was associated with higher grievances and increased absenteeism. Downsizing puts unions on the defensive, because they may have to reduce their wage demands in an attempt to save jobs.

Deregulation Deregulation refers to the change from a business regime in which the government regulates market entrants and prices to one in which the market is open to competition. At one time, some industries in Canada, such as airline and phone services, were regulated. There would be one producer, which charged rates approved by a govern-ment commission such as the Canadian Radio-television and Telecommunications Commission (CRTC). Deregulation in the phone industry led to the entry of AT&T Canada and Sprint Canada and competition in the market. Deregulation does not mean that all government rules or restrictions on a particular industry are abolished. The airline industry was deregulated in 1988; however, the industry is still subject to various restrictions that will impact employers and unions. For example, the industry has pressed the federal government to change the rules to reduce the number of flight attendants required. Unions have opposed this measure, claiming that safety would be compromised.¹⁹

Deregulation has put pressure on unions and employers. The employers now have to be more concerned with increasing efficiency and reducing costs; job security can become a more important issue for the unions. For example, after deregulation Bell announced a reduction of 10 000 employees over three years. The company offered a plan to employees to take extended leaves, without which it might have been forced to confront its unions with wage reductions or additional job cuts.²⁰

Legacy costs Legacy costs are the expenses associated with providing pensions and health benefits to retired workers. For some older organizations, these costs are a growing concern. Legacy costs were cited as one of the reasons for the bankruptcy in 2005 of Delphi, the world’s largest manufacturer of auto parts. This problem may not be as serious in Canada, because health care is largely funded through taxation. In fact, some auto and auto parts manufacturer may have been shifted to Canada because of lower health care costs.²¹ If there is further privatization of the Canadian health care system in the future, these costs may be a growing concern. There are some observers who claim that public sector pensions are a serious problem for Canada.²² One of the ways to avoid the pension-cost problem is to switch from a defined-benefit to a defined-contribution pension plan, but any proposal to make such a change could be contentious for unions and employers.

tEchnoLoGY

The technological environment refers to developments in knowledge that lead to new products, services, and changes in methods of production. Illustrations of its impact on daily life are easy to find: ultra-thin computer tablets; remote access to home security sys-tems; and automatic parallel parking options on new car models.Technological innovation has important consequences for unions and employers. It will lead to concerns regarding job security because of the possibility of workers being replaced by labour-saving devices or facilitating the transfer of jobs to lower-wage countries. For example, some Canadian call centres have been closed when the work has been moved to India. On the technology issue, unions face a dilemma: technological change may lead to increased productivity that can be the basis for wage increases, but at the same time it may lead to job losses. It might also give rise to concerns regarding ergonomics, health, and safety, such as those surrounding the effects of video display terminals. There is the potential for disagreement between the union and employer over compensation. Where technological change leads to jobs requir-ing fewer skills, employers will attempt to reclassify the job and reduce compensation.

Deregulation is the replacement of government control over market entrants and prices with competitive markets.

Legacy costs are the expenses associated with providing pensions and health benefits to retired workers.

Where change leads to new jobs, or jobs requiring more skills, unions will seek to increase compensation. Advances in computerization have meant that some employees are now able to work at home, an issue unions and employers will have to address in collective agreements in the future. These advances now allow more employers to monitor employee activity. Some employers are using global positioning systems to track the location of employees.²³ In call centres, a report can be generated that indicates how much time an employee spends with each customer. Technology will also lead to privacy in the workplace becoming an issue. If employers monitor employee email, what should the response be from the union?

The effect of information technology, including the Internet and intranets, will be of interest to unions in the future. Unions can use websites to deliver information to employ-ees they wish to organize, and provide services to members. However, some observers have suggested that information technology may pose a threat to unions.²⁴ For example, the present model of labour relations is based on employees working at one location for one employer, whereas information technology has allowed more workers to work away from the employer’s location or to work for more than one employer. In the United States, there are now more employees working at home than there are union members. This will mean that employees have less connection with their workplace and perhaps with a union. Also, many employers have developed intranets to provide information and communicate with employees. These may pose a threat to unions because they allow employers to develop more direct communication with employees. Intranets might be used to establish discussion groups and other devices to foster closer identification with the company and weaken any link to a union. It is also argued that the Internet and the Web pose a threat to the tradi-tional relationship between the union and its members. In order to survive, unions will

The effect of information technology, including the Internet and intranets, will be of interest to unions in the future. Unions can use websites to deliver information to employ-ees they wish to organize, and provide services to members. However, some observers have suggested that information technology may pose a threat to unions.²⁴ For example, the present model of labour relations is based on employees working at one location for one employer, whereas information technology has allowed more workers to work away from the employer’s location or to work for more than one employer. In the United States, there are now more employees working at home than there are union members. This will mean that employees have less connection with their workplace and perhaps with a union. Also, many employers have developed intranets to provide information and communicate with employees. These may pose a threat to unions because they allow employers to develop more direct communication with employees. Intranets might be used to establish discussion groups and other devices to foster closer identification with the company and weaken any link to a union. It is also argued that the Internet and the Web pose a threat to the tradi-tional relationship between the union and its members. In order to survive, unions will