The Futrrre of IndustrialRelations in Canada

James MatkinCanadian Public Policy / Analyse dePolitiques

Vol. 12, Supplement The Macdonald Report: TwelveReviews / Le Rapport Macdonald: Douze Analyses (Feb.,1986), pp. 127-132Published by: University of Toronto Press on behhlf ofCanadian Public PolicyDOI: 10.230713551299Stable U R L : http ://www.j stor. org/stable/3ss 1 299Page Count 6

THE FUTURE OF I]IDUSTRIALRELATIO]IS I]I CA}IADA

JAHES HATKIi{ Business Council of British Columbia

anada continues to suffer the disadvantages

of a poor reputation in its industrial relations

and unfortunalely there is little appetite to come

to grips with the problem. The British Columbia

economy illustrates the damage to investment op-

portunities caused by a poor reputation in industrial

relations as the province struggles to expand and

diversily its economy.lWhile the Macdonald Royal Commission is very

well-known for its bold support of freer trade with

the United States, by comparison the Beport's

lacklustre observations on labourlmanagement

relations were disappointing and have gone un-

noticed. Yet if we do not improve our industrial rela-

tions, the benefits of a closer economic relation-

ship with the United States will be lost.The Commission researched some of the key

causes of labour strite such as bad personal rela'

tions between employers and employees and thegrowth of unionization and the volatility of the

economic environment, but surprisingly they were

not convinced that the situation in Canada de-

manded any tough reform. The Report concludes:

Employer-employee relations in Canada

seem likely to be most responsive to improve'

ment at the level of individual firms, plants and

union locals. Overallsolutions proposed at theprovincial or national levelseem unlikely to be

as effective as local solutions.Commissioners therefore recommend that

governments support, on a local and voluntary

basis, such features as:

- Preventive mediation programs

- Quality-of-working-life programs

- Gains-sharing/compensation arrange'ments.

Therefore, no new idea or philosophy for in'

dustrial relations is recommended. The Commis'

sion concluded thai more of the same will be good

enough for Canada. C'est dommage.

Canada has a worse strike and lockout record

'than in any otherWestern nation'according to the

Report (Vol. Two, p.689)and after some discussion

of the meaning of these statistics the Commis'

sioners concluded 'that we Canadians are now

among the most dispute prone of the industrialized

nations'(Vol. Two, p.695)'lYet the Report opts for

the status quo recommending only 'greater c&operation and consultation' betvrreen labour and

management. ln light of our devastating record forlabour strife it is obvious that we need more co'

operation, butlhe real issue is hout do we achieve it.

'Glearly, ours is a system desperately in need

of revision'. The above sentiment is guoted from the

Report (Vol. Two, p.689)and is on target, particularly

when you consider our'system' of industrial rela-

tions. We need to chart a new course in Canada

where we conduct our work relations under a dif'ferent'system' or philosophy. The Macdonald Com'

missioners were right as far as they went that we

Canadian pubtic paticy - Analyse de Potitiques, Xll:supplemenltl27-1321986 Printed in Canada/lmprim6 au Canada

l'' must take some of the excessive strife out of thesystem and become less adversarial, but they didn'tgo far enough and present a realistic action plan

for a new system.Of course, this failure cannot be remedied by

this short piece, but it may be helpfu! to outline anew direction that could help Canada break away

from its illustrious strife-ridden past and embracea better system of industrial relations where there

is greater co-operation and consultation between

competing interests.

A New System ol Baqaining

There is an irnportant cause of labour strife in

Canada not emphasized in the Report and that isthe way that labour and management conduct theirnegotiations. My own experience in trouble shoot-

ing rnore than 100 labour disputes as Deputy Minis-

ter of Labour for British Columbia dudng nine years

suggests that the most frequent reason for thebreakdown and bitterness of collective bargaining

is the structure of negotiations where positional as

opposed to principled bargaining dominates and

corrodes the relationship between the parties.

Collective bargaining is more often an experi'ence in position bashing than problem solving, re'

sulting in a failure to separate the relationship from

the problem, ignoring alternatives to the rigid posi'

tions taken and chilling effective communicationbecause the processes of inventing options and

making commitments are comingled.Roger Fisher of the Harvard Law School and

Director of the Harvard Negotiation Proiect is one

of the most persuasive critics of our toxic habit ofpositional bargaining. He explains:

When negotiators bargain over positions,

they tend to lock themselves into those posi'

tions. The more you clarify your position and de'fend it against attack, the more committed you

become to it. The more you try to convince the

other side of the impossibility of changing your

opening position, the moredifficult it becomes

to do so. Yourego becomes identified with your

position. You now have a new interest in 'sav-

ing face' * in reconciling future action with pastpositions - making it less and less likely thatany agreement will wisely reconcile the parties'

original interests. (Fisher and Ury, 1981:5.)

128 James Matkin

Bad labour disputes almost always exhibit thisrigidity and 'saving face'dilemma in my experience.

Regarding the conduct of negotiations, the Mac-

donald Commission did endor$e pre-negotiation

review or preventive mediation as it is commonlychlled- The Commission judged 'that preventive

mediation programs can contribute to improved

labour/management relations and can help toreduce collective bargaining disputes'.

The advantage of the pre-negotiation review is

that it will help the parties to get off to a better start

by early identification of the major issues that need

to be addressed. The reviews will give the parties

the opportunity to develop a problem solving ap-

proach as opposed to the toxic experience of posi-

tion bashing.Preventive mediation is a valuable beginning for

a new direction but it is certainly not enough! For

example, the existing voluntary program in Ontario

has been in place for several years but only a small

number of bargaining parties take advantage of the

service. lf we accept the challenge of creating a

new system vvhere a key obiective is to change the

adversarial attitudes of employers and employees

towards each other, then we must influence a large

part of the workforce.The basic problem with greater co'operation

between labour and management in the private sec-

tor is the attitude of botft sides. Employers have

been hurt in the past by union militancy and opposi'

tion to the market values that are at the core of in'dustrial success in our economy. The result is thatemployers are increasingly convinced that the on'ly hope is to operate'non-union'. This employer at'titude is reinforced by the experience in the United

States where unionization has fallen to a mere 18

per cent of the paid wbrkforce and the non'uniongrowth industries like the hlgh tech companies are

viewed as the wave of the future.Two models of a new system for Canada are

available from comparative experience - first,there is the non-union model of the United $tateswhere fewer and fewer employees in the private

sector workforce belong to unions and the resultis a much more productive and flexible industrywhere lahur strife is non-existent. But Canadians

will find it very difficult to opt for the non'unionmodel because of our hislory, values and political

culture and the greater unionization of our primary

industries.

aThe other model is Japan where there is a

rnarvellously co-operative attitude among both

employers and workers. Of course many distinctive

cultural factors make the Japanese experience uni'que and of little comparative value to Ganada, but

some basic concepts certainly are transferable. For

example, the Commission evaluated the applicabili'ty of 'Japanese-Style Human Resource and Man-

agement Practices'and concluded in favourol iointconsultation and the enormous value of lhe Japan

Productivity Centre.

Canada and Japan share a highly unionized

work force where the union leaders usually do not

share the free enterprise philosophy. (Ihis fact also

separates our country from the United States be-

cause their unions seem much more $upportive of

the market economic system.)

The Report also notes that in Japan enterprise

unions rather than trade unions prevail. This sub-

ject deserves much more carefulattention by North

Americans who have too guickly dismissed enter'prise unions as ineflective, and dominated by

management. As a background paper for the Com'

mission explains:

Perhaps the key merit of enterprise unionism

is the fact that the union tends to be solidly sup-

portive of the interest of raising the efficiency

in its own plant. Since the elected union officers

are also employees of the enterprise, they are

more familiar with the history, personalities,

operations and future prospects of the company.

This contributes to a more informed input into

the various union-management consultative for'

ums which operate on a frequent, regular basis

in many enterprises. The net effect of this struc'

ture is that union representatives play a far more

active role in the management of the enterprise

than do their Western counterparts. {Weiler,n.d.)2

It is indeed remarkable that in Canada, Japan'

ese style enterprise unions are illegal because our

laws prohibit a company from interfering with

unions, which includes helping them by providing

benefits. As George Adams explains, employersupport for a trade union 'is fatal to an application for

certification or the recognition of an agreement'.

(Adams, 1985:a98.)

Unlike Japan our law prohibits a close relation-

ship between employers and unions even when thepurpose is to assist the unions. The result of thisphilosophy is to strengthen the adversarial nature

of our system of industrial relations thereby dis-

couraging the parlies from sharing a common in-

terest in the success of the enterprise. Union and

management play the game in Canada like the of-

fence and delence of opposing football teams.

Ol course, studying the Japanese productivity

miracle is au fait and there is much more that can

be applied in Canada than the sceptics believe

{witness the implementation of Japanese practices

in US joint venture plants).

How do we change our system to create a dis-

tinctive Canadian modelthat incorporates the best

of the Japanese and United States experience?

Proposal 1

ln order to bring our best resources to bear in the

improvement of our industrial relations climate,

consideration should be given to the creation of a

national dispute resolution centre that would offera variety of services related to conflict management

and industrial relations. There arc a number ofmodels for such a centre in the United States -from the long-established American Arbitration

Association to the most recent Dispute Resolution

Centre established at the Will iamette School of Law

in Oregon providing avariety of services including

training, mediation, arbitration and research. Ourpoor reputation for conflict resolution in labour/

management relations is the justification for thisproposed centre.

According to Thomas Peters and Robert Water'

man, Jr., authors ol ln Searctt of Excellence, suc'

cess in excellent companies comes from the recog'

nition that people make business successful

through their productivity. A dispute resolution cen-

tre could help industry and labour to apply this prin-

ciple to the very important subiect of conflictresolution. Support for the centre could come {rom

a blend of inputs from both the federal and provin'

cial governments recognizing the divided character

of constitutional law over industrial relations inCanada.

Canada is the only country in the world where

the primary responsibility for industrial relations

does not fall under the wing of the federal or

The Future of lndustrial Relations 129

national goyernment. ls it mere coincidence thatwe are also unique among nations in our poor

record of labour strife? I believe there is a connec'tion between our uneven record in labour manage'

ment relations and our decentralized responsibili'ty or jurisdiction.

The Heport does identify the evolution of labour

legislation into different phases in accordance with

constitutional development. For example the R+port states that 'Until 1925, iurisdiction over labour'

relations matters was assumed to rest with the

federal government . . . The Snider case (Toronto

Electric Commissioners v. Snidel of 1925 chang-

ed this presumed division of powers. Labour rela'

tions, the Privy Councildecided, fell under proper'

ty and civil rights, and thus under provincialjurisdic'

tion.'{Vol. Two, p.672). Yet, the history shours thatwhen the constitution was first addressed, the

Canadian courts viewed 'the social facts of in-

dustrial relations disputes to be of such national

irnportance that the (Federat) legislation was

upheld as being of national concern by a judicial

headcount of ten to two. ln 1925 the Privy Council

disagreed.' (Dorsey, 1 98il:72.)

ln the Report the discussion of collective bar'gaining begins appropriately with the topic of'jurisdiction' and Canada is compared with the

United States whose record in industrial relations

is much better, particularly during the last 20 years.

The history of constitutional law development bet'

ween Canada and the United States is certainly one

subject that is worth further examination.

The allocation of government responsibilitygoes to the heart of our system of industrial rela'

tions. The result of our constitutional law in Canada

is that even major export industries like lumber,

mining and steel fall under the provincial labour

power in Ganada.

By contrast, the constitulional iurisdiction over

labour management relations in the United States

had the opposite history with the courts first de'

ciding in favour of state power and then changing

their minds in favour of federal dominance over

labour/management re lations. National power h as

had a very positive effect in the US, while the

dominance of provincialjurisdiction in Canada has

resulted in a more politically charged climate with

more bitter disputes lasting longer because of the

closeness of the provinces to the participants and

130 James Matkin

the political partisanship that this engenders. This

conclusion is more apt for BG and Quebec than itis for some of the other provinces.

My experience working in British Columbia sug'gests that the federal government is more suc'cessful in reducing the polarization that exists be-

tween labour and management, largely because

there are fewer partisan influences at play. Anotherproblem with provinciat jurisdiction is the fragmen-

tation of policy and administration.3We are not helplessly committed to the status

quo because the power of reform lies with ourjudiciary. When Alex Smith completed his thesiscomparing the constitutional law in the two coun'

tries he concluded 'ln Canada the federal com'

merce power has not been as broad as the

economic needs of the nation'. (Smith, 1963:180.)

Proposal 2Canada should revisit its constitutional law regard'

ing industrial relations. The Canadian courts could

follow the lead of the United States Supreme Court

and update the interpretation of the trade and com-

merce clause under Section 91(2) of the BrifisfiNorth America Act The US situation paralleled ours

untilthe Supreme Court changed its mind in 1936.4

The most straightfonrvard approach is for argument

to be made before the Supreme Court of Canada

to revise the earlier incorrect constitutional deci'

sions of the Privy Council that the lion's share oflabourlmanagement relati ons fal I u nder provi nc ial

iurisdiction.Whether our constitutional law is changed or

not the nationalgovernment must assume greater

responsibility for the improvement of our poor

record of collective balgaining. At least the federal

spending power offers plenty of scope to influence

the situation.

The Public Sector

The Commission dlso tackled the subiect of 'Public

Sector Labour Relations' and correctly concluded

that the'central issue' is whether a major change

in policy is warranted regarding the right of public

sectoremployees to strike. Again lhe Commission

faltered in making any clear recommendation for

reform. The Beport does conclude that'The right

to strike or lock out must be rationally limited by

the need to maintain the health and safety of thepublic'.

The Commission documented the problems

with fullcollective bargaining rights in the public

sector, including the high level of settlementsresulting from 'the overly permissive environment

surroundlng public sector-wage determination in

the past two decades'. A further problem is the

significant cost of strikes and lockouts being borne

by innocent third parties, who are often customers

or suppliers. The devastating impact of a postal

dispute on small businesses offers vivid evidence

of this problem. Also, disputes in Canada last too

long, particularly in the public sector.

These significant problems deserve some policy

changes.

Proposal 3The right to strike in the public sector of Canada

should be curtailed and a system of 'med-arb' in'

troduced to govern collective bargaining. Med'arb

is a combination of mediation and arbitration per'

formed by the same tribunal thereby placing more

emphasis on negotiation than on adiudication. The

right to strike is not essential to healthy collective

bargaining in the public sector if there is some

pressure on both parties to require them to nego-

tiate instead of relying on binding arbitration to'getthem off the hook'. When the med'arb alternative

is administered by an impartial agency then the par'

ties must genuinely negotiate before they can

receive any third party assistance.

Strikes of essential workers, like firefighters or

nurses, are too damaging to the public who are

seriously threatened and, as a result, these dis'putes distort the balance of power in collective

bargaining. The alternative of compulsory arbitra'

tion is increasingly unattractive to both sides

because of the poor quality of lhe decisions. Col-

lective bargaining negotiations are the preferred

method of resolving conflicts with a strike disincen-

tive added in order to create a better balance ofpower between the parties.

The experience of New York City proves that the

med-arb alternative preserves negotiations as theprimary method of dispute resolution. For more

than a decadeover2OO,$0city employees have had

a successfulexperience with med'arb. The grava'

men of their success has been the insistence of the

board that adrninisters the program that binding ar'

bitration is not available untilthe parties have ex-

hausted the possibilities of negotiation. Therefore,

collective bargaining has not been chilled in New

York City by the lack of the right to strike and in-

deed over 90 per cent of the contracts have been

negotiated without an arbitrator. (Anderson, 1982.)

Conclusion

We should strive to achieve in Canada a new reality

reg ard i n g labou rlmanagement relati on s by ch an g-

ing our system away from the adversarial model

and introducing a more principled approach in the

conduct of negotiations. The establishment of a na'

tional dispute resolution centre may help us tocreate a new system. Also, a major shift is needed

in favour of greater federal jurisdiction over our ma'jor industries. Our success in industrial relations

is a national problem that requires national con-

stitutional responsibility.The introduction of a new system of public sec'

tor collective bargaining based upon med-arb and

the protection of innocent third parties preserves

collective bargaining without the damage of public

sector strikes. lt is important to emphasize that the

New York City system worked because all of theparties participated in the reform and wanted it towork and any reform in Canada should follow thisconsultative approach.

The gradual evolution toward stronger enter-

prise unionism in Canada could be the most signifi'cant change we make to improve the future of our

labour management relations. This reform would

encourage a more co'operative relationship in the

work place, with management and unions treating

each other like the offence and defence of the same

football team instead of opposing teams.

Notes

'l Unpublished report to BC governrnent prepared byPublic Affairs lnternational, from Washington, DC,

1985).2 See also Brody (1985).

3 See Scott (1960).

4 See N.L.R.B. v. Jones and Laughlin Stee/ Gorp. 301

u.s. 1 {1934.

The Future of lndustrial Relations 131

Adams, George (1985) 'Canadian Labour Law,'Canada Law Book.

Anderson, Arvid (1S?'lnterest Arbltration in NewYork Gity,' The Arbitration Joumal, 37:16.

Brody, Mlchael (1985)'British Unions Go Japanese,'Fortune, Dec. 9.

Dorsey, James E. {198li) Canada Labour RelationsBoard (Carswell).

Fisher, Roger and William Ury (19S1) Getti ng fo Yes;Negotiating Without Qiving ln (Boston: Hough.ton, Mifflin)

Peters, Thomas and RobertWaterman, Jr. (1982) tnSearch of Excellence (New York: Harper &Rowe).

scott, F.R. t1$0)'Federat Jurisdiction over LabourRelations - A New Look,' McGill Law Journal6:153.

Smith, Alex (1963) The @mmerce Power in Canadaand the United Sfabs (foronto: Buttenrvorths).

Weiler, Joe (n.d.)'The Japanese Labour RetationsSystem; Lessons tor Canada,' unpublished.

The power of Canada's unions: ALabour

i-:i',, Tasha Kheiriddin : .l

card

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Day report,,

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Perlsions

Ullorkens,NOT

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Wo*enNOr

Canadian unions are living a paradox. For the past decade, theirmembership has remained relatively flat, at between 30 and 31 percent of non-agricultural workers, after dropping from a high of 34.6%in 1997. The decline in manufacturing jobs, the rise of temporary and

2A14. They claim it will hurt the Canadian auto industry by removingtariffs and thus decreasing the price of European imports. But thedeal would also vastly increase the number of cars Canada exports tothe EU, and provide a boon to the auto parts trade - and Canadianmanufacturing iobs. As the next federal vote looms ever closer,Canadians can expect the war of words between labour's defendersand critics to intensify. For the Tories and the NDP, maintaining thecurrent political polarization in the House serves both their interests,but with the Liberals on the ascendancy, it is unlikely that it will be assharp. But whether as a wedge issue or an organizational boost, therole of labour in federal politics hasn't been this important in decades.It promises not only to influence the campaigns, but to openopportunities to more fully debate issues such as right to work laws,trade, and pensions, from all sides of the political spectrum.Tasha Kheiriddin is a political writer and broadcaster who frequentlycomments in both English and French.

James Matkin a year agoWe are witnessing a long term decline in trade union influence andmembership everywhere including my province of British Columbiawhere a few decades ago strong and militant unions ruled the day.What changed? The economy and public opinion. The private sectorhad to hunker down in the new global economy and be competitivenotwithstanding a high wage and benefit worldorce. How? Theanswer unequivocally was technolory. The BC forest industry aresuper efficient with super machines and few employees. But thisadvance decimated union membership so that Jack Munro'sinfamous IWA went from being the largest union in the seventies tofall so low it no longer exists and was swallowed up in union mergers.But unions continued to flourish in the public sector but not withvoter approval as the election of Bill Bennett defeating Dave Barretton a public restraint campaign proved. After the turmoil of inflationand public sector restraint provoking a one day general strike in r9B3things settled down in BC. Collective bargaining moved away fromwage conflicts and focused mostly on job security. Now three decades

4

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later it is "deja vu e all over again" as Yogi Berra put it. I stronglydisagree with the thrust of Tasha Ktreiriddin's opinion. Big laborshould not pick one federal party or another to follow. They shouldsupport the issues that advance the interests of their members -workers - as should big business and both labor and business shouldnot bring party politics to the workplace. Parties will make mistakeswhether they think they are friends of the left or right. Canada isunique as the only Western democracy that has not federallized ormodernized labor relations. The Canadian constitutional law in thisarea is governed by the r9z5 Privy Council decision Snider findingthat labour relations is exclusively a matter of "properby and civilrights" and not as in all other federal countries a matter of "trade andcommerce". Therefore only 6 % af workers in Canada come under theCanada Labour Code. The situation is dramatically different in the USand Australia for example. This weak federal constitutional presencefor labor further underscores the ill wisdom of Tasha's advice onfederal politics.