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Public Sector Unions and Government Restraint

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  1. Public Sector Unionsand Government Restraint Week 8

  2. United Nations: Universal Declaration of Human Rights • Article 23 (4): Everyone has the right to form and to join trade unions for the protection of his [or her] interests.

  3. International Labour Organization (ILO), an agency of the United Nations • In its constitution (1919), the ILO affirms “freedom of association” as a global labour right. • In 1948-49, ILO conventions number 87 (Freedom of Association and the Right to Organize) and number 98 (The Right to Organize and Collective Bargaining) affirmed the rights to bargain collectively and to strike. • In 1998, the ILO’s Declaration on Fundamental Principles and Rights at Work reaffirmed the “fundamental rights” to “freedom of association and the effective recognition of the right to collective bargaining.” •

  4. Recent Labour Conflicts • Jim Stanford. “Raitt’s Three Principles for labour relations only run one way,” Globe & Mail. November 2, 2011. • Contracted out transit service in York Region is currently experiencing a strike.

  5. Labour Movement in Canada Four major waves of working-class resistance and labour militancy when the labour movement expanded its membership and its goals: • the 1880s, • the end of First World War, • during and after the Second World War, • and the decade after 1965.

  6. Development of unions in Canada • Until 1872, union activity was illegal in Canada. Yet workers had formed unions and went on strike regardless. • In 1872, thousands of workers in cities and towns throughout southern Ontario and Quebec, went on strike to secure the nine-hour day. • It included printers at the Globe newspaper owned by George Brown, a prominent Liberal. Brown had the union leaders charged for engaging in a seditious conspiracy.

  7. The Nine-Hour Movement of 1872 • George Brown’s political rival, John A. Macdonald sensed a political opportunity and passed the Trade Unions Act which legalized union formation. However, it did not require employers to recognize unions or engage in collective bargaining. • In 1876, federal legislation granted some legal room for picketing. • A national labour organization, the Trades and Labor Congress of Canada (TLC) was established in 1886.

  8. 1880s: the Knights of Labor • “The 1880s were a decade of unprecedented working-class militancy, centred in the emergence of an organization called the Noble and Holy Order of the Knights of Labor, a body different from the trade unions inasmuch as it sought to bring all workers into one grand organization” (Palmer, 1992: 120). • The leadership of the Knights spoke of class co-operation rather than class struggle and tended to dislike strikes, but the Knights were involved with most of the major labour struggles and strikes of the 1880s and early 1890s.

  9. Winnipeg General Strike, 1919 • metalworkers struggling for union recognition asked for support, as a result some 25,000-30,000 workers went on strike, strike lasted 6 weeks. • Essential services were maintained during the strike as authorized by the Central Strike Committee. • the North-West Mounted Police fired into a crowd killing two strikers.

  10. Winnipeg General Strike, 1919 • Workers in other cities struck in sympathy with Winnipeg. • Victoria, Vancouver, New Westminster, Prince Rupert, Calgary, Edmonton, Medicine Hat, Prince Albert, Regina, Saskatoon, Brandon, Port Arthur, Toronto, Montreal, and Amherst, Nova Scotia, all saw general strikes called to support the workers in Winnipeg and to protest the arrests of strike leaders.

  11. 1940s: Industrial Unionism • “The great watershed was the 1940s. Before that point, almost every effort by various labour movements to win a permanent place in Canadian industrial and political life was beaten back by hostile employers and a generally unsympathetic state.” • “It was only during and immediately following World War II that unions made the breakthrough that allowed them to operate, within a tightly controlled framework, in most mass-production, resource, and transportation industries” (Heron, 1996: xviii).

  12. Industrial Unionism • breakthrough for industrial unionism in the manufacturing sector came in 1937 with the strike for union recognition at the GM plant in Oshawa. • 1943, one in three union members in the country was on strike.

  13. Rise of Institutionalized Collective Bargaining in the Private Sector 1944 Privy Council Order PC 1003: • established a process to allow workers to certify a union, • once a union was certified the employer was obligated to recognize the union, • it also established grievance-arbitration procedures which involves a mechanism for the resolution of grievances without resort to strike action; • banned strikes during the life of a collective agreement, banning sympathy or solidarity strikes

  14. Rise of Institutionalized Collective Bargaining in the Private Sector • 1945 Ford Windsor strike; workers blocked the plant with cars; arbitration and Justice Ivan Rand came up with what has been known as the Rand formula; all members of bargaining unit pay dues, but does not compel them to be members of the union, union dues to be paid automatically by check-off.

  15. Postwar bargaining system (private sector) • institutionalized the labour movement, incorporated them into the system. • Grievance procedures meant that disputes were settled by professionals rather than rank and file membership; • institutionalized procedures rather than mobilization or strikes; • union leaders were pushed to police their own members to prevent them from striking during the term of the collective agreement; • Cold War era of the 1950s meant that Communism and radicalism in general was suppressed by government, business and unions.

  16. Public Sector Workers Saskatchewan • 1944 CCF government led by Tommy Douglas extended collective bargaining rights, including right to strike, to provincial government employees. Federal • National Joint Council of the Public Service, 1944 • Merely an advisory board, involving consultation with public employees

  17. Rise and Fall of the Postwar Settlement in Canada • End of WWII ushers in era of Keynesian demand management, development of welfare state and institutionalized collective bargaining regime. • Economic turbulence of the 1970s and the corporate response turns the tide in the direction of neo-liberalism.

  18. The Shift to Keynesianism • Great Depression of the 1930s • War economy, 1939-45 • Foreign models: Franklin Delano Roosevelt (1933-45) in USA, Labour Party government (1945-51) in Britain. • Alleged success of our war-time ally, the Soviet Union • Rise of the CCF • Rise of industrial unionism

  19. Rise of the Postwar Settlement in Canada • 1943 Report on Social Security in Canada • 1945 White Paper on Employment and Income - commits the government to goal of “high and stable levels of employment”

  20. Labour Militancy in the 60s and 70s • There was a significant burst of labour militancy in the late 60s up until the mid 70s, led by young workers, often rebelling against their own union leadership • Canada had more strikes and more workers on strike than any advanced capitalist country other than Italy; about a third of these were illegal wildcat strikes;

  21. Public Sector Unionization • Late 60s also saw the beginning of the unionization of the public sector. • Provincial: Quebec grants collective bargaining rights to public sector workers, 1965. Remaining provinces do likewise from 1968-1978. • Federal: Public Service Staff Relations Act, 1967 • Restrictions on issues that can be negotiated - “Excluded are all matters respecting the organization of the public service, the assignment of duties, the classification of positions, and job evaluation” (Johnson, 2011: 369). • “estimated that public sector union membership increased from approximately 183,000 members in 1961 to 1.5 million members in 1981” (Rose, 2007: 185).

  22. Public Sector Unionization • In 1972, Quebec’s public sector workers formed the “Common Front” and engaged in a massive public sector general strike (with sympathy strikes by private sector workers) involving some 250,000 to 300,000 workers, the largest strike (and among the most radical) in Canadian history.

  23. Labour Movement Today • Uppal, Sharanjit. 2011. “Unionization 2011” Perspectives on Labour and Income. Vol. 23, No. 4. Winter. Statistics Canada Catalogue no. 75-001-X. • Unionization rate: 29.7% (female workers: 31.1%, male workers: 28.2%) • “The highest unionization rates were in public sector industries” • In 2011, 74.7% of public sector workers were covered by a collective agreement, but only 17.5% of private sector workers. • “a wage premium exists, which, after controlling for employee and workplace characteristics, has been estimated at 7.7%”

  24. The Growth of Social Programs Old Age Pensions (1927) Blind Persons’ Allowance (1937) Unemployment Insurance (1941) Family Allowances (1944) Old Age Security (1951) Hospital Insurance (1957) Canada Pension Plan (1966) Canada Assistance Plan (1966) Guaranteed Income Supplement (1966) Medical Insurance (1968) U.I. expanded (1971)

  25. The Backlash: Business Militancy and Public Sector Restraint

  26. Onset of Inflation (%) in Canada 1971 2.9 1982 10.9 1972 4.7 1983 5.7 1973 7.8 1984 4.4 1974 10.8 1985 3.9 1975 10.8 1986 4.2 1976 7.5 1987 4.4 1977 8.0 1988 4.0 1978 9.0 1989 5.0 1979 9.1 1990 4.8 1980 10.2 1991 5.6 1981 12.4 1992 1.5

  27. Rising Unemployment (%) in Canada 1967 3.8 1987 8.8 1969 4.4 1989 7.6 1971 6.2 1991 10.3 1973 5.5 1993 11.4 1975 6.9 1995 9.6 1977 8.0 1997 9.2 1979 7.5 1999 7.6 1981 7.6 2001 7.2 1983 12.0 2003 7.6 1985 10.6 2004 7.2

  28. The International Context:American Leadership Challenged • The ‘Nixon shock’, the US ends the convertibility of the US dollar to gold, 1971 • OPEC oil embargo and oil crisis, 1973 • The United States withdraws from Vietnam, 1973 • proposals for a New International Economic Order, 1974 • Iranian Revolution, 1979

  29. The Backlash • The combination of • domestic social movements, • international economic turbulence • and international political uncertainty led to a social and political backlash against the welfare state and the rights of labour.

  30. Corporate militancy • The period from the mid-1970s onward has been described by some as class politics (or class war) from above, as the business sector has aggressively mobilized to defend their interests in Canada and elsewhere.

  31. The Backlash in Canada • In Canada, the backlash was, to some degree, delayed. While 1968 saw the victory of Nixon in the US, Canada experienced ‘Trudeaumania’ in the same year. • Still, the Canadian corporate elite would engage in a similar process of organizing as occurred elsewhere.

  32. Canadian Council of Chief Executives (CCCE) • Founded in 1976 as Business Council on National Issues (BCNI). CCCE – 2001. • composed of the chief executive officers of 150 leading Canadian enterprises, widely recognized as Canada's most influential business organization. • The companies they lead collectively administer C$3.2 trillion in assets, have annual revenues in excess of C$750 billion. • Thomas d'Aquino was the CEO and President of the BCNI/CCCE for 28 years, on January 1, 2010 he was replaced by John Manley, a former federal cabinet minister during the Chrétien government.

  33. The Backlash: Corporate and Advocacy Think Tanks • Conference Board of Canada, 1954 • C.D. Howe Institute, 1973 • Fraser Institute, 1974 • Atlantic Institute for Market Studies (AIMS), 1994 • Montreal Economic Institute, 1999 • Frontier Centre for Public Policy, 1999

  34. The Backlash: Neoliberal Citizen Groups • National Citizens Coalition, 1967 • Canadian Taxpayers Federation, 1990

  35. Crisis of Keynesianism • economic difficulties, a crisis of public finance (rising public sector deficits and debt), and concerns about global competition provided the context for the shift away from Keynesianism and toward neoliberalism. • Foreign models: Margaret Thatcher (1979-1990) and Ronald Reagan (1981-1989).

  36. End of Keynesianism • In 1979, the American govt turned to high interest rates to squeeze inflation and the Bank of Canada followed, these high interest rates led to the most significant economic recession since the 1930s, but it served the purpose of squeezing inflation and disciplining labour.

  37. Canadian Govt Response Restraint imposed on labour, especially public sector workers. Anti-Inflation Program (wage and price controls) 1975-1978 Public Sector Compensation Restraint Act (“6 and 5” program) 1982-1984

  38. Canadian Govt Response Restraint imposed on labour, especially public sector workers. Joseph Rose, describes these years as the “restraint years” (1982-1990) and the “retrenchment years” (1990-1997).

  39. Federal Govt Response Monetary Restraint From 1975 onward, Canada’s central bank, the Bank of Canada, was committed to monetary restraint. Particularly in the 1980s, the Bank of Canada followed the lead of the US Federal Reserve in using high interest rates to defeat inflation.

  40. Federal Govt Response Restraint imposed on transfers to provinces Established Programs Financing (EPF): block funding arrangement replaced cost-shared programs for health and post-secondary education, 1977

  41. Major Privatizations by Federal Government • de Haviland 1986 • Canadair 1986 • Teleglobe 1987 • Canadian Development Corporation 1987 • Air Canada 1988 • Petro-Canada 1991 • Nordion International 1991 • Telesat 1992 • CNR 1995 • NavCanada 1996

  42. Federal Govt Response Massive spending cuts, especially in 1995 budget. Canada Health and Social Transfer (CHST) replaces EPF and Canada Assistance Plan (CAP)

  43. Federal Govt Response “The 1995 federal budget marked a fundamental shift in the role of the federal state in Canada” (McBride, 2005: 106).

  44. Federal Govt Restraint • Following the 1995 federal budget, the Public Service Alliance of Canada (PSAC) lost 21% of its membership within 3 years (Fudge, 2005: 44).

  45. Social programs in retreat Corporate interests have mobilized to advocate neo-liberal policies including: • free trade agreements, • the deregulation of foreign investment in Canada, • tax cuts, • the privatization of public services, and • reductions in social spending. Successive federal governments have responded by restraining social spending and attempting to reduce the role of the state in the economy.

  46. Canada in comparison Canadians tend to compare ourselves with the US and point to stronger social programs and public health care, but compared to other rich developed countries, Canada spends relatively little on social programs and has a relatively high degree of social inequality. In 2007, UNICEF ranked Canada 12th among 21 ‘rich countries’ in child well-being.

  47. Corporate Restructuring • At the same time that the state was engaged in this shift to neoliberalism; employers were responding through economic restructuring to deal with the labour militancy and the economic turbulence. The corporate sector responded by: • re-organizing workplaces, • speeding up production, • introducing new technologies in a process described as lean production, • they also investing internationally, • and moved to support trade and investment liberalization.

  48. Growing Inequality under Neoliberalism • “From 1946 to 1980, family incomes grew at all points in the distribution, so incomes shares remained roughly unchanged, and median family incomes and living standards rose rapidly. In the 1981 to 2006 period, when the gains from growth went to the top end of the distribution, real incomes for most families stagnated” (Osberg, 2008:17). • “After 1995, ongoing changes in transfers rapidly reduced the redistributive role of the Canadian state” (Osberg, 2008: 30).

  49. Growing Inequality under Neoliberalism • “Declining unionization, a lower minimum wage, higher unemployment, less social insurance protection and more openness to international competition probably interact strongly in their impacts on inequality. If so, they should be viewed as a ‘policy package’, to contrast with the policy package of the period before 1980” (Osberg, 2008: 34).

  50. Conclusion: • Canadians tend to consider their society to be a kinder, gentler, more egalitarian version of the United States. • However, the more generous welfare state in Canada only emerged in the 1960s. And by international standards, Canada looks more like the US than different. • By the 1980s, many of these programs were beginning to be whittled away. In the mid-1990s, Canadian governments made a serious shift to fiscal restraint.