I noted last week that the United Auto Workers in the U.S. had been surprised to learn that the Bush administration had included a “no strike” condition in its agreement to inject funds into the U.S. auto industry. At that time, I noted that it was still unclear what the terms of the Canadian bailout would be. Today, the Globe and Mail reports that the Feds will require, as a condition of the bailout, that the Canadian Auto Workers agree to some form of wage and benefit concessions. The Globe’s story includes a lengthy video, including an interview with CAW president Ken Lewenza. Here it is.
It’s quite unusual for a government to inject itself into private sector collective bargaining by pressuring the parties to open up a collective agreement and by insisting that workers agree to less than what the employer had agreed to in bargaining. It will be interesting to see how the CAW reacts, especially given the union’s history of resisting concessions. Note Mr. Lewenza’s point about how labour costs in Canada account for only 7% of the cost of a car. Does that surprise you?
Of course, unions have been arguing for years that governments should attach conditions to government bailouts, including tax cuts and other government subsidies, but the conditions they have sought are usually promises by the companies not to layoff Canadian workers. Governments have not historically been too keen on those sorts of conditions, although apparently there were some such conditions in a recent package given by the Ontario government to General Motors. This all reminds me of the great Michael Moore Chapter (6) from Downside This, called Big Welfare Mamas, in which he counted down the Top 5 Corporate Welfare Moms, companies that took huge government subsidies and then went on to layoff thousands of employees in return.
Which makes you wonder if there is any condition in the terms of the bailout requiring the companies to promise to keep car or truck lines in Canada?