Will Ontario Pursue Greater Unionization in the Service Sector?

September 8 2o15

You are likely aware that the Ontario government is presently studying possible reforms to the provinces labour and employment laws. The Ministry of Labour released a detailed “Guide to Consultations” in May.  After a discussion of the growth in non-standard work (part-time, temporary, occasional) and the share of the workforce employed in services (about 59% in Ontario in 2014), the Review asks the following question:

Q 3: As workplaces change, new types of employment relationships emerge, and if the long term decline in union representation continues, are new models of worker representation, including potentially other forms of union representation, needed beyond what is currently provided in the LRA? (p. 12)

This is a great question for new students to labour law (welcome back to campus!) as well as grizzled veterans.   Everyone is talking about “alternative models of worker representation” these days.
I want to spend a moment in this post talking about some old proposals and laws tried in the past to try and improve access to meaningful collective representation in the service sector.

A.  Why the Existing Union Certification Model is Ill-Suited for the Retail Service Sector

I’ve explained before why our labour law model designed in the 1940s to facilitate collective bargaining in large industrial workplaces and control large industrial unions doesn’t work well in the service sector.  Unionization rates are always among the lowest in this sector:  union density  in the service sector is around 12 percent, and is only about 8 percent in food and accommodation services.  This is  despite survey evidence that may service sector workers would support unions if given the opportunity.  This is particularly true in the case of industries that operate primarily or exclusively through the franchise model (think McDonald’s, Canadian Tire), or through a large number of locations (think Wal-Mart, banks).
Employees of these businesses who want collective bargaining face two big challenges.  Firstly, these employers tend to be especially resistant and hostile to the threat of unionization for fear of the domino-effect:  if a union is successful in winning benefits at one or two locations, then employees at the other locations may see value in joining unions too.  Therefore employers treat the appearance of unions at any location as a grave threat.

Secondly, in the face of hostile employer resistance, unions have limited power.  The legal model arms the union with one main power leverage–the threat of a strike.  However, large corporations that operate through many small locations have great power to resist a strike, because the marginal cost to the corporation of potential lost business at one location can be easily absorbed.  If employees at one branch of the CIBC strike, the bank will barely notice.  CIBC will happily withstand a strike by 50 employees at a branch in Willowdale if the lost strike signals to all other employees that unionization is futile.
A franchisee that owns one or two locations will certainly feel a strike, but in that scenario the union faces a another challenge.  These employers often (not always, but often) operate on a small profit margin and under a climate of intense competition, so the gains a union can win are often marginal.  Absent significant bargaining gains, unions often face a decertification drive.  That is why unions need to and try to organize competitors, to try and take labour costs out of competition.
Lastly, for unions, the cost of organizing and servicing a bargaining unit comprised of one small retail store can make organizing these workplaces economically unviable.  I know of unions that have stated or unstated policies of not organizing workplaces of less than a threshold number of workers (say 30) because those units will cost far more to service than will be recouped in union dues.  This is a reasonable concern for unions.

B. Should Old Ideas Be New Ideas?

None of this is new.  We have known for years that in order to facilitate collective bargaining in the service sector, a new legal model would be needed.  Some political parties (read Conservatives) have no interest in improving access to collective bargaining in the service sector, since they believe unions are always a bad thing and that low wages in the service sector are a good thing, or at least a natural thing.  Liberals, but especially the NDP, have at least been prepared to acknowledge that the absence of collective bargaining in the service sector helps explain the low pay and poor benefits, poor compliance levels with employment protection statutes, and sporadic working hours that characterize that sector.
Two ideas (among others) repeatedly come up to help address the challenge of expanding collective bargaining in the service sector:  (1)  Sectoral Bargaining and (2) Combination of Bargaining Unit.

1.   Sectoral Bargaining

When the British Columbia N.D.P. government explored the challenge of allowing collective bargaining to grow in the service sector in the early 1990s, an expert report recommended a new form of “sectoral union certification” that would apply in the service sector.  Access to the model would apply in sectors determined to be “historically underrepresented by unions” and where workplaces were on average less than 50 employees in size.  The model would have applied for example to coffee shops, fast food, and most if not all retail stores.
Under this model, if a union organized two Starbucks stores, it would be able to bargain a single collective agreement for both stores. If it then organized new Starbucks, or new Second Cup or Tim Hortons stores in the geographic scope covered by the sector order recognized by the labour board, it could ask the board to sweep the new employers into the existing collective agreement.  If a different union organized different coffee shops in the same sector, it would bargain its own initial collective agreement with those employers.  A majority of workers at each store would have to vote for the union.  In this model, therefore, a union (or unions) could organize stores at different times, bring them under an existing collective agreement, and slowly build a critical mass of representation in a sector over time.  The more stores unions organize, the greater the workers’ power in bargaining.
The proposal for Sectoral Bargaining model was not adopted.  [My friend and former colleague Diane MacDonald published a nice summary of this proposal:  “Sectoral Certification: A Case Study of British Columbia” (1997) 5 Can. Labour & Employment Law Journal 243]

2.   Combination of Bargaining Units

One of my first jobs as a summer law student back in 1992 was to prepare stacks of applications for “consolidation of bargaining units”.   I filed applications to combine multiple bargaining units of The Bay, Sears, and other retail employers I no longer recall.  Consolidation of two or more bargaining units of the same employer was possible under amendments to the Labour Relations Act introduced by Bob Rae’s N.D.P. government.
Section 7 of Bill 40, introduced in 1992, read as follows:

Combining bargaining units
7. (1) On application by the employer or trade union, the Board may combine two or more bargaining units consisting of employees of an employer into a single bargaining unit if the employees in each of the bargaining units are represented by the same trade union.

This simple rule offered a potentially powerful new strategy for unions in the service sector. Unions could organize stores sequentially and then have each new combined with existing units to create a single, more powerful combination of workers.   For example, at that time, the United Steelworkers (my old client) represented several Bay stores, each covered by its own collective agreement.  By consolidating all the stores under one collective agreement, the union’s bargaining unit grew.  It could then approach employees at unorganized Bay stores and promise them that if they join the union, they too will be swept under the existing collective agreement.  Gains won in the past were immediately passed on to new union members.  While a threat by employees at one Bay store may not be overly concerning to the Bay, a threat that 7 stores will all strike at once will.  This dynamic empowers the workers in bargaining.
One of the first thing Mike Harris did when his Conservatives were elected in 1995 was “de-consolidate” every unit that had been combined in the short period Bill 40 was in power.  The combination power has never returned.
Questions for Discussion

1.    Do you think Canadian governments should be concerned with low unionization rates in the service sector?

2.    Do you think a model of sectoral bargaining would address the problems that impede access to collective bargaining in the service sector?  Do you have concerns about such a model and, if so, what are they?

3.   Should the Ontario government bring back the ability to consolidate multiple bargaining units of a single employer?  If it did, do you think this would make much difference to the level of unionization in the service sector?