My new industrial relations students will be learning for the first time about how we govern industrial conflict in Canada. The latest Air Canada dispute presents an opportunity to discuss the state’s role in collective bargaining in Canada. The Air Canada flight attendants are set to strike, and then to be immediately ordered back to work by Air Canada’s friends in the Conservative government in Ottawa. This isn’t how things usually work.
The legal right to strike (and lockout) is intended to steer the parties towards a negotiated solution, since a work stoppage is usually very costly to both sides. It is the threat of a strike that gives the workers bargaining power. Take it away, and the model no longer works as intended. When strikes have been prohibited, Canadian governments have substituted interest arbitration, a process in which an arbitrator, usually chosen by the parties, sets the collective agreement after hearing arguments from the employer and union. Interest arbitration is usually applied in the public sector, where workers perform “essential” public services.
The government’s aggressive interference in the collective bargaining at Air Canada is very unusual in several respects.
Firstly, Air Canada is not providing an essential public service. It is not a hospital, police, firefighter. It is not even a school, transit service, or garbage collector. It is a private, for profit corporation that sells shares and operates in a highly competitive industry. There are lots of other airlines that can fly people around if Air Canada is temporarily shut down because of a strike. In addition, flying is not even an essential requirement for business anymore. We have Skype, video-conferencing, email, trains, etc. So it is extremely unusual for a government to be intervening on behalf of a private corporation that does not perform an essential service.
Secondly, because Air Canada knows that if the workers strike, the government will come to their rescue, the incentive to bargain in distorted. Even when public sector employers know the dispute will go to interest arbitration (when strikes are banned), employers still usually have an incentive to reach a deal because interest arbitration is also unpredictable. In fact, interest arbitrators have been know to impose collective agreements that employers believe are better than what the workers would have been able to bargain if they had the right to strike. But the Conservatives have tried to alter this dynamic as well by trying to control the arbitration process in ways designed to favour of the employer.
They assumed unilateral control over selecting the arbitrator, instead of allowing the parties to try and agree on their own as is the usual approach. This is to ensure that the Tories can pick someone who will not be concerned about pissing off the union. Usually interest arbitrators are also grievance arbitrators, and they depend for their livelihood on appearing to be fair to both unions and employers. The Tories don’t want a person like that. They want someone who will care less about long-term labour relations implications, and will apply a more narrow interpretation of the statutory language than an experienced labour relations expert would be inclined to do. Someone like a judge, for instance, without labour relations expertise. Someone like the person the Tories appointed to hear the Canada Post arbitration, for example. Predictably, the union there is challenging the judge as an inappropriate selection.
The back-to-work legislation passed during the last Air Canada strike earlier this year also included a set of parameters to guide the government’s hand-picked arbitrator. These parameters emphasized the employer’s concerns over the employees. Here is the relevant language (section 11(2):
In making the selection of a final offer, the arbitrator is to be guided by the need for terms and conditions of employment that are consistent with those in comparable airlines and that will provide the necessary degree of flexibility to ensure the short- and long-term economic viability and competitiveness of Air Canada and the sustainability of its pension plan.
Can you see how this tends to emphasize the employer’s interests in keeping labour costs down over the employees’ interests in obtaining a larger share of the revenues? The legislation the government will introduce on Wednesday if no deal is reached today will almost certainly include the same (or very similar) language.
You can imagine a slightly different set of parameters that could change the emphasis. Like this for example:
In making the selection of a final offer, the arbitrator is to consider the ratio in executive pay at Air Canada to bargaining unit employees wages, the concessions given by bargaining unit employees in the previous decade, the economic competitiveness of Air Canada, and the sustainability of the pension plan.
Do you think that those parameters would alter the arbitrator’s impressions? Note that the CEO Robert Milton was paid over $80 million dollars between 2004 and 2009, a period in which unionized workers’ wages were mostly frozen or reduced.
The union will likely point that little fact out to the arbitrator during arguments about the “economic viability” of Air Canada.
Do you think the arbitrator should treat the huge salaries paid to Air Canada executives as relevant when he/she decides how much of a raise and benefit improvement to award the CUPE members?