Welcome to the new Canadian nanny state, curtesy of the majority Conservative government.
The Air Canada strike ended with a settlement this week. I haven’t seen the terms, but the CAW is reporting that it includes continuation of the defined benefit pension plan for existing employees, but for future employees, the terms of the pension plan are being sent to an arbitrator.
This settlement followed on the heels of an extraordinary piece of legislation introduced in Parliament by the majority Conservative party just days into a strike that was having very little negative impact on the airline according to its own spokesperson, and even less impact on the airline industry. Here is the Bill that the Government introduced.
It’s extraordinary because unlike the usual back-to-work legislation Canadian governments introduce more than any other democratic country in the world, this legislation actually chooses sides. Surprise, the Tories sided with the employer! The legislation referred the bargaining disputes to an arbitrator. Normal. It legislated an end to the strike. Normal. It defined the arbitration process–“final offer selection”. Not common. Final Offer Selection requires the union and the employer to submit collective agreement language on the issues in the disputes, and then limits the arbitrator to selecting the one or other. The theory behind this process is that FOS forces the parties to come forward with reasonable and realistic proposals, since an unreasonable and unrealistic proposal will be rejected by the arbitrator.
It gave the government, rather than the parties themselves, the right to pick the arbitrator. Extremely rare. This is part of the nanny state nature of the proposed law: the parties can’t be trusted to chose an arbitrator that will implement the government’s collective bargaining strategy, so the government wants to chose the arbitrator itself. Maybe it will be one of those retired judges with no labour relations experience or credibility in the labour relations community that the Mike Harris regime preferred back in the 1990s. Recall how the Harris government’s attempt to appoint non-labour relations experts unacceptable to unions was ruled unlawful by the Supreme Court of Canada in CUPE v. Ontario.
And then the legislation told the arbitrator to chose the option that best protects the employer’s interests. Virtually unheard of. Read section 11(2):
(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.
Firstly, back-to-work legislation targeting a private, for profit, publicly-trade corporation is almost unheard of. Back-to-work legislation is a tool used to protect the public from disruptions of publicly provided services. Air Canada does not provide a public service, and there are a bunch of other for-profit airlines ready to fill the demand. A government directing an arbitrator in a dispute involving a private corporation to focus on the employer’s desire to have “flexibility” and the competitiveness of the industry is extremely unusual. Is anyone aware of back-to-work legislation targeting a publicly traded corporation that directs an arbitrator to focus on the employer’s demands?
For a Conservative government that talks a whole lot about small government and reducing government’s fingerprint on business, this is government intervention in private business affairs in the extreme.
Of course, that doesn’t mean that this language would lead an independent, neutral arbitrator to side with the employer’s position. Even this language is vague enough to allow an arbitrator to reject a proposal by Air Canada that attempts to gut the collective agreement or its pension plan. Respected interest arbitrators have shown remarkable resistance to politicians telling them to weigh the employers’ interests over the employees’. Arbitrators are labour relations experts who understand the dynamics and realities of collective bargianing, unlike politicians, who are concerned with being re-elected.
For example, to an arbitrator, the “economic viability and competitiveness” of Air Canada depends on a whole range of factors that don’t involve the collective agreement. Take for example the CEO of Air Canada who was happily granted a 75% raise last year, from $2.6 million to $4.6 million in one year! If Air Canada can afford those sorts of raises and salaries for its senior employees, then it’s viability mustn’t be threatened by slight improvements in wages and benefits for the unionized workers at the bottom, right?
The terms and conditions at “comparable” airlines must be considered, but what is “comparable” to Air Canada? British Airways? Swiss Air? U.S. Airways? Westjet? Take your pick of comparators, arbitrator. How do you compare those companies? If the airline is new, like Westjet, it would be expected to have lower labour costs, since it’s employees have very little seniority and little pension costs. No respectable arbitrator would interpret the above language to mean that they are being directed to initiate a race to the bottom in working conditions in the airline industry.
The “sustainability” of the pension plan could also prove to be a meaningless parameter. Of course that would be considered, as it is by the parties in collective bargaining. Neither side wants the pension plan to fail. The parties just disagree on what is required for the sustainability of the pension plan. Both have pension experts and their is no obvious right answer. The union would make an argument that the pension plan is sustainable under whatever proposal it makes, as would the employer. The arbitrator could chose either and justify his/her conclusion.
In the end, unless the government wants to turn into a nanny state and actually legislate employment contracts for the parties—and perhaps this government is heading in that direction–it is difficult to convince respectable arbitrators to just give employers whatever they want by trying to tell them what to consider. Hence the need for the government to control who the arbitrator is.
Next stop on the government’s legislation-happy train: Canada Post. Stay tuned…