Thursday, January 26, 2012

The Future of Unions?

The Star ran a story today indicating that the CAW and CEP are trying to figure out ways to rejuvenate the relevance of unions in the 21st century, lest they slowly perish.  They're talking about a re-branding, trying to change their image.

The article notes a perception "that unions are primarily self-interested and outdated".

I think that's a fair criticism, and calls for a very deep change to not only how unions advocate, but what they advocate and why.

Unions are dealing with two major problems in terms of public perception.

Do Unionized Employees Have Unrealistic Expectations?

Firstly, there's some criticism that unions and their members are too greedy, pushing too hard and disrupting production for perks and benefits that non-union workers could never expect.  Is this jealousy?  Maybe.  But it goes beyond that, especially in the present economy - job security is something for which bargaining unit members have always been envied, but even they don't have much of it today.  Layoffs are a reality.  Unemployment is a reality.  It's true that it still isn't easy to fire a bargaining unit member for an unsatisfactory performance, but that's not why most people are losing their jobs these days.  Employers are struggling.  Consumer confidence is down, sales are down, revenues are down, and so many employers simply cannot afford to continue to pay the generous wages bargaining unit members receive.

But a union still presses for gains, wage increases, better benefits, etc., which would force layoffs.  So the most senior among the workforce may be better positioned, assuming the employer doesn't go under entirely, but this compounds the unemployment problem.

Of course, not all employers seeking concessions are in financial difficulty.  There's the Caterpillar lockout, and public sector entities looking to shave their budgets.

A colleague of mine from law school argues that the Caterpillar lockout, with a U.S. corporation in good financial shape buying a Canadian company and demanding massive wage concessions, is a symptom of the corporate greed that motivates the Occupy movement.  Perhaps.  But it's also an illustration of the effects of recession:  With higher unemployment, the value of labour goes down in most sectors.  If you won't do the job for x, I'm sure that I can find somebody who will.  The kneejerk "Be happy you have a job" reaction isn't just coming from the public, but also from employers.  Those who press for wage gains in a recessionary economy are often overvaluing themselves, and this is going to inevitably result in job losses.

If I'm employing one person for $60,000, when there are two qualified people on OW who would happily do the same job for $30,000 each, I think that there's a good argument to be made that the better social good is achieved by getting rid of my existing employee and hiring the other two instead.  Labour protections, however, make it very difficult for unionized employers to do that.  Indeed, only a company in a solid financial position like Caterpillar is able to take a hard stand against the union.  Other companies will

Are Unions Protecting Their Members?

The second problem the unions are facing in their perception is something of an inversion of the first problem:  They are not seen as doing enough to protect their members.  They're happy as long as they're getting their union dues, and the less that they can do to earn their dues, the better.  It's more important to them that they convince the bargaining unit to ratify the collective agreement, rather than making sure that the bargaining unit is getting the best deal possible, because a collective agreement gives them protection against decertification.  I can't tell you how many employees I've seen with serious (and in many cases legitimate) gripes against the employer that the unions decline to address.

But the law holds unions to a very low standard in assessing their duty of fair representation, which means there are very few remedies against the union, and almost all of a bargaining unit member's remedies against the employer lie through the union, which means that if the union doesn't go to bat for the member, the member is essentially out of luck.

In many cases, it can be more of a 'tyranny of the majority' type of thing.  As long as they're maintaining majority support among the bargaining unit members, they're fine, and don't need to worry about a few disgruntled individuals.  But this causes a lot of animosity, though, because it isn't just a failure to pursue the individual's remedies; rather, the existence of the union is actually removing from the individual the remedies he would otherwise have.

And here's a fun point:  The collective agreement displaces the common law implied term that an employee will get reasonable notice of termination.  Accordingly, when layoffs do happen in a union context, unless there are negotiated terms of notice in the collective agreement, a laid off worker has very limited entitlements.  (Note:  A union has very little incentive to negotiate such terms into a collective agreement.  It essentially means that, when there's limited cash to go around, the employer has to pay more to the people leaving the bargaining unit, which leaves less for the people who are still going to be paying union dues and who can vote the union out if they want to.)

How to Reconcile and Address these Criticisms?

While the two criticisms may seem to be essentially opposites - unions aren't pressing hard enough, but they're pressing too hard at the same time? - there is a logical thread running through both.

Unions are, by their very nature, most concerned with those who are and who will continue to be members of the bargaining unit.  Layoffs are unpleasant for unions because it means fewer people paying dues, but pay cuts are more unpleasant for the union because it means an equal number of people to represent with smaller dues.  So if people are getting laid off, the union will usually be okay with that.  Security against layoffs is not high on the agenda for unions themselves.  Bargaining unit growth is not necessarily something that the unions are highly motivated towards, either.

The 'jealousy' phenomenon is actually something that unions want.  They want non-unionized people looking at unionized people and saying "My job's not that different from yours; why are you paid so much more?"  Whereupon someone from the union hands over a business card.

The result is that the union would rather have a prosperous environment for those who remain in bargaining units, to show others just how nice it is to be in a union, despite the fact that others have paid a steep price for that prosperity.

There's no easy answer.  I consider myself a centrist in terms of the "labour" debate.  I recognize that unions have a place, especially in times of economic growth, but I don't believe that they are assisting employees generally as it is, and in fact I think they're compounding the recessionary pressures.  But can a 'rebranding' work?

Maybe.  Unions need to change their purpose.  Traditionally, they've justified themselves as 'raising the bar', pushing hard for benefits for their members, as a way of pushing the envelope on how workers everywhere should be treated, so that everyone gets more from their employers.  (Is it just me, or does this sound a little bit like the capitalist mantra of the trickle-down effect?  A little strange to hear it from labour.)

The Occupy movement seems almost like an extension of the labour movement, but the facts underpinning the Occupy movement one thing extremely clear:

Labour Has Failed.

Yes, that's right.  The point of Labour is a redistribution of wealth from those who own the capital to those who produce the capital.  The growth of the income gap and the shrinking of the middle class was going on long before the current economic crisis - this is just increasing our awareness of the injustice.

So how did this happen?  How did we get into a situation where employees are being laid off or having compensation reduced everywhere around us while executives are still getting bonuses in the hundreds of thousands of dollars or more?

In terms of lobbying power and capital, the Labour movement is on nearly equal footing to Corporate interests.  Perhaps more importantly, the Labour movement in large measure owns the large corporations.  Union-administered pension plans have absolutely massive holdings in equity markets, and unionized employees often have quite significant stock portfolios as well.

So while executive compensation has been increasingly running off the rails, where have the unions been?  Why haven't the unions taken an active hand, as lobbyists and as shareholders, in bringing to bear massive pressure for greater corporate responsibility?  Perhaps it's because the unions regard capitalism and corporatism as being offensive to their labour sensibilities.  They don't want to be involved in corporate governance.  That's the realm of capitalists, about labour supporters are unwelcome.  Therefore, we end up in a situation where anyone sympathetic to the plight of employees quite willingly stays completely out of the running of corporations.  (Consider, then, who is left to run corporations.)

What have unions been up to, in the mean time?  Instead of pressing for greater accountability in corporate governance, what legislative reforms have they achieved?

They've been working almost exclusively on their own regulation, trying to protect and improve the existence of the labour movement itself, through amendments to statutes like the Labour Relations Act.  They got the McGuinty government to bring back "remedial certification", making it easier for them to get new bargaining units in the face of "anti-union animus" by employers.  So employers (including large unionized employers) are paying their executives ridiculous wages at the expense of employees and shareholders (read: employee pension plans), and the unions' biggest concern is that some small mom-and-pop employers are disrespecting unions.

What to do, then?

The labour movement needs to rise above this small-minded thinking, and address realities that they've tried to ignore as a matter of ideology:  They need to get out in front of the Occupy movement in a sustained way, using their clout to demand transparency and accountability from corporate executives.  They need to stop being victims, anti-capitalists living in a capitalist world, trying to achieve measly protections from the evil capitalists, and rise to a different level entirely, facing the "1%" on their own playing field.

They need to make economic prosperity and job growth their priority.  The goal of the labour movement has always been to earn the employees a place at the table, to become a partner in running the workplace; to truly earn that place, unions need to show that they can think bigger.

To get to this point, we need to re-evaluate our view of our entire labour relations model, which is built on a fundamentally adversarial relationship between unions and employers.  When unions start getting involved in proxy circulars, their representational role of employees in that adversarial relationship will be compromised.

We need to start recognizing that the needs of the business are not necessarily at odds with the interests of employees as a whole.  Employees should, by all rights, share in the successes and failures of the business; they are major stakeholders in the business.  There are certainly interests to be balanced between employees and shareholders as groups, but at the end of the day they are on the same side, with similar goals.

More to the point, the collective interests to be balanced between groups and the individual rights of specific employees are not the same thing.  This stands out particularly if you imagine a union that truly is a partner in running a workplace - sometimes, the best interests of the company and the bargaining unit as a whole will mean taking actions which are adverse to specific employees.  An enlightened union will know this, and will therefore be incentivized to bargain away the rights and remedies of these employees, and this creates immense unfairness.

Thus, unions need to change the way the see their role, and we need to change the way that their role is legislated.  Unions should be taking an interest in corporate governance, from a general policy viewpoint, and taking a greater interest in the operational success of the employers whose employees they represent, and to do so they will need to sacrifice the sanctity of the collective agreement as completely displacing the individual contract of employment.

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