Wednesday, 1 May 2013

Facing down challenges of the "New Economy"

Labour relations have traditionally involved the intersection of three principal groups: (i) labour organizations - represented by unions; (ii) capital - represented by employers; and (iii) government institutions and regulatory authorities.

This three-part focus worked well for decades, with each side counterbalancing the other to negotiate some measure of peace. When globalization began in earnest, however, the power shifted to capital and disrupted the balance. Government has backed capital all the way, leaving unions disenfranchised by the new economy. The result has been a steady decline in working conditions and an erosion of the standard of living for Canadians.

So what accounts for the power shift? The most obvious culprit is the reallocation of global manufacturing production. The persistent liberalization of trade over the past decades has made the processes of production more mobile than ever before. In North America, as a result of agreements like the Free Trade Agreement (FTA) and the North American Free Trade Agreement (NAFTA), multinational corporations (MNCs) are now able to transfer their manufacturing bases with relative ease. MNCs have used this freedom to relocate production as leverage in bargaining with unions, demanding major concessions from organized labour and resisting the unionization of workplaces. Business profits have soared while workers have suffered.

Proving that globalization is a truly global problem for workers, it was not long ago that a company in England demanded its workers agree to a 50% reduction in wages in order to match the wage level of non-union workers in a different country. When the workers rightly refused this massive pay cut, the company shut down and the workers lost their jobs.

This is not an isolated incident. It’s a tragedy that has become commonplace as the new global economy expands and the borders of international commerce continue to blur. This is no revelation. Many workers are painfully aware that the off-shoring of production to jurisdictions with fewer labour protections and workers’ rights has become an endemic problem for all workers.

At first blush the situation seems hopeless. With cost of living expenses being what they are, workers in nations like Canada cannot be expected to survive on wages that may suffice for workers in less developed nations. Still, this hasn’t stopped MNCs from demanding concessions from unions that would begin the process of reducing wages to levels comparable to those of workers from developing nations. The problem is clear: workers can’t accept the concessions demanded of them and the MNCs, with their newfound bargaining leverage, are unwilling to accept anything less from the unions. We appear to have reached an impasse in which the only possible winner is Capital.

As daunting as the challenges this situation presents for organized labour, however, it also contains the seeds of opportunity.

Union Responses

This situation does not have to mean the destruction of unions and the middleclass. Unions can adapt and not simply survive, but thrive. There are stories the world over of unions facing down the hostile environment of the new economy and coming out on top.

In some nations the negative impacts of globalization have been offset or avoided by stepping up efforts to focus on the quality of labour unions bring to a workplace. Organized labour has long had a reputation for providing higher quality work than non-union workplaces. In emphasizing this reputation for quality, unions are able to underline a key strength. Quality of labour is not something that is easily outsourced to workers who would work for poverty level wages in jurisdictions with few labour rights. Shifting the dialogue to focus on quality of labour is a strategy that has been proven to restore bargaining leverage to unions.

Germany is a case in point. Faced by similar threats from globalization, the forces of labour, capital and government worked together to compete on the international stage. Competitiveness was improved by emphasizing quality of production and technological innovation. This emphasis challenged workers to learn new skills and means of production. German workers ably took up the challenge.

This investment in its own workforce yielded great dividends for Germany. Today German workers produce some of the most innovative and technologically advanced machinery in the world. Germany is just as exposed to the downward pressures international markets place on wages, but through this strategy German unions have remained strong, wages have remained decent and regulatory safeguards for workers have not been compromised. Germany is the most economically successful country in Europe and vividly demonstrates that strong unions go hand in hand with a strong economy even in our globalized world.  Germany is just one example. The emerging economies of the BRIC (Brazil, Russia, India and China) have a growing union presence.

The Conservatives in our own country would have us believe that unions impede business interests and no longer serve a purpose. The more unions succeed in attaining rights for workers the louder become the cries that workers no longer need protection (or unions). The senselessness of this argument is astonishing. To assert that union success makes unions redundant is akin to a person recovering from life-saving medical treatment and then turning around and arguing that the health care system should be dismantled. Germany and other countries are testimony to the fact that unions can coexist with strong economies. These countries have recognized what unions have always known - workers’ rights never lose their relevance and are always worth protecting. It is high-time the government and business interests in Canada appreciated the true value of our unions. We would all be much better off.

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