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


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.

You may also like

Lufthansa Flights Canceled Due to Strike

Lufthansa Flights Canceled Due to Strike

We Have a lot to Thank Unions For

We Have a lot to Thank Unions For

This Week in the History of the International Labour Movement Wagner Act

This Week in the History of the International Labour Movement Wagner Act
{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}

Subscribe to our Bulletin now!