Strikes losing historic leverage
TheStar.com – business
Published On Mon Jun 20 2011. By David Olive, Business Columnist
Striking Canada Post workers had to be legislated back to work or this year’s Summerside Lobster Carnival would have been a fiasco. As of Monday, applications for the spelling bee, parade and other festivities mailed in from across P.E.I. totalled a mere 10, compared with more than 40 last year.
“We’re scared that there are some entry forms somewhere in Canada Post and they aren’t getting to us,” said organizer Catherine Dickson.
After public-employee strikes that embittered Torontonians, a year-long strike at Vale S.A.’s former Inco operations in Sudbury, and simultaneous work stoppages this month at Canada Post and Air Canada, Canadians can be forgiven in thinking we’re entering a new era of labour disruptions.
But that’s not the case. A few reasons why:
Inflation is at harmless levels. Inflation is the chief driver of wage demands that culminate in work stoppages. But apart from recent spikes in gasoline and housing prices, inflation has been quiescent for two decades now, never rising above 5 per cent in the past 10 years. Inflation is currently running at a 3.3 per cent annual rate. The strike-prone 1970s, when it seemed Canada Post was more often on strike than on the job, were characterized by double-digit inflation, which peaked at 12.9 per cent in 1975.
Workers then were understandably determined to keep up with a spiralling increase in their cost of living, even as their own wage demands contributed to the spiral.
The economy remains in recession. Officially, the recession ended more than a year ago — as measured by a resumption in GDP growth — but try telling that to Canada’s 1.5 million unemployed.
Canada’s jobless rate of 7.4 per cent is intolerably high. That compares well enough with America’s 9.1 per cent jobless rate. But the unemployment rate in Germany is 7.0 per cent and in Australia a mere 4.9 per cent. Canada’s high jobless numbers obviously weaken the bargaining power of all workers, given the surplus in labour supply.
Union membership has steadily declined over the past three decades, to a current 30.8 per cent of the non-agricultural workforce. The comparable figure for the U.S. is a mere 12.3 per cent. The sharp drop in union membership is cited as a leading cause of the flatlining of inflation-adjusted middle-class incomes in Canada and the U.S.
Employers are taking a hard line. A 17-month strike at Caterpillar Inc. in 1994 marked a turning point in North American labour relations. Employers had been loath to “take a strike,” fearing permanent loss of market share while their plants were idled. Cat took the 1994-95 strike — the longest on record — and striking workers eventually returned to work without a contract. Employers have been playing hardball ever since.
Governments have turned pro-employer. Labour laws of every description — from organizing a bargaining unit in the first place to traditional prohibitions against employers bringing in “scabs” or replacement workers — have been steadily eroded not only by conservative governments but centre-left ones. Strikers have always enjoyed little public support. With that in mind, the Harper government threatened strikers at both Air Canada and Canada Post with back-to-work legislation, and the principle of collective bargaining rights be damned. Thus Air Canada’s 3,800 striking airport check-in agents and call-centre staff settled with management after a brief three-day strike. And the time elapsed since more than 40,000 Canada Post workers began rotating strikes to their return to work, expected Friday, will be 22 days, a small fraction of which affected the country as a whole.
Canada Post and Air Canada are sick puppies, and they have lots of company. They are struggling with fundamental change in their business models. Canada Post admirably has chalked up 15 consecutive years of profit, which looks awfully good in comparison with an effectively insolvent United States Postal Service (USPS), which lost $8.5 billion last year and is on track to lose another $6.4 billion this year.
But Canada Post’s profits are slender and shrinking, only $281 million in 2009 earnings — the latest reported year — on revenues of $7.3 billion. That’s a miserable return on invested capital.
Revenues in its core business of “transaction mail,” or letters, keep falling, a victim of cyberspace, principally email, but also social networking. The consistent black ink on Canada Post’s bottom line has come almost entirely from wringing costs out of its workforce of 71,000 employees.
Air Canada has lost $513 million over the past four years, returning to profitability last year with meagre earnings of $107 million on 2010 revenues of $10.9 billion.
Both corporations are saddled with unfunded pension liabilities — the biggest stumbling block at the bargaining table for both.
This is a widening crisis for all “legacy” employers, public and private. You can’t bargain away demographics, and legacy employers — such as 144-year-old Canada Post and 74-year-old Air Canada — now have more retirees than active employees.
Each has hit the wall in its ability to continue with guaranteed, or “defined benefit,” pension payouts. Each is attempting, with great resistance from workers, to switch to “defined contribution” schemes in which employer and employee contribute to pension funds which, fingers crossed, will generate enough investment income to cover retiree obligations.
The good news for would-be contestants in the Summerside Lobster Carnival is that the deadline for applications has been extended from Monday to Tuesday. And anyone calling organizer Catherine Dickson to say their application “is in the mail” is very likely to be believed.
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