Skip to main content

The Globe and Mail

New battleground of wage freezes takes centre stage with CAW talks

CAW president Ken Lewenza speaks at the union’s convention Monday in Toronto on Monday, August 20, 2012.


The economy is recovering in fits and starts, but there's one area where growth is accelerating: the number of employers telling workers to abandon any hope of winning wage increases.

The word to workers is that they must agree to freeze their wages – a position the Ontario government is taking in negotiations with teachers and a point the Canadian units of the Detroit Three car companies have made clear to the Canadian Auto Workers union.

But the most extreme example comes from Caterpillar Inc., whose workers at a plant in Joliet, Ill., capitulated to company demands after a three-and-a-half month strike and agreed to freeze their wages for the next six years.

Story continues below advertisement

The heavy equipment giant, which posted a profit of $4.9-billion (U.S.) in 2011, is "essentially saying that what you can expect from competitive success is less to workers," said Harley Shaiken, a professor at University of California, Berkeley, and a long-time observer of U.S. labour.

"And that unwinds the history of the U.S. in the 1950s, '60s and '70s, where competitive success resulted in more for workers, which in turn fuelled purchasing power and economic growth."

The attitude among companies that the coffers are empty when it comes to sharing with workers will be tested over the next month in CAW contract talks with the Detroit Three.

The union is insisting that workers be rewarded for the concessions they made to help save two of the companies during the recession.

The companies have no moral right to demand more concessions, CAW president Ken Lewenza told a throng of workers gathered Monday in Toronto for a CAW convention.

The pressure on unionized workers is not new, but stubbornly high unemployment levels and the fresh memories of the 2008-2009 recession are giving employers powerful leverage not only to hold the line on wages, but also roll back benefits built up over decades.

In Canada, companies in some cases have enjoyed extra help in the form of the federal government, which legislated employees back to work at Air Canada and Canadian Pacific Railway Ltd.

Story continues below advertisement

Those high-profile disputes and the actions by Ottawa to intervene have emboldened other private-sector employers, noted George Smith, a professor at Queen's University in Kingston who specializes in collective bargaining issues.

"That does translate – employers do see that," Prof. Smith said.

That leaves unions fighting what is effectively a rear-guard action to hang on to what workers have, rather than demanding increases in hourly wages or monthly pension payments for retirees or better health-care coverage for both active and retired workers.

But if the labour movement banded together instead of being fragmented, unions would have more power to fight back politically and at the bargaining table, said former CAW president Buzz Hargrove, who noted that the public attitudes have turned upside down since the 1970s.

"When I started out in the labour force, you were envious of people doing well. That envy always led you to want to do the same to get decent wages and pensions and benefits and time off the job," Mr. Hargrove said Monday. "Today the envy is: take it away, they haven't earned it."

His call for unions to fight back was echoed by Charlotte Yates, dean of social sciences at McMaster University in Hamilton where United States Steel Corp. locked out workers for nine months in a pension battle that was eventually won by the company.

Story continues below advertisement

"They [unions] need to have a concerted political strategy, because they cannot win at the collective bargaining table on their own," Prof. Yates said. "There has to be a more concerted political and social strategy that starts articulating alternatives and talks about the need for governments to play a role."

Unions also need to convince the broader public of their value by taking stances that affect workers broadly, notably low-income workers who may not be unionized, she said. Members of the public look at unions and see pensions and vacations they don't share, so they have difficulty caring when unions are in disputes, she added.

At the CAW bargaining and constitutional convention Mr. Lewenza thundered that the auto makers should be grateful for the concessions workers made in 2009, which helped persuade the federal and Ontario governments to contribute to the bailouts of Chrysler Canada Inc. and General Motors of Canada Ltd.

Mr. Lewenza issued a warning to companies and governments that are insisting their employees surrender gains they have made over decades.

"The more you push us, the harder we're going to fight back," he declared.

Report an error Licensing Options
About the Authors
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More

Real Estate Reporter

Janet McFarland is the real estate reporter for The Globe and Mail’s Report on Business, with a focus on residential real estate trends. She joined Report on Business in 1995, and has specialized in reporting on corporate governance, executive compensation, pension policy, business law, securities regulation and enforcement of white-collar crime. More


The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨