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Ottawa makes no apologies for Air Canada clampdown

Labour Minister Lisa Raitt on Air Canada: 'It’s up to those two camps to talk to one another and make sure their company prospers.'

Sean Kilpatrick?The Canadian Press/Sean Kilpatrick?The Canadian Press

When baggage handlers heckled Lisa Raitt last month in a protest that spurred a 14-hour wildcat strike, it was because her moves to prevent a full-scale work stoppage at Air Canada were viewed as a clampdown on labour.

But the federal Labour Minister's actions may actually have come at a high cost to industrial relations at federally regulated companies. The truce with unions brought about by Ottawa's intervention short-circuited the bargaining process and damaged the airline's already-fractious relations with its unions.

The temporary peace is a Band-Aid solution that may carry long-term financial pain for Air Canada as the airline struggles to contain pension expenses and seeks to start a discount division that would pay lower wages to staff, say employers and labour experts.

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While Ottawa appeared to be siding with management, federally-regulated employers have watched Ottawa's clampdown on walkouts with some trepidation, contrary to the conventional wisdom in union circles that corporations are thrilled by the Conservative government's intervention in labour contract fights.

"When people are intervening in labour disputes, it's almost impossible for either side to negotiate a breakthrough settlement that will change the basic economic framework of an operation," said John Farrell, executive director of the Federally Regulated Employers – Transportation and Communications (FETCO) organization, whose members include Air Canada.

The Conservative government is focused on guarding air travellers against unnecessary strikes that would threaten Canada's fragile economic recovery. Ms. Raitt said in an interview that she makes no apologies for "putting in the right process to get people to an agreement. Then Air Canada and the unions have to work on their relationship with each other."

She said her decisions aren't driven by political ideology, but by a surgical study of each case and how a strike or lockout might send ripples across the economy.

"There's always a fair amount of tension between unions and employers. How that is managed and manifested is up to the parties to deal with to ensure the best interests of the company," Ms. Raitt said. "It's up to those two camps to talk to one another and make sure their company prospers."

Ms. Raitt said Ottawa's back-to-work legislation, which sends the airline's labour disputes to arbitration, doesn't necessarily favour management. "Employers want to be in control of their destiny because they have to deal with the fallout," she said. "I'm not happy that I have to intervene in terms of finding and putting a process for these parties in place to get to a collective agreement, but you only do it when you're concerned about the national economy and the Canadian flying public, and that's the measure."

She emphasized that Air Canada is a complex case, especially given the pattern of union negotiators recommending tentative agreements, only to watch employees reject those pacts in ratification votes. "It's difficult because they're not pulling in the same direction right now for the prosperity of the company," Mr. Raitt said.

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But crucial changes to collective agreements are needed to give the airline the flexibility to compete in the years ahead.

Ian Lee, a professor at Carleton University's Sprott School of Business, said Ottawa wasn't acting to foster harmonious labour relations between Air Canada and its unions. Instead, the intervention aimed to follow a guiding principle of defending the national economy against disruptions in the transport and communications sectors, he said.

"A large number of Canadians support, in the abstract, the right to strike and collective bargaining, but when there were strikes in the past at the postal service or air travel or the railways, public opinion supported back-to-work legislation," Mr. Lee said. "The Conservative government has decided to look after the greater public good and if it messes things up at the micro-level, meaning between Air Canada and its unions, so be it."

Contentious issues include pension reform and the creation of a discount leisure airline that would pay lower wages to workers at the proposed new division.

Union leaders are upset about Ms. Raitt's intervention to prevent strikes at the airline. Dave Ritchie, Canadian general vice-president for the International Association of Machinists and Aerospace Workers, said Ottawa's repeated interference has poisoned labour relations at Air Canada.

Industrial relations expert George Smith, a fellow in the School of Policy Studies at Queen's University, said Ms. Raitt is stalling when she enlists the help of the Canada Industrial Relations Board, buying time for the government to prepare a back-to-work bill.

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He describes Ottawa's tough stance on strikes as "short-term gain for long-term pain. Air Canada has been in a toxic, dysfunctional relationship with its unions, and those problems get swept under the carpet. Ottawa is basically putting major changes in collective agreements in a holding pattern."

If anything, unions may come out slightly ahead through arbitration, Mr. Smith said.

Instead of further bargaining, the Air Canada disputes will go to "final offer selection" arbitration, where each side will submit their proposals, and either management's or the union's offer will be chosen to break the impasse.

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About the Author

Brent Jang is a business reporter in The Globe and Mail’s Vancouver bureau. He joined the Globe in 1995. His former positions include transportation reporter in Toronto, energy correspondent in Calgary and Western columnist for Report on Business. He holds a Bachelor of Commerce degree from the University of Alberta, where he served as Editor-in-Chief of The Gateway student newspaper. Mr. More

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