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Raitt cements a labour policy with unintended consequences

Picketers stand at the entrance to the CP yards in Coquitlam, B.C.


Lisa Raitt insists that companies and unions are always better off settling disputes on their own.

But the federal Labour Minister's tough stand at Canada Post Corp., Air Canada and now Canadian Pacific Railway Ltd. may, paradoxically, ensure that government intervention becomes a permanent fixture of the labour relations landscape.

Back-to-work legislation, which Ms. Raitt has promised to introduce if needed to end the CP strike, typically begets more of the same, according Benjamin Dachis, a senior policy analyst at the C.D. Howe Institute who co-authored a recent report on the unintended consequences of government meddling in collective bargaining.

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The reason is simple: Intervention lets both sides off the hook. Knowing the government is ready to step in discourages employers and employees from tackling the toughest issues at the negotiating table, such as the thorny questions of pensions or work rules that are at the heart of the CP strike.

"Intervention makes a freely bargained contract down the road less likely," Mr. Dachis said. "The government not only kicks the can down the road, but makes the two sides less likely to reach a mutually agreeable outcome."

A back-to-work order triples the chances that the next contract will also wind up in a legislated end or arbitration, according to a review of thousands of contract negotiations by Mr. Dachis and McGill University industrial relations professor Robert Hebdon. Illegal wildcat strikes and work-to-rule campaigns also become more frequent.

"One of the key dynamics of any work stoppage is that it's supposed to bring pressure on the parties to accommodate each other," said Anil Verma, director of the University of Toronto's Centre for Industrial Relations and Human Resources. "When you move too quickly, you haven't given them a chance to reconsider the consequences of their actions."

Some business leaders agree that back-to-work legislation isn't optimal. But Perrin Beatty, chief executive officer of the Canadian Chamber of Commerce, said his 192,000 members understand that the government may have no choice when the economic reverberations of a strike are felt far beyond a single employer.

"Nobody wins at the end of the day where the government is forced to intervene and there are hard feelings afterwards," Mr. Beatty acknowledged. "But nobody wins either from a protracted dispute that ties up a good chunk of the economy and costs jobs."

Ottawa's penchant for getting involved in labour disputes isn't a new phenomenon, as Ms. Raitt is quick to point out. The federal government regularly got involved in various transportation disputes during the strike-riddled 1970s, 1980s and 1990s.

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But the frequency dropped off dramatically at the end of the nineties, in line with a sharp decline in strikes and other work stoppages.

Now intervention is making a comeback under the Conservatives. If Ottawa orders nearly 5,000 striking CP engineers, conductors and rail traffic controllers back to work early next week, as threatened, it will mark the sixth such action since 2006 – the fourth in just two years.

"There's been a mini-uprising in labour unrest over the last couple of years and the government has had this urge to intervene," Mr. Dachis said.

The effects of back-to-work legislation can be enduring and far-reaching. It's not just about rail, airline and postal workers, where Ottawa is either the regulator or the owner. Ms. Raitt is sending a clear message to workers in other federally regulated industries that she won't tolerate strikes that threaten the Canadian economy. That would include banks, as well as telecommunications and shipping companies.

Even within industries, there are unintended outcomes. When Ottawa ordered Air Canada employees back to work, that was a lost opportunity for rival WestJet Airlines Ltd., which is proudly non-union and employee-owned, to gain from a strike. A WestJet official declined to comment.

Intervention also leads to lower wages at affected companies, according to Mr. Dachis and Mr. Hebdon's research – 2.9 per cent less than "otherwise similar" contracts. And that may undermine the competitiveness of rival companies.

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Ottawa is clearly "picking sides," and that "calls into question the entire system of collective bargaining," argued David Gray, a labour economist at the University of Ottawa. "We are in the process of seeing a major change for our model of collective bargaining in Canada," he said.

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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