IR Scene is All Shook Up

An Interview with Rob Hickey, Queen’s Master’s of Industrial Relations Program Facilitator
Labour Relations

Rob Hickey, a facilitator in the Queen’s Master’s of Industrial Relations program, says restructuring is the big issue of 2007 for both labour and management. Below, Rob – who worked as an organizer for the Teamsters for a decade in the United States, and earned his MA and PhD from Cornell University’s School of Industrial Relations and Labour Relations Studies – discusses IR issues, and what he’d most like to see happen in IR in the year ahead.

What are the most crucial labour-management issues for 2007?

Key issues facing labour and management over the next year continue to revolve around the process of economic restructuring. The recent announcements of layoffs by Chrysler, preceded by Ford, the ripple effect that the Big Three auto sector has on parts suppliers – that type of restructuring is certainly impacting the field of IR and labour unions, the Canadian Autoworkers in particular.

This also plays into other forms of restructuring at the level of the workplace. Take the current CN strike: one dimension is a wage dispute, but the other is restructuring of work processes, or the drive for flexibility on the part of management.

I continue to see the issue of restructuring, both on the broader, industrial level and on the micro, workplace level as being the key challenge facing management and labour in the coming year.

What are the top priorities for management?

Management’s priorities are consistent with the term ‘flexibility’, and it creates clear tensions with unions over questions of job security, and economic security in general.

I think flexibility relates to both numeric and functional flexibility; functional flexibility as seen in the CN dispute and numeric flexibility based on the employers’ ability to outsource, contract out, to rationalize and downsize their workforce. We saw this at Chrysler, among the Big Three, and at a host of companies including Eastman Kodak and Nortel.

You see companies trying to adapt their operations to the changing global economic environment, and that includes in some cases shifting production from North America to Mexico, or low-cost offshore locations in the Far East. Or it includes what I call “in sourcing” – bringing non-employee contractors into a local workplace. So the work may still be done locally, but no longer by core employees of a particular employer. These forms of flexibility continue to be attractive to employers as part of overall cost containment or cost reduction strategy.

It’s not simply a question of adapting to current economic pressures: it’s also about restructuring the work process, and creating different structures in the employment relationship.

What are the top priorities for labour?

Pressures from economic restructuring are increasing the profile of economic and social security concerns. So job security and also broader social security remain a serious focus of labour’s agenda. I include social security because while the loss of manufacturing jobs is one element, it also contributes to concerns about a crisis in the provision of public services and the quality of the health care system – which the Canadian labour movement is deeply concerned about.

Wages will of course not disappear from labour’s concerns, and that will continue to ebb and flow. Statscan has tracked contractual wage increases at slightly above the rate of inflation, and I don’t see that changing significantly in the near term. Labour unions do not want to see their members’ purchasing power decline.

Related to the first point on economic restructuring, we see rapid changes taking place in ownership structures through mergers and acquisitions. Take Novelis here in Kingston – an India-based firm, Hindalco, just made one of largest buyout offers in the industry’s history to purchase this aluminium manufacturing company. This type of global capital restructuring creates concern for unions but also opportunities that may bring much needed capital investment to operations that have historically been efficient, productive, and profitable, but lack money to recapitalize.

So restructuring in this case is not just about job protection and layoff concerns, but also about investment flows, capital improvements, and commitment to innovative technology to local operations.

A recent Conference Board IR report said management/labour interests are converging, and identified the “war for talent as “the tie that binds.” Do you agree?

I was left unconvinced that pressures for convergence overcome the inherent tensions in the drive for flexibility. Management’s drive for flexibility may indeed trump the ability of the parties to cooperate on issues of retention and skills, and I think we are seeing that. One of the commentators in the report was from CN, and she was prescient in talking about types of flexibility changes they were seeking in their contract negotiations, claiming that current contractual work-rules were still based upon operations using steam locomotives. I’d venture there is some hyperbole involved in that statement, but I do think it accurately reflects what the real tensions are and that there will continue to be serious areas of dispute in terms of restructuring at the workplace level.

There are concerns on the union’s part about safety and economic and social security; and on the employers’ part about winning greater flexibility and efficiency gains. It is not enough to say that the changes in the work rules are merely about modernizing in the current economic environment – one also has to recognize the serious concerns unions have about the health and safety impacts of work rule changes and the challenges of maintaining health and safety standards with a significantly reduced workforce.

Employers call it flexibility when one person can do three jobs; unions call it a safety hazard. So how the parties resolve that fundamental dispute is a real challenge, and will not be overshadowed by changes in the demographic makeup of the Canadian workforce. That’s just part of the background context for what will remain in the foreground of challenges facing labour and management in the global economy.

Do you think the changing demographics will promote grassroots labour-management partnerships, as predicted in the report?

One of the challenges even in successful partnerships between labour and management is moving the partnership down to the shop floor. There may be great relationships among top negotiators and top officers of the two organizations, but frontline supervisors and rank-and-file workers still see traditional disputes. So how you move the culture of partnership down to a grassroots level? I think that’s a real challenge to the long-term maintenance of partnership agreements.

To the extent there are new opportunities, I don’t know that they will stem strictly from changes in the demographic makeup of the Canadian workforce. I think the real challenge of partnership is to build it throughout organizations, and not just on the top tiers.

Each organization has its own approach to more grassroots engagement. So the extent to which labour and labour leaders have been able to develop more inclusion in terms of membership participation, democracy and communications is one element of that. At the same time management has developed more team-oriented approaches, flatter structures, and broader engagement with front-line employees.

I’d say both trends are happening, but I’m not convinced they are always happening in concert with one another – meaning sometimes they are vying for the hearts and minds of members more than moving partnership agreements deeper into the culture of the organization.

What other developments can we expect to see in IR this year, and beyond?

In 2007 on the collective bargaining front a number of important contracts are coming open. In the public sector, health services in Ontario and Alberta will involve about 60,000 workers. In the federal sector there are contracts involving Quebec public workers particularly in transit in Montreal. So certainly the public sector remains a rich area for labour-management relations, partly as it is so highly unionized, and partly because it does set the tone for labour-management negotiations across a spectrum of industries.

Also the pace of restructuring, both on an industrial scale and workplace scale, will continue to be an area to pay attention to. Whether we continue to see contraction of the unionized auto sector or not we will certainly see the ripple effects as Chrysler contracts by 2,000 jobs in Windsor, and all the jobs that feed into those assembly operations are affected. How unions and managers negotiate those changes and help the workforce adjust will be critical in the coming year.

What development would you most like to see in IR this year?

I’d like to see the parties have an ability to take a step back and think about not just how they deal with restructuring on an individual basis, but how Canada manages the restructuring process on a nationwide basis. So to consider it both in terms of changes on an industry level, and in terms of changes in geographic flows and demographic flows.

There’s not currently a good forum for this interchange, at least directly between organizations of labour and organizations of management. A tripartite forum could exist where you have federal/provincial ministers of labour, along with representative of the Canadian Labour Congress, and Canadian employer associations. I think would be a tremendous step forward, helping parties navigate the restructuring process.

I don’t see it happening. But if I had a wish-list, I would really like to see a forum for a broader-based discussion on how we handle restructuring on a national basis and all the way down to the workplace level.

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