Queen's University IRC

Recession-Era Labour Relations: Pocket Book Thriller or Stephen King Trilogy?


Alan Morantz
Queen’s IRC Thought Leadership Consultant

April 1, 2009

The economic upheaval currently gripping world economies will profoundly alter the dynamics of labour relations in Ontario, says a senior official in Ontario’s Ministry of Labour.

In a presentation in late March to Queen’s School of Policy Studies, Kevin Wilson, Assistant Deputy Minister in the Ministry of Labour’s Policy, Program Development, and Dispute Resolution Services Division, said the current recession has hit Ontario hardest: consumer confidence is the lowest in Canada; unemployment is headed for 9 percent; and the crucial automobile and parts manufacturing market has been decimated.

This merely punctuates the steady erosion of Ontario’s manufacturing base: in 2000 manufacturing made up 18 percent of the province’s workforce; that is now down to 13 percent, and “I expect it to bottom out at nine to 10 percent,” Wilson said. As a whole, private sector union density in Ontario now sits at 15 percent.

Ontario is already seeing a “massive collapse in the private sector settlement pattern”, he said, with very little if any increase in wage settlements. Wilson expects public sector settlements to follow this downward trend over the next six to nine months.

The frequency in strikes in the private sector is falling as well, and there is unprecedented demand and willingness to reopen collective agreements, with even the Canadian Auto Workers “stripping out costs” to help avert corporate bankruptcy.

“The risk is that in some sectors such as auto and forestry, there will be a race to the bottom,” Wilson said. “As companies undercut each other to hang on to market share, unions will begin to draw the line on how far they will go in accepting concessions.”

The challenge for private sector unions is significant. The amount and speed of change may exceed the ability of some unions to respond. “Those that can adapt may survive, but there’s no guarantee,” said Wilson. “The threat of globalization is forcing unions to abandon national borders to respond to the mobility of capital.”

He sees some unions and sectors, such as Ontario’s construction industry, experimenting with new forms of collaboration. Another example from the U.S. is the United Auto Workers creating trust funds (known as VEBA) that provide for the healthcare benefits of GM and Ford retirees.

The dynamics driving Ontario’s public sector labour relations are quite different. There the issue is not survival but managing mounting public debt and signing affordable collective agreements. Public employees will be looking for security while public employers will bargain for greater workforce flexibility. “Employers will discover they can still achieve their fiscal results through hard bargaining” rather than calling on government to use a legislative hammer, said Wilson.

Wilson listed a number of “forks in the road” or decisive pivot points for labour relations players. For the private sector these include:

  • Will global economies continue to integrate or will protectionist pressures win the day?
  • Will employers and unions accept the need to make common cause or not?
  • Will governments maintain a social safety net or accept greater social unrest?
  • Can unions re-brand themselves to connect with youth and immigrants or risk losing relevance?

Wilson identified a couple of key issues for public sector labour relations:

  • Will the nimbleness of the private sector increase the public debate for increased contracting out of public services?
  • What will the ascendance of public sector unions mean for Canada’s labour movement?

“Coming out of this recession, Ontario’s economy will be fundamentally changed,” said Wilson. “The question is, is this chapter three of a six chapter thriller or chapter one of a Stephen King trilogy?”

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