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Canada needs a new model for resolving public-sector labour disputes

Ake Blomqvist is an adjunct research professor at Carleton University and a fellow-in-residence at the C.D. Howe Institute

The Ontario Legislature's vote to send striking community-college teachers back to work has been highly controversial and has been described as high-handed and "anti-labour."

It is neither of these things, but draws attention to a dilemma that is becoming increasingly difficult to deal with in liberal democracies such as Canada: how to avoid disruptive labour disputes in the public sector.

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Like nurses, teachers, the police and LCBO employees, community-college teachers are paid largely out of public funds, or by government-sanctioned institutions that are the only legal providers of the goods or services they supply.

When labour unions representing these groups go on strike for higher pay, they are not targeting wealthy owners of private firms. Instead, they are trying to get more money from taxpayers or from the buyers of the goods and services they supply, such as buyers of liquor, beer and wine – or students who have to pay higher tuition fees if the taxpayers refuse to raise their subsidies to community colleges.

Provincial labour laws, supported by Supreme Court decisions in Charter of Rights cases, affirm the rights of workers in these categories, such as those in the private sector, to bargain collectively about their pay and other working conditions, and to strike if they are not willing to accept what employer representatives (read "the government") offer. If this were the end of the story, taxpayers, students, and LCBO customers would be faced with the choice of either paying what the unions are asking, or doing without the goods and services these workers supply. That is, our labour laws would essentially have given these unions the right to collect a tax from any citizen who wanted these goods and services.

Provincial governments have tried to address this problem in various ways, such as designating certain workers as providing "essential services" and taking away their right to strike, or passing ad-hoc legislation as in the Ontario community-college case. However, when doing so, they typically have agreed that workers in sectors in which such measures had been used would have the right to demand settlement of unresolved disputes through binding third-party arbitration. A recent instance of this approach is the Ontario government's agreement that the Ontario Medical Association now has the right to call for binding arbitration in case it cannot reach a negotiated settlement with the government about physician compensation. Although the OMA technically is not a labour union, it effectively functions as one, and the model is similar to that used in negotiations with those representing the police, firefighters or teachers.

Relying on third-party arbitration, however, simply means that decisions about how much citizens will have to pay for the services of public-sector workers, as taxpayers, students or liquor buyers, have been delegated to unelected arbitrators. Arbitrators' decisions, in turn, are governed by legal rules that do not take an explicit societal perspective. For example, one of the main factors arbitrators are supposed to take into account is the employer's "ability to pay." If the employer is the taxpayer, or an institution such as the LCBO that has a government-sanctioned monopoly, this principle doesn't seem helpful as a tool for reaching a reasonable compromise between the interests of the workers and the citizenry.

In markets for most goods and services, competition policy decrees that it is illegal for sellers to enter into agreements to fix prices. Buyers and low-cost suppliers benefit from this rule; buyers because they can bargain for lower prices, and low-cost suppliers because they will get more sales. Competition laws contain an exemption for collective bargaining, but should this exemption automatically apply to bargaining in which the union represents employees of monopolistic providers of key services to the public?

Wage increases negotiated by unions were easy to defend in an earlier era when the employers were wealthy capitalists in local markets where workers had low pay and few outside options. They are harder to justify when they are gained on behalf of workers who are relatively well paid to begin with, when the costs are borne by taxpayers at large or the buyers of publicly funded goods and services who have little choice other than to pay up, and when they block entry into the market of young job seekers.

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The Ontario community-college strike and back-to-work legislation are only the latest example of why Canada badly needs a more forthright and active debate about how to create a better model for public-sector labour relations than what we have now, including by allowing more competition for jobs or in activities monopolized by the public sector, or revised rules for arbitration in disputes involving public-sector workers.

Faculty union calls on Ontario colleges to bargain, ‘not dictate’ (The Canadian Press)
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