Corporate scandals, wage inequity and unions (Guest commentary)

A union man's look at how to fix corporate Canada
By Buzz Hargrove
|Canadian HR Reporter|Last Updated: 11/01/2006

Whether it’s questionable accounting practices, insider trading, overstated earnings, value manipulations, price-fixing, fraud, spying or outright theft, corporate misconduct is on the front pages.

Workers have been squeezed, productive plants have been closed, corporate raiders have slashed and burned their way through research and development budgets, training budgets and other long-term commitments in exchange for short-term gains.

At the same time, the ratio of CEOs’ salaries to workers’ salaries has grown tenfold in the last 25 years, from 40-to-one in the early 1980s to more than 400-to one today. (That figure, from research groups United for a Fair Economy and the Institute for Policy Studies, comes from the United States but the story is similar on this side of the border.)

In the early days of this run of scandals, most commentators were quick to point to a “few bad corporate apples.” But increasingly the public discourse is about the barrel itself. That’s why the remedy needs to be more comprehensive than external directors or better regulatory oversight. If we’re dealing with the barrel, and not just the apples, then the power to determine a company’s direction, purposes and practices needs to go to a broader list of constituents than those who are currently heard.

On a broader economic front there is a growing skepticism about free market fundamentalism.

At times the criticism comes from unexpected quarters. The Organization for Economic Co-operation and Development (OECD), which a decade ago urged governments to cut employment insurance and welfare, lower minimum wages and impose labour flexibility, now recognizes that an approach of strong social protections and spending on labour market policies, such as retraining, is not only possible but should be encouraged.

The most recent annual competitiveness review conducted by the World Economic Forum picks up the theme. This year’s ranking of the 10 most competitive nations (Canada dropped from 13 to 16) includes countries with very different approaches to fiscal policy, labour laws, labour markets and social programs.

We can argue about policy choices but there needs to be recognition that there are different roads to economic development and international competitiveness.

Canada has seen decades of economic growth resulting in a staggering concentration of wealth at the very top. The other end of the spectrum has not fared well, with growing rates of poverty and an increase in the number of working poor.

In addition to rethinking the business model and pursuing a broader range of economic choices, we also have to rethink our attitudes toward unions.

Over the last three decades, there has been a steady decline in unionization in Canada. While overall rates hover at about 30 per cent, union levels in the private sector have fallen from almost 30 per cent in 1981 to 17.5 per cent today.

Some might argue the results reflect a generation of workers who don’t want unions. Others might suggest workers don’t organize because unions don’t accomplish much.

Academics, industrial relations practitioners and even some unlikely sources such as the World Bank agree that unions make an important difference in workers lives.

Unions improve wages and benefits. In unionized workplaces wages are higher by as much as 25 per cent. Unionized workers are also more likely to have pension plans than non-union workers. In fact, the best way to get a pension is to get a union. That’s also true for medical, dental and related benefits.

Unions improve working conditions on a wide range of issues including vacation and personal time off, shift scheduling, work environment, posting and seniority rights, health and safety and equality in the workplace. And strong unions improve productivity and quality.

If unions are so successful, why aren’t more workers unionized? We know workers want unions from polling results and we know it from our experience in helping workers get organized.

But workers who want to organize face the triple threat of unconstrained economic restructuring, regressive labour laws and aggressive anti-union employers. What is surprising is not the number of failed attempts, but that workers, up against some of the most formidable anti-union conditions, are still successful in forming unions.

It is generally accepted that the right to organize, the right to representation and the right to bargain collectively are basic human rights enshrined in international covenants and in national and provincial labour laws. But in the last two decades governments across the country have changed labour laws to make it much harder for workers to organize and harder for unions to make progress in collective bargaining.

The main reason workers don’t organize is fear of employer reprisal. Workers should be able to decide whether or not they want a union free of intimidation and harassment.

HR professionals have an important role in developing and promoting a climate of neutrality in the workplace when it comes to organizing. I think HR also has an important role on the broader questions. What values, perspective and sense of purpose will shape organizations? What economic choices will produce better social results?

Buzz Hargrove is national president of the Canadian Auto Workers union. He was the keynote speaker at a recent HRPAO/Carswellbusiness conference in Cobourg, Ont.

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