Essential services designation no panacea

Binding arbitration doesn’t necessarily resolve underlying issues
By Shannon Klie
|Canadian HR Reporter|Last Updated: 02/22/2010

When private sector workers strike, the only party hurt by the action is the employer. But when public sector workers strike, such as transit workers, teachers or, in more extreme cases, police and firefighters, the public ends up getting hurt because there is no one else available to deliver the service, says Anil Verma, a professor of industrial relations at the University of Toronto.

To mitigate this damage, most Canadian jurisdictions have imposed essential services legislation to ensure these services are continuously provided. Also, some collective agreements include special essential service provisions.

One way to ensure the public isn’t affected by essential service workers going on strike is by legislatively removing their right to strike and implementing compulsory arbitration as the ultimate dispute resolution procedure. Police and firefighters usually fall under this category

But when workers aren’t able to strike, the underlying issues often remain unresolved even after an arbitrated settlement, says Verma. These issues can drag on for years and manifest themselves in lost productivity, such as through work-to-rule actions, and damaged labour relations.

“When you have a strike, it forces the issue. It brings a certain urgency to the issue,” he says.

Essential services legislation that has binding arbitration as the last resort when negotiations break down only works if there is a mechanism, such as an agency or commission, to help both sides find a solution to the underlying cause of the grievance, he says.

And both sides need to continue to work on their relationship and issues throughout the life of the collective agreement.

“The overall goal of any employment relationship is to improve the overall quality of the underlying relationship. This is not an overnight process. This has to be done gradually and over time,” says Verma. “The essential services designation makes sense only if there is that ongoing and continuous effort to improve relations between the union and the employer.”

Another way to reduce the impact of essential services work stoppages is the designation or “controlled strike” model. Under this model, workers are allowed to strike but certain job classes within the bargaining group, such as critical care nurses, are legally obligated to continue providing designated services. Sometimes the essential service designation is made by agreement between the union and management, other times it is legislated or determined by a commission or labour relations board.

To maintain a power balance, unions and management should work together to determine which positions are essential, says Pradeep Kumar, professor emeritus of industrial relations at Queen’s University in Kingston, Ont.

“If employers have the unilateral power to designate certain workers as essential, it enhances the employer’s power,” he says. “On the other hand, if the unions and management negotiate between themselves about what group of workers are essential, then there’s no problem.”

Evidence suggests designating a public service essential increases the cost of negotiated wage settlements, fuels wage growth across sectors and does not guarantee crucial services will be provided during a strike, according to a 2008 C.D. Howe Institute report.

This can be seen in Alberta where strikes are illegal for nurses in acute care. Since 1983, the time lost in acute care has been 15 times higher than in Nova Scotia, where strikes are legal, says Judy Haiven, an associate professor at the Sobey School of Business at Saint Mary’s University in Halifax.

“Not only does the removal of the right to strike not guarantee that strikes will stop, it may also have an unintended consequence — strike activity could increase,” says Haiven.

In No Free Ride: The Cost of Essential Services Designation, Benjamin Dachis of C.D. Howe examined 6,721 contracts between 1976 and 2007. Of those, an essential services designation applied in 802. He found declaring a service essential increases annual average wage hikes by 0.28 to 0.41 percentage points. In 2007, the effect on real wage increases was about 0.5 per cent per year.

Even with the potential for higher wage settlements through binding arbitration, many labour advocates believe the essential service designation undermines a union’s bargaining power by taking away its right to strike.

“It tends to lower morale and it makes people feel as though they’re not going to get a good deal when they go to collective bargaining,” says Haiven.

If arbitration works at all, it is only where the problems are simple and marginal adjustments are needed, she says.

Arbitration will not solve complex problems and results in the parties putting off dealing with difficult issues until it’s too late, she says. And too often an arbitrator chooses one side instead of trying to reach a compromise.

“If there is a provision for binding arbitration, the arbitrator would choose either the company’s side or the union’s side to go with. The arbitrator, generally, doesn’t choose a little of this and a little of that,” says Haiven. “If the arbitrator chooses management’s side, then workers are no further ahead.”

But not everyone agrees. Settlements under arbitration are at least as generous as they would be under the right to strike, says Morley Gunderson, a professor at the University of Toronto’s Centre for Industrial Relations and Human Resources.

“They’re designed to mimic the right to strike,” he says. “I think arbitration is a very sensible alternative. By definition, if it’s an essential service, it’s very hard to get alternatives. And if you can’t, there’s huge inconvenience.”

After long, drawn-out work stoppages, there can be a long legacy of resentment between workers and management, he says. Also, unions tend to incur a fair amount of public wrath when they strike.

“People forget it takes two sides to strike and they tend to blame the unions. What they see is the unions, or the workers, withholding their services,” says Gunderson.

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