'I would compare right now to the times around mid-2020 in terms of the uncertainty'
The enemy of my enemy is my friend.
It’s a well-known saying that refers to the necessity of parties who might otherwise be at odds to team up to face a bigger challenge. It’s something that applied to a certain extent to collective bargaining a few years ago during the COVID-19 pandemic and the related economic downturn – when employers and unions were focused on keeping businesses and the jobs they create going - and it’s something that might have to apply again for unionized employers and unions.
The events of the past half-decade have required evolution in the collective bargaining process while both sides try to find equilibrium – from the pandemic, through the economic recovery from it, and now economic uncertainty brought on by uncertain international trade markets.
An overarching trend in collective bargaining right now has a lot to do with employers trying to pull back from generous benefits that were doled out following the pandemic that were in recognition of concessions unions agreed to during the pandemic, according to Patrick Groom, a partner at McMillan LLP in Toronto specializing in collective bargaining and labour relations.
“During COVID, a lot of collective agreements that came up were either renewed for only one year in anticipation of trying to see what the economic landscape would be like in a short period of time, or contained concessions such as zero-per-cent pay increases or other budget-saving provisions that allowed employers to weather the downturn,” says Groom.
“So things like, for example, greater wage increases, signing benefits, or signing bonuses were put on hold during Covid, and then employers were a bit more generous coming out of the pandemic – and, of course, there are work-from-home working arrangements that stemmed from that.”
Economic concerns
But Groom says that the collective agreements he’s negotiating now may be part of the next wave of uncertainty due to the economic relationship with the US and the global impact of that uncertainty - not just tariffs, but the uncertainty of international trade as a whole.
“I have some clients who, while not necessarily directly impacted by the tariffs, have seen their sales or their market position change or its viewed as less stable in the US, so they're looking for other markets to fill that gap,” he says. “This level of uncertainty is akin to when collective bargaining agreements were being negotiated very early on in the Covid shutdown - I would compare right now to the times around mid-2020 in terms of the uncertainty.”
With that uncertainty, more unionized employers over the next year may be either looking for concessions and ways to save money, or short-term collective agreements of one or two years to push more substantive bargaining down the road until both unions and employers have a better perspective of what the economy looks like.
On the union side of things, the changing economic climate is fueling a greater push for work protection that is also in part sparked by the looming prospect of artificial intelligence (AI), says Groom.
“[AI] is certainly not developed yet anywhere to the point where we're actually going to see very serious impacts or reductions in traditionally unionized businesses in Canada, but it's on the horizon and I think that's on people's radar,” he says. “But what we're seeing more in job security language isn't just a reflection of AI, it's a reflection of the prospect of automation or any efficiencies that companies are going to try in order to survive this trade war with the US.”
Collective bargaining process
Are the external economic pressures affecting the collective bargaining process itself? While different sectors are being affected differently, the Canadian auto parts sector is under particular threat from the economic uncertainty with the US, and that’s causing some delays and friction in negotiating, according to Groom.
“I have a round of bargaining [with an auto parts company] that’s supposed to start soon, but it's been delayed because we don't even know if the auto parts factory is going to be here in September, and that's a hard reality,” he says. “Not only are we dealing with the ongoing viability of this plant, we're also dealing with the potential severance packages to very senior, long-service employees - if they have to shut it down and they can’t reopen it within 34 weeks, they're looking at $8-$10 million in severance [for a relatively small employer] and they’ll lose a big chunk of their workforce.”
However, in the construction industry, things have become surprisingly stable, particularly in Ontario, where the provincial government has announced a priority on building housing.
“We were expecting more labour disruptions, particularly because we had negotiations ongoing for multiple trades in the residential construction sector,” says Groom. “However, there’s a public push for home building that’s reflected in construction industry collective bargaining, where home builders and the unionized trades have been able to come together and reach agreements without resorting to strikes.”
Recognition of diversity, culture
With all of the concern over the economy, there may be a developing trend that’s independent of economic factors and could have beneficial effects for both sides of the table in terms of productivity and engagement – a focus on diversity and culture. One particular round of collective bargaining with which Groom is involved features an employer with a significant number of Indigenous employees that provides Indigenous services. The employer and the union are developing collective agreement language recognizing traditional healing circles as a dispute resolution mechanism that’s an alternative to the adversarial grievance and arbitration procedures.
“It’s been in the collective agreement for one agreement, and we're renegotiating the current agreement and ensuring that it’s fully equal to the agreement’s arbitration process,” says Groom. “And it's been recognized as a collaborative way to resolve a number of labour relations issues without having to get into a traditional adversarial system, and another Indigenous group that I represent is looking to adopt this as well in their next round of bargaining.”
That example is part of a strong push for cultural recognition in some collective bargaining processes, including in industries such as auto parts, where some employers have large South Asian workforces and are recognizing holidays such as Diwali on the same level as traditionally Christian holidays like Christmas, according to Groom.
With external challenges putting pressure on unionized employers, it’s a good strategy for the labour relations groups to be realistic about their own expectations and uncertainties, and approach their collective bargaining with directness, says Groom.
“When you're uncertain about how you're going to deal with uncertainty in the near future, sometimes admitting that your data for the future is uncertain is in itself preparation for bargaining,” he says. “A number of folks I dealt with in 2020 and early 2021 thought that they would exit Covid in a much better position than they were, and that led to some difficulties in maintaining a profitable business until the next round of bargaining.”
Negotiating strategy
Groom suggests unionized employers be prepared to do two things as collective bargaining begins. One is to be prepared to make demands at the table that the union's not going to like and stand by them, whether it's a concession or a wage freeze, for example.
The second is to seriously consider a short-term collective agreement as was done by some during the pandemic.
“Give the business the time to gather the data and have a better understanding of what the next two-to-three years will hold, because going into a three- or four-year collective agreement with a high degree of uncertainty at this stage can really put a company into hot water.”
