Ontario losing its competitive edge, study suggests
Right-to-work laws could be headed north of the border, if a think tank has its way.
The Fraser Institute, a public policy research agency, released its report, The Implications of US Worker Choice Laws for British Columbia and Ontario, earlier this month. In it, study authors concluded that implementing right-to-work legislation would give Ontario the competitive edge it so desperately needs.
Worker choice legislation, otherwise known as right-to-work laws, has existed in the United States for years, but it has yet to cross the border. It gives employees the ability to opt out of a union, making them exempt from paying dues, among other obligations. While worker choice advocates maintain these laws boost the economy and promote individual rights of employees, its naysayers argue it cripples the union movement.
Jason Clemens, executive vice-president at the institute and one of the study authors, said adopting worker choice laws would curb the looming competitive hurdle in the manufacturing sector. While right-to-work legislation has existed south of the border for years, the issue came to a head this summer when Michigan enacted right-to-work laws. Clemens said that puts Ontario’s manufacturing industry behind.
"It really is an issue of competitiveness," he explained. "Right now, Ontario and Ohio are the only two regions around the (Interstate 75) corridor — which is the manufacturing hub — that are not right to work," Clemens said, adding that Ohio is pegged to go the right-to-work route by 2015. "If they are not going to have competitive labour laws with the other manufacturing states, what is it that Ontario is going to do to gain that competitive edge? Because Ontario is struggling."
In British Columbia, the other province the Fraser Institute focused on, Clemens sees the opportunity to get a leg-up on surrounding jurisdictions by having looser labour laws.
In its report, the institute concluded Ontario’s gross product would increase by about $11.8 billion and create almost 60,000 jobs should right-to-work laws be implemented. In British Columbia, worker choice could up the gross product by $3.9 billion and generate 19,000 jobs.
What’s more is that, when given the choice, Clemens said employees are more likely to opt out of a union. But that can have a dangerous potential.
The Ontario Federation of Labour (OFL) released its own report on the same day as the Fraser Institute’s. Working For Less: The Coming Threat to Union Security in Ontario denounced U.S.-style right-to-work laws, saying they debilitate the union drive.
"Well clearly, if you don’t have a union in the workplace, you’re at the mercy of the employer," argued Sid Ryan, president of the OFL. "You actually begin to reduce the income and equality, and you give a free hand to corporations. You are essentially in a race to the bottom for all workers."
Of particular concern are "freeloader" workers.
"We know right-to-work has such negative connotation in the United States. What they’re saying is, ‘We want workers to have a choice to earn less wages as opposed to more wages, and if only we could get those pesky unions out of the way. You can become a freeloader and get all the benefits of belonging to a union and you don’t have to pay,’ and you call that worker choice? They didn’t make the case very strongly," Ryan said.
Despite what the numbers in the Fraser Institute’s report indicate, the OFL’s study shows that when worker choice laws are enacted, it actually damages the economy in those states.
Take Oklahoma and Idaho for instance, where wages plummeted after right-to-work was legalized, according to the report. And in North Carolina, where unionization rates are the lowest in the U.S., one-third of manufacturing jobs were lost after worker choice came into play.
Though Ontario’s labour ministry has said it will not pursue right-to-work policies, lawyer Richard Charney, the global head of labour at Toronto-based firm Norton Rose, argued that — regardless of how unlikely worker choice in Canada is — conversations about labour reform need to be had.
"There’s got to be a debate in this country about different models… you can’t rely on the same policy for all eternity. The system we have now has worked fairly well, in the sense that we have a functioning economy and some measure of wealth distribution, but I think we can always do better," Charney said. "I don’t think it’s in the interest of even workers — never mind employers — that there be guaranteed monopolies. Always the threat of some competition is going to put a jolt into production, and ultimately that’s to the benefit of everyone. I don’t think people can rest on their laurels."
Even more improbable is that, should right-to-work programs get the green light, the American-style version of those policies would work in Canada.
"American laws have attracted investment, I think there’s little doubt about that. Wages are lower and more competitive," Charney said. "To what extent do you want to adopt policies that mirror the policies of some of those competitors in the American south or Midwest? I think it’s not likely that the American model of right-to-work will happen in the foreseeable future."
There also remains unanswered questions in terms of what is constitutional under the Charter of Rights, and Charney explained the Supreme Court has made it clear they will not interfere. For instance, in Indiana a superior court judge just ruled right-to-work laws were unconstitutional, as they force unions to represent employees who do not pay their dues.
Fear of the unknown could also steer policy makers away from the right-to-work route, Charney said.
"To one degree or another, trade unions over the last half century have fostered some level of economic equality, and what will happen if you change the power balance? So that is really fear of the unknown," he said.
But what's in a name?
Chris Roberts, senior researcher at the Canadian Labour Congress’ economic department, said the term "worker choice" gives the wrong impression.
"The one thing we could agree on is that right-to-work laws weaken the union. It’s a misnomer to call them worker choice laws, they’re really free-riding laws," he said. "What it certainly is intended to do is weaken unions and drive down wages and benefits. So in fact, it limits and constrains workers’ choices, it allows non-union members in the bargaining unit — a minority — to simply free ride and to simply take the benefits from union representation and not pay the cost of it."