Amount of supervision required to administer program can be a disincentive: Union rep
At the peak of the recent recession, with mass layoffs looming, several unions in Canada turned to a previously underused tactic: work-sharing.
Under the federal government program, full-time employees could reduce their workweek to 32 hours and collect employment insurance for eight hours of lost work.
There are few statistics about how many jobs were saved as a result of this arrangement, but union officials have mostly praise for the program.
“This was a much better alternative to a layoff and then having to wait two weeks to be allowed to collect employment insurance,” says Gord Falconer, national education representative with the International Association of Machinists and Aerospace Workers (IAMAW).
The program, administered through Service Canada, was introduced in the early 1980s during a recession that saw a jobless rate of 13 per cent. The aim was to give employers flexibility to temporarily cut their workforce during a slowdown.
Work-sharing saw a return to popularity in 2009 as unions and employers looked for alternate ways to save jobs. Bombardier Aerospace, for instance, reduced layoffs in Montreal by agreeing to a work-sharing agreement with the IAMAW. Unionized workers agreed to reduce their workweek to four days to save 111 jobs.
Falconer is not sure how many of those workers have since returned to a full workweek, but he has heard few complaints about the program generally because it tends to benefit both parties.
“For the employees, this maintains a certain level of income for them,” he says. “For the employers, they’re keeping the same people and all the training they’ve done.”
Work-sharing has been particularly successful in the manufacturing industry where shifts are more “typical” and less so in the service sector where fluctuating demand makes scheduling and monitoring difficult, Falconer says.
The amount of supervision required to run the program is often a disincentive for employers to agree to it, he says. Earlier this year, machinists at Air Canada offered to enter a work-sharing arrangement to cut costs but Falconer says it was rejected because of the amount of administration involved.
“They would have needed someone just to maintain the schedule at a time when they were trying to cut costs,” Falconer says.
In 2009, workers at Essar Steel Algoma in Sault Ste. Marie, Ont., represented by United Steelworkers Local 2724, voted 54 per cent in favour of a reduced workweek for 26 weeks. Work-sharing was a great way to keep valued employees on during tough economic times, says Brenda Stenta, a spokeswoman for Essar.
“In 2009 when Essar Steel Algoma was impacted by the global financial crisis, we needed to find ways to cut costs while keeping people working,” she says. “Initially we stopped outsourcing and instead used employees to work on special projects, we offered retirement incentives, curbed discretionary spending and eliminated overtime.”
Despite these efforts, the market worsened even further, Stenta adds.
“Our salaried Local 2724 agreed to the program and as a result we were able to avoid layoffs among our salaried workforce,” she says. “Work-sharing allowed us to retain new recruits and employees… it avoided the disruption of employee displacement provisions and it kept people working through a difficult time. If circumstances ever warranted similar cost-saving measures again, we would certainly consider the work-sharing option.”
While work-sharing can save jobs, workers still take a pay cut for the eight hours, or one day, of lost work, says David Vipond, director of negotiations and resources with the British Columbia Government and Service Employees’ Union (BCGEU). Through EI, the program pays out 55 per cent of their allowable income. He says this can result in workers losing hundreds of dollars a month.
“Many of these people are living from paycheque to paycheque to begin with,” Vipond says.
The program requires union approval, based on a vote among members. It’s much easier to make a case for work-sharing at the peak of a recession than it is in a slightly improved economy, Falconer says.
Unions have learned to be cautious about entering these arrangements as a result of their experience over the past few years, he adds.
The IAMAW, for example, demands to know the “exit plan” once the work-sharing program ends.
“If this will be for a short-term period, then what is the long-term goal?” Falconer says. “If the employer is not upfront about its goals, we won’t enter into it.
“The employer has to show what they’re doing to generate business and to bring it back. This is not, ‘Oh, we’ll wait and see.’ ”
Unions also want to protect workers in case their jobs are ultimately eliminated because business doesn’t rebound, he says. If they have already collected some EI, they would be eligible for a shorter period post-layoff.
However, work-sharing is still preferable to job-sharing where one full-time job is split into two part-time jobs, says Sylvain Schetagne, chief economist with the Canadian Labour Congress (CLC).
Job-sharing can be useful in voluntary situations where someone heading toward retirement reduces hours to make room for a younger employee to gain experience, he says.
But most job-sharing arrangements are involuntary and result in workers receiving less pay with fewer benefits, he adds.While unions may look to work-sharing and job-sharing as a way to save jobs in challenging times, employers do have a right to adjust hours to deal with business fluctuations, says Schetagne, so these options should only be used as a last resort.