The Healing Power of Scabs: How Ottawa’s Plan to Ban Replacement Workers will Worsen Labour Relations

Lynne Cohen
May 1, 2023
The freedom to choose whether or not to work is surely the most basic of worker rights. Without it, no one can ever truly be master of their own labour. Yet the federal government is planning to remove this fundamental choice from 1 million Canadian workers. And for reasons of naked self-interest. In the wake of the PSAC strike, Lynne Cohen looks at Ottawa’s plan to worsen labour relations by banning replacement workers throughout the federal civil service and across the myriad of crucial federally-regulated industries, including banking, telecom and transportation. Based on economic evidence and expert opinion, Cohen reveals the damage such a move will cause – and why potential solutions seem so far away. Part I of a special two-part series.

The Healing Power of Scabs: How Ottawa’s Plan to Ban Replacement Workers will Worsen Labour Relations

Lynne Cohen
May 1, 2023
The freedom to choose whether or not to work is surely the most basic of worker rights. Without it, no one can ever truly be master of their own labour. Yet the federal government is planning to remove this fundamental choice from 1 million Canadian workers. And for reasons of naked self-interest. In the wake of the PSAC strike, Lynne Cohen looks at Ottawa’s plan to worsen labour relations by banning replacement workers throughout the federal civil service and across the myriad of crucial federally-regulated industries, including banking, telecom and transportation. Based on economic evidence and expert opinion, Cohen reveals the damage such a move will cause – and why potential solutions seem so far away. Part I of a special two-part series.
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How many workers does it take to screw in a lightbulb? And how long will it take? That depends on whether the bulb needs replacing during a strike. And whether the worker is covered by federal labour law.

To ensure that its own employees as well as those throughout the Canadian economy’s vast array of federally-regulated industries can wreak maximum havoc whenever they’re upset with contract negotiations – which, based on evidence of the recently-concluded strike by Public Service Alliance of Canada (PSAC) workers, is quite often – Ottawa wants to prevent anyone from doing the job of a union worker who is on strike or locked out. So that lightbulb could wait weeks. Maybe months. Who knows?

“Messy” business: Federal labour minister Seamus O’Regan (left) has promised legislation prohibiting replacement workers, or “scabs” in the pejorative, throughout the federal civil service and in all federally-regulated industries by the end of 2023. (Sources of photos: (left) The Canadian Press/Justin Tang; (right) Murray Bush/FLUX Photo, licensed under CC BY-NC-ND 2.5)

In their 2021 election platform, the federal Liberals promised to ban the use of replacement workers, or what they pejoratively referred to as “scabs,” throughout the federal government and in all federally-regulated industries. Such a law is necessary, Labour Minister Seamus O’Regan claimed last year, because using replacement workers “pits workers against each other. It’s undignified and it’s dangerous.” Progress has been slow, however. In March, O’Regan admitted the bill’s development is proving “messy” since it represents “one of the most monumental changes to collective bargaining in Canadian labour history.” But whatever the obstacles, the bill must be ready by the fall. Otherwise NDP leader Jagmeet Singh might take his ball and go home.

Introducing legislation before the end of 2023 to prohibit replacement workers is one of the key requirements of the Supply and Confidence Agreement between the NDP and Liberals that enables Prime Minister Justin Trudeau’s minority government to remain in office until 2025. “What we agreed to with the NDP was by the end of the year and that’s what we’ll stick to,” said O’Regan, illuminating who’s really the boss in Ottawa these days. But while meeting this artificial deadline might allow the Liberals to cling to power a bit longer, it threatens great damage to the Canadian economy by upsetting the carefully calibrated balance built into federal labour laws. It also signals the growing power of public-sector unions in a country that has largely moved past unionization.

Jump, he said: The Liberals’ rush to outlaw replacement workers is a direct result of the Supply and Confidence Agreement signed with NDP leader Jagmeet Singh. (Source of photo: The Canadian Press/Adrian Wyld)

What’s at Stake

As the government scrambles to placate NDP demands, it is useful to consider the scope of the proposed ban on replacement workers. The recent PSAC strike focused Canadians’ minds on the role of the federal civil service in their lives, including such things as producing passports, running the income tax system and enforcing fish and game laws. All told, the federal civil service comprises more than 300,000 workers. And while that’s sizeable, the new proposed changes would apply to another 1 million workers in the many private-sector industries covered by federal, rather than provincial, labour laws. A list of affected businesses included in a recent federal discussion paper is bogglingly long:

“air transportation, including airlines, airports, aerodromes and aircraft operations, banks, including authorized foreign banks…port services, marine shipping, ferries, tunnels, canals, bridges and pipelines (oil and gas) that cross international or provincial borders, radio and television broadcasting, railways that cross provincial or international borders…road transportation services, including trucks and buses that cross provincial or international borders, telecommunications, such as telephone, Internet, telegraph and cable systems…and all private sector businesses and municipal governments in the Northwest Territories, Nunavut and Yukon.”

The sheer scale of businesses and activities covered by the proposed legislation represents “the backbone of Canada’s economic infrastructure,” explains Steven Williams, an Ottawa-based labour lawyer. The last time a federal ban on replacement workers was seriously considered, in 2006, Williams prepared a thorough and scathing review of the impact it would have on labour relations and the economy-at-large. During the minority years of Stephen Harper’s Conservative government, MPs from both the Bloc Québécois and NDP tabled nearly-identical private member’s bills to ban replacement workers (C-257 and C-295), and for a moment the issue appeared to have political momentum. While those bills were eventually sidelined, the issues haven’t changed. A new NDP bill on the same topic, C-302, is nearly identical to past iterations and it seems reasonable to assume it represents the substance of Singh’s current demands. Williams’ critique remains as fresh and insightful as ever.

These bills propose to prohibit not only hiring replacement or contract workers during a strike or lockout, but also the redeployment of other employees, including managers, during the same event. Workers dissatisfied with a strike would also be forbidden from crossing the picket line and returning to work. As Williams observed about 2006’s C-295, the goal “is to effectively deny employers the right to carry on business during a strike or lockout…[and deny] striking bargaining unit employees the right to cross the picket line and return to work to make a living.” In other words, a total shutdown that would paralyze the company or organization in question. And as the experience of Covid-19 has demonstrated, the ripple effects of even small shutdowns throughout a supply chain can cause crises many times greater than the original problem.

Canada’s economic backbone: Outlawing replacement workers across all federally-regulated industries would cover 1 million workers and impact many sectors crucial to Canada’s economy, including banking, telecommunications, and air, rail and ocean transportation.

Laws Should Fix Problems, Not Create Them

Labour leaders seek to ban replacement workers because it heightens their ability to squeeze employers and bring all union members to heel. With a ban in place, it is impossible for any business to carry on work during a strike or lockout, or for an individual worker to decide whether he or she would prefer to work during that time by crossing the picket line. This marks a major shift in labour market equilibrium. “One party, in this case labour, should not be allowed to dictate the outcome of what is probably the most contentious issue in labour law,” Williams wrote in his paper.

Tread carefully: The last time Ottawa nearly got rid of replacement workers, Steven Williams of the Ottawa law firm Emond Harnden called it “probably the most contentious issue in labour law.”

Echoing this concern, in February a coalition of more than 75 business groups, including the Canadian Chamber of Commerce, National Airline Council, Conseil du patronat du Québec and Canadian Manufacturers & Exporters, released an open letter castigating the Liberals’ current plan. The letter points out that while “rarely used,” the ability to mobilize replacement workers allows employers to “provide a basic level of service that preserves critical services to Canadians.” Putting an end to this sort of relief valve “has the potential to destabilize our economy. It will disrupt the carefully-constructed balance we have built into our labour relations system.”

It is also the case, as Williams noted, that “laws should only be changed to address problems. Canada does not have a problem with the use of replacement workers.” If there were pressing issues, the Canadian Industrial Relations Board (CIRB) would be inundated with complaints. But as the Winnipeg Chamber of Commerce recently pointed out in its own missive, “The CIRB has not yet had to rule on a single case in which it was claimed that replacement workers had been used unlawfully.” No employer in Canada has been accused of using replacement workers to bust unions – a clear violation of the Canada Labour Code – or otherwise act contrary to the law. So why change the rules now?

Of even greater concern, existing evidence points to a serious – and highly damaging – unintended consequence of such a ban: it will lead to more strikes. Proponents often claim a permanent injunction against replacement workers will temper the severity of strikes and lockouts by forcing employers and employees to the negotiating table. O’Regan has frequently advanced this claim. “The best deals are made at the negotiating table,” he said last year in promoting his upcoming changes.

Yet ample evidence suggests banning replacement workers makes the task of negotiating deals that much harder by encouraging unions to take more aggressive action thinking they hold the whip hand. This can be seen in a comparison of Quebec and Ontario. Currently Québec is one of only two jurisdictions (British Columbia is the other) that bans replacement workers in provincial labour legislation. As research by the Fraser Institute clearly shows, Quebec is nearly twice as prone to strikes and lockouts as Ontario. Between 2008 and 2016, Quebec experienced 1,100 working days lost to work stoppages per 1,000 workers, while in Ontario the figure was 625.

Quebec and British Columbia are the only two provinces to ban replacement workers in provincial labour law; they also suffer the most time lost due to strikes or lockouts. (Source of graph: “The Economic Effects of Banning Temporary Replacement Workers” by Charles Lammam and Hugh MacIntyre, Fraser Institute, 2017)

“There is nothing like Quebec[’s replacement worker ban] in the rest of the world,” says John Mortimer, president of LabourWatch, a Vancouver-based organization that advises private and public-sector workers on employee rights and unionization activities. In an interview, the combative Mortimer argues that banning replacement workers makes things worse, not better for employees: “It takes away a unionized worker’s right to go to work during a strike and to defy their union as an accountability mechanism. It is totalitarian, overly aggressive, non-consultative, non-democratic behaviour.” And remember, the Liberal’s new plan will cover not only public-sector workers but private-sector workers in banking, telecom, transportation and numerous other key sectors. 

Labour market imbalance: Back-to-work legislation has been used only rarely by the federal government in recent years; a new ban on replacement workers would increase the power of unions, encouraging greater use of back-to-work orders. Shown, a Canadian Union of Postal Workers picket line in Sydney, Nova Scotia, June 2011. (Source of photo: Breton Local 117)

Another unintended consequence of a replacement worker prohibition is that it inevitably leads to greater use of back-to-work legislation, a situation surely contrary to the principles of negotiation. As the recent PSAC strike demonstrated, some things the federal government does cannot be held up by striking workers. The Federal Public Sector Labour Relations Act designates numerous jobs as providing “essential services” that cannot be involved in any strike. These include workers with confidential or managerial roles, or anything related to the safety or security of the country.

While other workers may not meet this immediate “essential” standard, they can still cause grave problems when their strikes are prolonged. In these cases, once negotiations reach an impasse, governments have traditionally resorted to back-to-work legislation. In 2011, for example, the Harper government forced nearly 50,000 Canada Post employees back to their jobs and imposed a four-year wage contract. In 2018, the Justin Trudeau government also imposed back-to-work legislation on Canada Post workers, and in 2021 on Montreal dock workers.

The degree to which governments rely on back-to-work legislation is often seen as an indicator of labour market balance. Prior to a recalibration of the Canada Labour Code in 1999, back-to-work legislation had been used 31 times by Ottawa, suggesting an underlying problem with the negotiation process. Since 1999, however, the federal government has used this hammer only four times, including the examples mentioned above. As the Chamber of Commerce letter notes, a vastly expanded ban on replacement workers will upset the current state of labour relations and lead to more confrontations across a huge swath of the economy.

The Power of Public Sector Unions

“Totalitarian”: John Mortimer, president of Vancouver-based LabourWatch, describes Quebec’s ban on replacement worker as a serious breach of individual workers’ rights. (Source of photo: LinkedIn)

For all the obvious risks their planned legislation poses to Canadian supply chains and labour harmony, the Liberals apparently consider it a price worth paying, since it will provide them with the chance to remain in office for another two years. Beyond such naked partisan intent, however, the move also reflects the increasing political heft of public-service unions.

As Mortimer observes, the overall union “density” in Canada stands at approximately 30 percent. Yet this figure hides considerable variation between the private and public sectors. Unionization in the government sector stands at around 75 percent of workers, he says, “whereas private-sector unionization sits at around 15 percent, having fallen from 25 percent.” While private-sector workers have become increasingly disenchanted with union membership, the public sector has become a growing bastion of unionization.

Jack Mintz is President’s Fellow at the University of Calgary’s School of Public Policy, former president of the C.D. Howe Institute and widely regarded as the dean of public policy economists in Canada. In an interview, Mintz frets over the huge imbalance in growth between unionized public-sector employment and everyone else. He points out that since 2015 the number of federal government employees has risen from 257,000 to 336,000. That amounts to an increase of over 30 percent. During the same period, private-sector employment grew by a mere 9 percent. This, says Mintz, “is something to be concerned about.” Legislative changes that further tilt the balance of power towards unions can only worsen the situation.

 “PSAC likes the coming changes,” Mintz observes about the proposed replacement worker ban. “It increases their power. And public service unions like to increase their power.” Since public service is a monopoly situation – there are no competitors to the federal government – this makes it easier for public-sector unions to increase their numbers and recruit members. “More membership also makes them more powerful as they collect more dues, and they get more money to play with,” Mintz says. (Case in point: PSAC’s $43 million strike fund that paid strikers to blockade government buildings.)

“Something to be concerned about”: Jack Mintz, President’s Fellow at the University of Calgary’s School of Public Policy, points to many problems arising from the growing size and political clout of public-sector unions.

As this public-sector gravy train rolls on, the wage gap between the private and public sectors grows. The widening disparity is the subject of Part II of this special two-part series. Beyond the wage differential, unionized public sector workers are also more likely to enjoy greater job security, take more personal leave, have a pension plan and retire early. Despite having a well-staffed media relations office, PSAC did not return multiple calls from C2C Journal for comment about federal worker compensation.

Mintz admits the civil service actually performed well throughout Covid-19. “During the pandemic the federal civil service doled out money at lightning speed, although without the usual care in making sure it was appropriately spent,” he says, noting that such alacrity helped prevent an economic disaster. “But,” he asks, “can we say the same thing today now that the economy has recovered?” The evidence on post-pandemic service provision is dismal, the economist laments. “Even the little things aren’t easily done,” Mintz observes. “It recently took a friend six months to receive a passport even though Service Canada promises to deliver by mail within 20 days. And for several years now I have found it impossible to simply change a mailing address on Service Canada’s website.”

Meanwhile, more than 16,000 workers were added to the Canada Revenue Agency in 2022, pushing its staffing up by 37 percent since 2015. “Will the agency make decisions faster?” asks Mintz rhetorically, suggesting the answer is “No.” One thing that is certain: the growing bloat in Ottawa has not improved the standard of living for most Canadians. Canada’s per capita economic growth has been one of the weakest among the 38 OECD countries since 2015, when the newly elected Liberals commenced their rapid expansion of the federal civil service.

Whose Side is Ottawa On?

There is an inherent conflict of interest at play when a government tasked with representing the best interests of taxpayers negotiates a labour contract with its own public-sector unions. This is because unlike in the private sector, there is no upper bound on wage settlements. The cost of accepting large contract demands can simply be shifted onto future taxpayers in the form of higher taxes or a larger public debt. In order to buy political peace, governments will always face the temptation to simply give in to obstreperous public-sector unions. As a recent Wall Street Journal editorial about public-sector union contract talks in Virginia noted, “The insurmountable problem with government unions is that there is no effective representative of the people in negotiations.”

No to public-sector unions: While U.S. president Franklin Delano Roosevelt was a great supporter of private-sector unions, he believed that, “The process of collective bargaining…cannot be transplanted into the public service.” (Source of photo: FDR Library)

This “insurmountable” problem gets even worse when the government doing the negotiating is a union-friendly NDP-Liberal coalition. Consider, for example, the federal discussion paper on the proposed replacement worker ban. It reads like a union advertisement. “The Government of Canada knows that the ability to form a union, bargain collectively and strike are essential to a healthy workforce. These rights allow workers to act together and improve the power imbalance between individual workers and their employer.” [Emphasis added.] The same theme is recognizable in the recent federal budget as well. “The ability to form a union, bargain collectively and strike is essential to a healthy democracy.” [Emphasis added.]

It is worth considering ways of dealing with this dilemma beyond acquiescence. Prime Minister Trudeau would do well to reflect on the lessons of a politician many regard as the greatest liberal leader of the 20th century. No, not Justin’s father Pierre Elliot Trudeau, or PET. But FDR. “Meticulous attention should be paid to the special relations and obligations of public servants to the public itself and to the Government,” U.S. president Franklin Delano Roosevelt wrote in 1937. “The process of collective bargaining, as usually understood, cannot be transplanted into the public service.”

Roosevelt was “a friend of private-sector unionism, [but he] drew a line when it came to government workers,” observes Daniel DiSalvo, a political science professor at City College of New York, in an interview. DiSalvo notes that FDR was hardly alone in holding these views. Even champions of organized labour, he observes, expressed great skepticism about allowing federal workers to unionize. “Indeed,” DiSalvo says, “the first president of the AFL-CIO, George Meany, believed it was ‘impossible to bargain collectively with the government’.”

Despite this wise advice, governments in Canada and the U.S. gradually buckled under union pressure and allowed public sector workers to bargain collectively by the 1960s. It should come as little surprise that the legislation unionizing the federal civil service in Canada was passed in 1967 by the Liberal minority government of Prime Minister Lester B. Pearson, propped up by the NDP and its socialist leader, Tommy Douglas; it was a political situation nearly identical to that of today.

The ’60s version of Trudeau/Singh: When Liberal prime minister Lester B. Pearson (left) passed legislation in 1967 allowing civil servants to bargain collectively, his minority government was propped up by the NDP under leader Tommy Douglas (right). (Sources of photos: (left) carleton.ca; (right) The Canadian Press/Chuck Mitchell)

As for the role of current opposition parties in pushing back against public-sector union hegemony, the Conservatives’ quest to win labour votes that began with former leader Erin O’Toole continues under current leader Pierre Poilievre. Rather than point out the danger in cozying up to public sector unions,  Poilievre prefers to focus instead on the “failure” of the government to stem the size of its bureaucracy. No one, it seems, is prepared to bell the cat.

Will it Get Better or Worse?

There are ways to curb the power of public-sector unions, even in our current era. In 2011, for example, Wisconsin’s Republican Governor Scott Walker passed legislation dramatically curtailing their collective bargaining authority, limiting public-sector unions to asking for raises tied to the cost-of-living. Walker further required that they face a recertification vote from their membership every year or risk being decertified. Subsequent right-to-work legislation ensured that all union dues are now optional. (Ironically, Wisconsin was the first state to allow public sector unions in 1959.)

Taking action: In 2011 Wisconsin’s Republican governor Scott Walker (left) dramatically curtailed the collective bargaining rights of civil service unions; he later passed right-to-work legislation enhancing individual workers’ rights. Shown on right, a union rally protesting Walker’s agenda in the rotunda of the State Capitol in Madison, Wisconsin on February 16, 2011. (Sources of photos: (left) AP Photo/Morry Gash; (right) Joe Rowley, licensed under CC-BY-SA-3.0)

A decade after these changes were implemented, a report by Wisconsin Public Radio (WPR) found that union power had greatly diminished throughout the state. “There are fewer union members, they carry less political clout, and those who remain are limited in what they can bargain for,” the WPR report noted. Overall union density in the state fell from 14.2 percent in 2010 to 8.7 percent in 2020. And as dues dried up, so did the aggressive behaviour of those unions. The Wisconsin Education Association Council, the largest teachers’ union in the state, saw its lobbying budget shrink from US$2.5 million to US$71,000 between 2009 and 2019, and its roster of lobbyists fall from 17 to 2.

While no other U.S. state has been as aggressive as Wisconsin in hobbling public-sector unions, many others have also passed right-to-work laws. Such legislation can be considered the exact opposite of a replacement worker ban, since it prevents unions from denying employees the chance to work when they choose to do so, even during a strike. Instead, it ensures that workers retain full autonomy over their own labour. There are currently 28 right-to-work states across the U.S. As Mintz observes, “These are the states that attract businesses and workers.”

Former Ontario Progressive Conservative leader Tim Hudak once proposed right-to-work legislation for his province, but dropped the idea before being soundly defeated in the 2014 provincial election; today the concept has few vocal supporters in Canada. (Source of photo: Laurel L. Russwurm, licensed under CC BY 2.0)

The likelihood of such legislation coming to Canada, unfortunately, seems extremely low. In 2012, Ontario Progressive Conservative leader Tim Hudak boldly proposed right-to-work legislation for his province as an economic balm, but dropped the plan when it came time to release his party’s election platform in 2014 due to an outcry from organized labour. He was then soundly defeated by Liberal premier Kathleen Wynne. Plus, the Supreme Court of Canada has been busy inventing new collective labour rights, such as the right to strike, buried deep within Canada’s Charter of Rights and Freedoms. The existence of individual labour rights – such as the right to choose to work even when your union wants to force you to stay home, or to be free from the obligation to pay dues to a union you disagree with – has yet to be discovered in the Charter.

The reason union leaders want to ban replacement workers is obvious enough. It gives them more power by allowing them to completely shut down any workplace. That such a thing will unbalance the labour market and lead to greater damage throughout the Canadian economy is of no consequence to them. The motivation for the federal Liberals is also readily apparent. By giving in to NDP demands today, they get to stay in office a little longer. But what’s in it for the workers themselves? Not only does such a law rob them of the ability to decide for themselves how best to use their own labour, but it will also lead to more strikes and greater labour market disruption. Does anyone really think that’s a good idea?

Lynne Cohen is a journalist and non-practising lawyer from Ottawa. She has published four books, including the biography Let Right Be Done: The Life and Times of Bill Simpson.

Source of main image: Ververidis Vasilis/Shutterstock.

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