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Monday, October 29, 2012

Attacking unions won’t help economy

At a recent Greater Halifax Partnership luncheon, Robert Kelly blamed trade unions, in part, for Nova Scotia’s less than stellar economic performance.
According to The Chronicle Herald (Oct. 19 article), the Canadian former head of the Bank of New York Mellon Corporation, forced out of his $16-million-per-year job over a year ago, told Halifax businesspeople: “Employees enjoy a lot of rights today versus years ago. Additionally, a lot of businesses think that if you have a risk of having a unionized workforce, it might be another risk to doing business and maybe I won’t open a business there.”
Kelly, chancellor of Saint Mary’s University, praised “back-to-work” laws in operation in several American states, which drastically reduce, if not impede, unions’ ability to organize. Such laws, he is reported as saying, promote higher economic growth and, if implemented in Nova Scotia, would “send a huge message … that Nova Scotia is thinking differently, is pro-growth (and) pro-business.” After his speech, he told reporters that “in today’s world where you’re competing against kids in India or China or in Brazil, you’ve got to build every competitive advantage you can have without creating artificial barriers to more hiring.”
How convenient a scapegoat. But how unfair and inaccurate. After a financial meltdown caused by financial speculation, it is indeed rich to blame the 99 per cent for pursuing a better life through one of the most effective vehicles available — unions.
First, there is simply no proof, except in the minds of the one per cent, that investors flock to union-free zones or that low rates of unionization are connected with strong economic performance. Right-to-work states in the U.S., by and large, happen to be the low-productivity ones, and vice versa. Across the world, highly unionized countries tend to be among the most productive and prosperous. A World Bank report a few years ago touted collective bargaining as an important contributor to “co-ordinated labour markets,” a key factor in prosperity. The Bank and its sister International Monetary Fund now meet regularly with trade union leaders from around the world.
Kelly’s remarks also ignore the Supreme Court of Canada’s landmark 2007 decision which enshrined collective bargaining as a constitutional right. The court affirmed that “one of the fundamental achievements of collective bargaining is to palliate the historical inequality between employers and employees.”
A study by Larry Haiven and Mathieu Dufour in 2008 showed that despite steady productivity growth throughout the boom leading up to the recent downturn, mean real weekly earnings for Nova Scotians actually dropped. Moreover, the share of prosperity going to owners of capital surged over the same period. And the recession has only made it worse for workers.
A study published this year by the authors of this article found Nova Scotia labour standards generally among the lowest in Canada. And average weekly earnings in this province are the lowest in the country, bar Prince Edward Island.
How have unionized workers fared? The evidence across the country is that unions, even in the largest and strongest bargaining units, have not done better than the workforce as a whole and that public-sector workers have done worse than private. Were it not for trade unions, earnings figures for the entire workforce would be even worse than they are.
In fact, there is evidence that low-wage ghettos like Nova Scotia actually promote low productivity. Productivity is about companies efficiently using labour and technology. Relying on cheap labour allows Nova Scotia companies to continue having among the worst records in the country in capital intensivity, research and development, innovation and employer-sponsored training.
Indeed the financial crisis still plaguing us was fuelled by precisely the growing and vast inequality in earnings, placing unprecedented piles of capital in the hands of speculators dreaming up ever more unstable tricks to produce returns.
Nonetheless, it’s always more convenient for the one per cent to change the channel, ignore the facts, shift the blame and pile onto unions and the 99 per cent.
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