(Comparative Analysis on Canadian Market and US Market)
Introduction 2
Analysis 2
Communism and Capitalism Approaches 2
Corporate Governance 3
The Trade Union and Political Alignment 4
Collective Bargaining Approach 5
The Gini Coefficient Impact 5
Job Exportation Effect 6
Union Contribution Effect 6
Transparency in Union Operations 8
Conclusion 8
Recommendation 9
References 10
Introduction
Are unions still relevant today in Canadian labor market? This is one of the fundamental questions at the heart of the Canadian workforce. Apparently, it has been highly speculated that the Canadian workforce, especially among the young workers, does not see the need for strong trade unions. According to a study by the Canadian union of public employees, this wide speculation was refuted. It showed that young Canadian, and the general population, still values the roles that are played by the trade union. Among the reasons that were cited to support the existence of trade union include union allow the workers to unite thus mobile in order to form a formidable force when negotiating for better terms. The study reveals that the worker, especially young workers, still believe that the trade unions are important in improving the worker's quality of life. Also, this generation still believes that the unions' helps in making the workplace fair, union helps to make life better for all and union are an advocate of the workers (CUPE, 2016.). The outcome of the survey shows a strong commitment to trade unions among Canadians.
The strong commitment and faith in trade union explain the high number of trade union membership across Canada compared to other developed countries. For this case, the comparison will be made using the USA. In both countries, Canada and the United States, union membership has fallen over the year with the decline in membership in the United States taking a very steep path compared not only to Canada but also other major developed economies. According to official statistics, the Canadian union membership peaked at 33.4% in the early 80s which significantly reduced to 16% by the year 2009. In the US, union membership in the United States peaked in the 70s at a high of 29% which drastically fell to less than 7% in the year 2009 (Stone, 2011). From the statistics, it is evident that Canadian market and the US market are quite different in term of labor needs, structures and development. Therefore, this implies that the need and relevance of the trade union vary in these two labor markets. As such, these leads to the research question are unions still relevant and practical in the Canadian Labour Market comparing to the American Labour Market?
Analysis
Communism and Capitalism Approaches
During the cold war period, the USA was the leading capitalist advocate where the USSR was a capitalist advocate. These were the two competing ideologies at that time. However, after the end of the cold war, the strong position that had been taken by these nations still influenced the thinking of people long after the end of the cold war ended. One of the dominant factors that contributed to the decline in union membership in the United States is the cold war ideologies. As such, these ideologies formed the fundamental differences that differentiated the Canadian labor market from the United States. In one of the dirty tactics that were used to counter the membership to trade union, US Corporation engaged in a spirited fight against the trade union. One of the leading voices, Richard Hole, associated communism with trade union where communists were branded a satanic movement. As such, Richard distorted biblical verses where he used the bible to spread the propaganda that “unions=socialism =communism=Satanism” meaning such movement would separate believers from God (Stone, 2011). These anti-trade union people used propaganda to present trade union in the bad light. America, at that time, especially among the rightist, was largely Christian. Therefore, the Bible had a huge influent on them thus Richard and his group that used the Bible to fight trade union exerted high influence among the rightist community and some of the democratic leftist who believed that the separation of state and the church has gone too far.
The account presented is relevant to show the intention that led to the decline of trade membership in the US. Although Canada was part of the west capitalist, such initiatives by the religious people did not have much effect in the Canadian context since Canada adopted some socialist approaches as articulated in C10 (Kumar, n.d.). Therefore, this could partly account for a slower decline in union membership in Canada. In addition, the account shows that the intention of the trade union was not informed by their irreverence but a fight against the communist. According to the anticommunist protagonist, unions resembled principles that were advanced by socialist which was clearly leaning toward communist USSR. Therefore, the dirty media campaign by the rightist Americans was not based on issues relating to the labor market but a political move in support of capitalism thus defeating communism and advancing the capitalist ideology to the rest of the world. Therefore, there is no economic justification for this action in the American market thus the Canadian market can learn that although America trade union membership is low, it was as a result of an ill-informed campaign in the fight against communism. As such, Canadians need not fight the labor union since the cold war is no longer in place and time has proven that trade unions are not satanic as early claimed thus the trade union should not be fought based on communism and capitalism market structure parameters.
Corporate Governance
Corporate governance is one of the fundamental aspects that affect the performance of the firm. In corporate governance, ethics is one of the fundamentals included in organization corporate governance. Ethical conduct, among other things, promotes fair dealings in the company with all its stakeholders including the employees (Kim, 2009). As such, through such dealings, the company is expected to provide the employee with a good working environment and fair remuneration among other benefits. However, good working condition and fair remuneration is not a standard definition. As such, it is subject to interpretation by the workers, through their trade union, and the management of the organization. In addition, strong corporate governance calls adherence to the established rules and regulation such as the minimum wages and safety measures among other factors. In the United States and Canada, there are various legal provisions that inform various minimum wages, safety measures and other working condition benefits.
The situation in America presents a valuable lesson to the Canadian community to show how unions are still relevant to their economy by examining the effect of weakened unions. Although Canada has a had a more successful trade union than success, the situation in America shows that that weakened trade unions, coupled with lack of consistent political goodwill, may work against the workers and oppress them. Therefore, this situation reiterates the call to have a strong trade union. The trade unions are important in participating in the definition of the term fair remuneration and good working condition as stipulated in many corporate governance codes of conduct since they present the worker's view of the terms fair remuneration and fair working condition among other issues. As such, the success of corporate governance is affected by consensus arrived with the trade union hence enabling the company to comply with the established rules and laws (Kim, 2009). Moreover, this enables the firms to go beyond the minimum wage requirements since, where possible, the union will negotiate to be compensated based on the performance of the firm as opposed to merely compensating based on legal provisions or base rate set by the firm.
The Trade Union and Political Alignment
National politics are a major factor that affects the labor market. The policies that are made at the national level will affect the dynamic of the economy thus consequently affect the labor market dynamics. In the Canadian context, since the 1930s and 1940s, the trade unions have been moving towards social unionism as founded in the C10 tradition. Therefore, this has enabled the Canadian trade union movement to be active participants in the country's political arena thus affecting the manner in which the political decision will affect the labor market dynamics. Therefore, this means that the Canadian trade unions are not politically neutral compared to the United States trade unions which have shown large extent of political neutrality. Therefore, unlike the US trade union, the Canadian trade unions have been dedicated to more activities as opposed to just" bread and butter" activities (Kumar, n.d.). As a result, trade unions have advanced their activities and taken leadership roles in social and economic reforms such as the fairer distribution of income, the campaign against free trade, deregulation and privatization of various activities, full employment policies and effective full employment. From these activities, some activities go beyond the tradition understanding of the role of trade unions. In order to activity expand their mandate, the trade unions have created alliances with other interest groups such a churches and special interest group to participate in wider national issues that affects workers but are not traditionally in the realm of trade union activities (MacDowell, 2004). The activities have significantly improved on the status of the trade union in Canadian economy thus enhancing their public image. The improved roles of trade unions are highly underdeveloped in the United States. In other words, the Canadian trade unions have realized that for them to survive and remain relevant, they must become active, innovative and aggressive social institution as opposed to being a passive, reactive and defensive institution which is the approach taken by the America trade unions (Kumar, n.d.).
Collective Bargaining Approach
The two countries trade unions have been noted to have very different collective bargaining approaches which are opposing in nature. In the Canadian context, the Canadian trade unions have registered outstanding success in opposing the introduction of “concession bargaining". Also, these trade unions have successfully repelled other schemes such as long-term employment and compensation flexibility demands of the management without adequate union and job security guarantee. Also, these unions have successfully rejected contingency compensation such as profit sharing schemes and other standard pay initiatives that have been proposed. Others successes include rejection of the QC and QWL concepts that have been introduced to involve the employee in the affairs of the firm citing hidden agendas in such schemes that may be invoked to the disadvantage of the employee (Kumar, n.d.). As a result, through these successful rejections of fishy schemes, the Canadian trade unions have managed to sustain ongoing collective bargaining format approach which has taken the form of joint labor and management in solving emerging issues that pit the employees against the employer. The Canadian success can rarely be celebrated in the American market since America has not successfully managed to advocate for the ongoing collective bargaining platform. As such, "concession bargaining" has taken root in America.
Concession bargaining is a limiting form of bargaining in which the trade unions will be surrendering some of the previous gains that have been realized in exchange for some job security. Therefore, this creates a back and forth pattern since job security may not be as important as a good pay and good working condition. As such, it is expected that American will tend to enjoy a higher job security but lower wages as compared to Canadian who will have both the better pay and higher job security due to the fact that Canadian have successfully replied the concession bargaining compared to American who have largely embraced it due to weakened strength of their trade unions. As such, from both the Canadian and American case, the ability to lower the penetration of concession bargaining highly benefits the workers since the workers gains better pay as well as job security and does not have to trade one for another since the net effect with not improve the workers’ working condition or economic status (Kumar, n.d.). Since trade unions have the power to repel such a scheme, it is, therefore, imperative that the Canadian market continues to strengthen the trade unions hence their relevance.
The Gini Coefficient Impact
In 1912, Corrado Gini developed the Gini coefficient which has played an instrumental role in assisting economists and statistician in understanding the wealth and income disparity. A value that edges closer to 0 means that the country has an equally distributed wealth while a country whose value edge closer to one means that country has a very wide between the rich and the poor. As of 2009, Canada had a Gini Coefficient of 0.33 which is ranked 12th out of 20 leading economies in the world. However, the country fairs better than the USA which had a Gini coefficient of 0.45 (Stone, 2011). Studies have showed that the countries that have a higher union membership have a lower Gini coefficient. The studies have showed that these countries have a better social programs and lower crime rates. In addition, the studies have also revealed that a decrease in the union membership leads to a statistically significant increase in the Gini coefficient. The statistical relationship shows that the trade unions are imperative in managing the social structure of a country since inequality in wealth and income is a social economic factor that must be managed carefully due to its sensitivity. Economists argue that if the Gini coefficient is higher than 0.4, the crime rate will be extremely high and such a government cannot sustain meaningful social benefit program (Stone, 2011). Therefore, this is a recipe for social disorder that can lead a country to a country to a state of failure as the Gini coefficient edges towards one.
Trade unions are involved in bargaining for better pays. Consequently, they are involved in the redistribution of wealth in a country hence bridging the income and wealth gap. Therefore, the more the trade unions are effective, the more wealth is redistributed thus contributing to lowering the Gini coefficient in a country. In the United States, it is evident that the trade unions are less effective than the Canadian trade union (Stone, 2011). This justifies the higher Gini Coefficient and the higher crime rate in USA compared to Canada. Therefore, Canada is on a better path in relation to utilizing the trade union in promoting wealth distribution thus lowering social evils and availing better social benefits to the populace. This role by the trade union is an encouragement to retain the existence of the trade union in Canada since they will assist the government managing inequality gap thus lowering the Gini coefficient and maintain it at low levels.
Job Exportation Effect
American corporation, in their quest to improve their profitability, have largely moved their manufacturing aspect to low labor cost countries such as China and other Asian countries. Comparing the Canadian corporate rate of relocating with the American corporates, the Canadian rate is significantly lower than the American rate (Government of Canada, n.d.: Levine, 2012). In most cases, the workers that are expected to join the trade union are lower level workers such as laborers (Levine, 2012). Therefore, when the American corporation moves their manufacturing wing to lower labor cost countries, it means fewer people in America will be unionized due to lower number of workers. In Canada, the number will be higher since the country has not relocated as many industries compared to America.
Since there are a large number of local jobs where the workers require trade unions, the Canadian people have a unique position to preserve the strength of the trade union due to the higher number. The strength will enable the trade union to fight for their rights as well as balance the interest of the corporate in which they work. The trade unionist are meant to be sensitive to the economic times that the corporates are facing but also consider the realities that the workers are facing. Through the trade union, the country can manage to strike a balance between the workers and the corporate needs hence preserving the jobs in Canada but also fairly compensating these workers thus avoiding the American situation which a large number of jobs have been exported to Asia while this work can be done in the American economy (Levine, 2012). This is a win-win situation for workers, corporate and the general economy thus the Canadian people should strive to have the trade union in their economy.
Union Contribution Effect
In the United States of America, the federal government has taken broad measure to regulate the functioning of the trade union compared to the Canadian Government. In the United States, there is no legal basis in which the worker is compelled to join a trade union or pay any dues to the trade union. However, the law gives every worker the right to join a trade union. Consequently, once the worker has a joined a union, it follows that that worker must comply with the regulation relating to the deduction thus adhering to union discipline (Laborwatch, 2006). Nonetheless, the United States upholds the principle that the interests of the worker supersede the interest of the union. As such, the government has reigned on trade union and stipulated that a union can only deduct a portion of the member pay which is equivalent to the value that worker gain from the collective bargain that is carried out by the union. In relation to other activities that the union covers, other than collective bargaining, these activities cannot be financed by the core fee that is deducted from the members. Nonetheless, this has been one area in which the government and the labor unions have strongly disagreed as the labor union in the United States have tried to give an exaggerated interpretation of the core expenses to include other activities outside the collective bargaining process (REAL Women of Canada, 2008). For instance, the trade union has argued that financing a political cause with the aim of changing a particular law should be considered as a core expense while the government perceives this expense a non-core expense thus should not be factored in the employee deduction (REAL Women of Canada, 2008). In the Canadian Case, workers are technically forced by the law to pay union fees irrespective of whether they want to join a trade union or not. The law provides that a worker is free to join a trade union. However, the law further provides that where a workplace is a member of a trade union with a forced membership clause, then the worker must join that trade union. In many workplaces, this clause is operational (Laborwatch, 2006). In many other developed countries, including the United States, the decision as to whether to join a trade union or not is considered as a basic human right thus solely on an individual will regardless of other people position. However, Canada does not hold this view thus there has been few reforms that must be aimed at lowering the power of the trade union and promote the wellbeing of the workers as it is the case in the United States.
Although the United States government bases the regulation on the principle of upholding the individual interest over the union, regulating the membership contribution and differentiating the core expenses from the non-core expenses is seen as a tactic to limit the role of the trade union in the country. From the regulation, the trade union deduction must be justified by the costs that will be incurred in the collective bargaining process. However, this means that trade union usage of the organization resources is limited to the collective bargaining process thus edging out trade union from taking part in key decisions that are made by the country affecting workers due to limitation of fund utilization. In other words, this tactics lowers the voice of the trade union in matters that these trade unions have an interest. The absence of such a law that limits the trade union is seen as an advantage to the Canadian labor market. In Canada, the trade union goes beyond the collective bargaining responsibility and makes the voice of the workers to be heard in all other matters of interest to their members (MacDowell, 2004). These enables the trade union to protect their members at all levels from the national government level to the organization level thus offering comprehensive service to their members. Nonetheless, these organizations have not given their members a choice to decide whether to members or not. By developed world standards, this is an infringement of Canadian rights. Nonetheless, this cannot be a sufficient justification to dismiss the role of the trade union in Canada for one key reason. The reason is this situation can be changed. There is no law that bars the trade union form sponsoring a bill in the legislature that seeks to give the workers the power to choose whether to be a member or not. The action will allow the trade union to up their game in protecting the interest of the workers in order to encourage the workers to join their trade unions. Also, the creation of this right will create an auto-regulation mechanism that will control the contribution made by workers since the trade union with high deduction will have the least attractiveness.
Transparency in Union Operations
In the United States, the government has moved in swiftly to demand transparency in the organization operations. The government has required all the union to disclose the amount that they pay to all their officials and all the operational costs that are incurred in the union activities. In effect, every coin contributed by the members must be accounted for and records made available for inspection. On the other hand, in Canada, the unions are not required to disclose the manner in which they spend the members contribution despite these members being compelled to contribute to unions that that may not want to be members (REAL Women of Canada, 2008). Such action is an example of the epitome of dictatorship which goes against the Canadian values of democracy and participation in leadership.
Although there is opaqueness in the operation of the organization, this is not sufficient ground to dismiss the needs of having trade unions in Canada. The reason is that it is possible to rectify this situation and create transparency in the trade union as well as align the trade union values with the values of the nation at large through adequate reform in trade union policies and framework as well as creating enabling laws. In the United States, the primary reasons that this requirement was established was founded on the realization that trade union were funding political causes , mainly leftist parties, behind the scenes using members’ money (REAL Women of Canada, 2008). However, although the trade unions are interest groups in political process in matters that affect the workers, it is not acceptable that such practices be encouraged. As such, such political position must be done openly and with members consent hence legitimacy participating in a political process with the aim of protecting the workers thus this cannot be used a justification to eliminate the need of trade union since such abuses can be easily rectified.
Conclusion
It is absolutely clear that unions are still relevant and practical in the Canadian Labour Market comparing to the American Labour Market. First, from the ideological war in the cold war era, Canada was not a hardliner in the war since Canadian trade union still believed in some socialist principles in the C10 tradition (Kumar, n.d.). As such, the trade union slaughter in the United States as they attempt to defeat the socialist principles that were deemed to be leaning toward communism which was deemed as satanic has little relevance in modern day Canada. The cold war is over and the Canadian market should use combination of principles, whether communist or capitalist, to promote the well-being of Canadians. As such, the vilification of trade union in the US cannot give a justification to Canada to declare trade union irrelevance and impracticability since it was based on some need to win a war but on hard evidence.
Second, both countries have a strong Corporate Governance culture. However, an existence of corporate culture does not totally eliminate corporate greed. As such, the trade union must be present in order to compliment initiatives by corporate governance code of conduct in taming corporate greed thus promoting their practicability, relevance and necessity in Canada (Kim, 2009).
Third, from the study of the Gini Coefficient, it is clear trade unions are useful tools in wealth redistribution. As such, they positively contribute to the existence of social programs hence improving the state of social order (Stone, 2011). As such, these unions ought to be present since Canada still has a high wealth inequality rate.
Fourth, Canadian workforce has a unique opportunity of using the trade union to facilitate business flexibility in order to encourage the manufacturing process to be carried out in Canada as opposed to Canadian firms relocating their manufacturing to low labor costs countries as it has been the case in the US (Levine, 2012). As such, they can be tools that can be used to limit loss of jobs.
Recommendation
In order to have comprehensive abilities to protect the interest of workers at all levels, it is important that the trade union participate in the political process on various matters that affect the workers. However, the participation must be transparent and legitimate. In addition, the political participation must be driven by the desire to protect the interest of the workers not championing a given political ideology. As such, the trade union must be required, not to have political affiliation of any kind but be neutral parties. In addition, the political participation must not be through making contribution to political parties in order to maintain neutrality (Kumar, n.d.).
In order to be at par with other developed countries, the Canadian government must give the workers the choice to choose whether to join a trade union by overruling any clause in the union that calls for compulsory membership. These choices must be made to be a basic human right. In so doing, this will allow trade union practices to be aligned with the national value of democracy and free choice. In addition, the choice gives the worker the tool to punish non-performing unions since they can choose to withdraw. Also, this will promote political neutrality since the members can punish the trade union by being partisan (REAL Women of Canada, 2008: Kumar, n.d). As a result, this necessitates the creation of steering bodies that will guide trade unions in political engagement.
References
CUPE. (n.d.). Top seven reasons why unions matter – a conversation with young workers. Retrieved June 13, 2016, from http://cupe.ca/top-seven-reasons-why-unions-matter-conversation-young-workers
The government of Canada. (n.d.). Global stats. Retrieved June 13, 2016, from http://www.statcan.gc.ca/eng/blog-blogue/cs-sc/gs
Kim, H. (2009). Corporate Governance and Labor Relations. Retrieved 2016, from http://webuser.bus.umich.edu/ehkim/articles/LaborRelations.pdf
Kumar, P. (n.d.). Organized Labour in Canada and the United States: Similarities and Differences. Retrieved June, 10, from http://irc.queensu.ca/sites/default/files/articles/QPIR-kumar-organized-labour-in-canada-and-the-united-states-similarities-and-differences.pdf
Laborwatch. (2006). UNIONS AND EMPLOYEE CHOICE RIGHTS: A FIVE COUNTRY COMPARISON Canada, Australia, New Zealand, United Kingdom and the United States. Retrieved 2016, from http://www.labourwatch.com/docs/research/five_country_international_labour_law_comparison.pdf
Levine, L. (2012). Offshoring (or Offshore Outsourcing) and Job Loss Among U.S. Workers. Retrieved 2016, from https://www.fas.org/sgp/crs/misc/RL32292.pdf
MacDowell, L. (2004). Labor Unions in Canada. Retrieved June 13, 2016, from http://autocww.colorado.edu/~flc/E64ContentFiles/HistoryOfTheAmericas/LaborUnionCanada060130.html
REAL Women of Canada. (2008). The Tyranny of Labour Unions - REAL Women of Canada. Retrieved June 13, 2016, from http://www.realwomenofcanada.ca/publications/analysis-reports/the-tyranny-of-labour-unions-in-canada/
Stone, W. (2011, June). The Decline of Trade-Unions in the US and Canada Dispelling the Myths of the Anti-unionists. Retrieved June, 10, from http://www.globalresearch.ca/the-decline-of-trade-unions-in-the-us-and-canada/25161
