Labour Disputes and Government Intervention

The labour dispute between Electro-Motive and its workers is gathering  a lot of attention (as it should) and a lot of sympathetic political attention. But what are the actual options available, and what are the repercussions?

The offer put forward by the company, essentially demanding that the workers take a 50% pay cut, is unfair. The workers have a right to feel insulted by this offer, and they have the right to withhold their labour in protest. They are not an essential service, their work stoppage won’t have a direct effect on the public good, and so it’s a legal negotiation tactic.

On the other side, the company has the right to make such an offer. It’s ugly, unfair, and done with an understanding/threat to move the operations to a place where the workers will accept that salary (in this case, Muncie Indiana), but it’s not illegal.

And though it is politically expedient for each level of government to point the finger of blame at the others as being too lax with “government handouts”, every level of government has given some kind of incentive to Electro-motive to persuade them to stay in London and manufacture locomotives.  So what could they do now in response to the situation?

1) The federal government could nationalize the company, seizing it from the parent company Caterpillar and assume operational control of Electro-motive. This would create a trade and foreign relations crisis that would eclipse the dispute itself, and have serious long-term repercussions. It’s also probably illegal and possibly an act of war.

2) The federal or provincial government could introduce legislation to end the lockout, though the legality of  such legislation would make it a messy situation. And even if they forced both side back to the bargaining table and appointed an arbitrator to make a binding contract decision, the end result would still likely be the closure of Electro-motive and the relocation of the locomotive production to Indiana.

3) All 3 levels of government could stand by and let the dispute resolve itself.

The sad fact of the scenario is that there is no real chance that the workers will be able to keep their jobs at their current salaries. Direct government intervention right now isn’t legitimately possible, and they all know that. Their hand-wringing and visits to the picket line won’t change it.

The real failure in good governance is the lack of protective measures to limit the effect of situations like these. Each level of government is supposed to ensure that they collect enough revenue that they can adequately protect and assist people when required, but their unshakable faith in “lower corporate taxes=more jobs” equation leaves them with a restricted amount of revenue to use. The money they choose not to collect from corporations is the money needed to buffer the after-effects of corporate actions. The Federal Government should be ensuring that Employment Insurance is properly funded and can quickly assist those applying for help, the Provincial government should be ensuring that retraining programs have additional resources to call upon when a large workforce is suddenly thrown out of work, and the municipal government has to have the money available to fund the increase in support services that will be used. Instead, we have Federal and Provincial crowing about the lowered corporate tax rate, and the Mayor with his bunch of “Zeros” cutting funding obsessively to meet their campaign promise of no tax increases.

Though all levels of government make the argument that “business incentives=more jobs” the reality is that the only guaranteed way a government can create jobs is to hire more people for public service.  Every other incentive, whether a direct subsidy paid to a company, a tax expenditure that allows a company to avoid paying some of their taxes, or an across the board tax cut, cannot be directly tied to an increase in full-time, permanent jobs at a living wage.

Companies are amoral, driven by a simple mandate to increase revenue for the shareholders, with no consideration to the community or the employees. Any kind of enticement offered to them to lure them to the city is at best a temporary arrangement that will dissolve the moment a cheaper offer is made. Government’s role is to collect enough tax revenue from these companies so that the community can survive the effects of the company’s demise or exit, and to create smart international trade agreements that protect the Canadian people and Canadian businesses instead of the multinational corporations.

 

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3 thoughts on “Labour Disputes and Government Intervention

  1. There was a TVO documentary a few years ago that detailed how corporations met every test to be classed a psychopath. It was a interesting and disturbing show.

  2. There’s an article over at the NYT about the change in job markets, with Apple as the case study. The conclusion is that the US is losing manufacturing jobs largely due to a dearth of skilled workers. According to the article, the lack of workers with advanced skills and education in technical areas is a huge driver of jobs offshore (though low wages and reduced environmental and labour laws also play a big part).

    As long as cheap oil makes it economical to ship products 10,000km, unskilled and low-skilled manufacturing jobs are going to continue to disappear. If a job can be offshored, it will be. And no, I’m not happy about this and what sort of future it paints for my kids, even if they work hard and get a great education.

    Anyway, the article is here:

    http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=2&hp

  3. I enjoyed reading this post, but you made some errors in your final conclusions. The core flaw is the idea that government needs to save people from the bad spots in life. That’s warm and fuzzy but also wrong. It’s not the role of government to cover all the sharp edges of life any more than government should give everyone cake on their birthday. Sometimes, life sucks. Individual responsibility is the correct preparation for bad times, not government taxation and welfare.

    I agree with you that the equasion “lower corporate taxes = more jobs” is too simple but the reverse idea, that higher taxes is better, is equally wrong. Government should do everything possible to remove obsticles to business creation and success. Government should do this because business success benefits society through employment and more goods & services. The #1 burden that government puts in the way of business prosperity is taxation and so maximum effort should be put into reducing that burden. Reducing taxes won’t instantly create jobs the next day, but it’s the correct, forward-progress move for government to follow towards the goal of benefiting people. Reducing the burden of taxation means the business has more money to spend on new hires (maybe) or improvements or distributions to shareholders (Not evil, by the way. Nearly every Canadian is a shareholder of several Canadian companies, if only distantly, through their RRSP investments.) or simply bank so they have cash to keep going during slow times.

    Progressively reducing taxes also shows prospective businesses that the area is favorable to invest in. Given a choice between two cities, one that favours the jobs that new business brings and one that is hostile to business, which would attract more new employment?

    Taxing business with the idea that they’re here today and gone tomorrow so government should suck as much blood as possible while they’re still alive is a terrible idea. Surely it’s obvious that healthy, profitable companies that last for generations and provide employment are desireable for a community? That taxing away every dollar the company earns would cause it’s destruction and the loss of jobs it once provided?

    Finally, the statement that companies have no consideration to the community or employees is nonsense. Hundreds of London businesses, giant and small, donate money in the London community to total annual sums of millions of dollars. That you don’t know about it should be evidence that they don’t do it for newspaper headlines; they do it because they believe in giving back, on top of the taxes they already pay and the jobs they already provide.

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