LEADING THOUGHTS

You can see it in the streets and smell it in the air: signs of economic recovery are beginning to emerge in Canada. But according to the latest estimates from the Conference Board of Canada, it will take up to five years for the economy to return to full capacity. For workforce planners with an agenda for change, now is the time to strike.

According to the Conference Board’s Industrial Relations Outlook 2010, “Employers now have a window of opportunity to develop effective workforce strategies before the recovery pushes us back to full employment and the challenges of a tight labour market.”

The report suggests that employers use this time to train and re-skill the workforce and more effectively integrate immigrant and Aboriginal communities.

As for the near term, the Conference Board predicts that the public sector will dominate collective bargaining in 2010, with negotiations involving 750,000 public sector workers. Faced with national deficits, federal workers will feel the need to concede gains. Municipal workers, however, may push for contract improvements.

Factoid: Union density rate in Canada is 29 percent — 71.3 percent in the public sector and 16.1 percent in the private sector

In the private sector, the Conference Board says, employers will continue to focus on controlling costs. The strength of the Canadian dollar relative to the U.S. dollar means dampened exports of manufactured goods.

According to the Conference Board, there are two big issues that employers face: one, a continued structural labour deficit; and two, a private pension fund system that requires fundamental change, particularly regarding employer finding.

For their part, unions will continue to be focused on protecting their existing rights and benefits and protecting jobs of existing members.

Given the uncertainty in the private sector and the fiscal deficits in the public sector, the Conference Board says, “universal labour peace is unlikely in the coming year.”

InfoBox: Current Negotiation Issues (Canada)

Management Issues:

1. Wages
2. Productivity
3. Health, pension, and benefits
4. Organizational change
5. Business competetiveness

Union Issues:

1. Wages
2. Employment security
3. Health, pensions, and benefits
4. Employment/pay equity
5. Outsourcing/contracting out

(Source: The Conference Board of Canada union-management survey)

Industrial Relations Outlook 2010: A recovery offering little relief, by David K. Shepherdson; Conference Board of Canada

photo credit: Aaron Magner

Sweeping changes in the labour market over the past four decades have triggered “the disappearance of ‘workers’ as a political and industrial force, as a social and cultural category and as the concept that organizes our thinking about labour law and policy,” says Harry Arthurs, one of Canada’s leading labour law scholars.

In a recent speech to St. John’s College at University of Oxford, Arthurs listed a litany of tectonic forces: technological change, the shift in employment from manufacturing to the service economy, the “flexibilization” of the workforce, demographic trends, and globalization.

These developments have made employment more precarious, created conflicts or magnified differences among workers, undercut labour solidarity, and shifted the balance of power to employers.

As a result, people no longer define themselves as “workers” or as members of the “working class.” If they experience unfairness, Arthurs says, it is not as “workers” but as members of a disenfranchised group. “The common experience, the solidarity-building experience, of workers — in mines and sweatshops and dark satanic mills— is gone,” Arthurs says. “Gone too is the culture that reinforced that solidarity.”

The transformation of work has also rendered machinery of labour market regulation obsolete. Arthurs offers a number of examples.

“The shift from manufacturing to service jobs has revealed that laws premised on one sort of employment relationship do not necessarily produce the desired results when transplanted onto another.” Implication: Should labour legislation be drafted to take account of sectoral differences?

“Technology enables employers to respond to their customers around the clock, and globalization requires that they do so. But for employers to respond, employees must be available on at least a standby basis.” Implication: Should laws fixing maximum hours of work and requiring premium pay for overtime be changed to accommodate the employer’s business needs, or the employee’s needs for even greater protection against intrusion on his or her free time?

Arthurs says Western economies have three choices:

1. Adopt the perspective of human rights and the principles of freedom, dignity, and equality. “These principles ought to apply to people at work, no less than people at other moments in their lives,” he says.

2. See what can be done to bring more equity into the labour market within the limits of neo-liberal capitalism.

3. Try to resuscitate the labour movement or reinvent the labour movement.

Which one would you vote for?

If you’d like a copy of Harry Arthurs’s presentation, send me an email at Alan [at] AlanMorantz [dot] com

photo credit: Mohammad A. Hamama – A Socialist Blogger

Trade union mergers in Europe and North America have been going strong since the Second World. It is almost always a question of survival: mergers or absorptions are thought to help unions maintain or grow membership to sustain their financial base and increase bargaining power.

While in the past mergers occurred among unions in the same industry or occupation, more recently unions from different parts of the economy have merged to create super-unions, such as ver.di in Germany and UNITE in the UK.

Across the pond in the U.S. starting in the 1980s, five unions led the way in multi-jurisdictional mergers: the Service Employees’ Union, the Union Food and Commercial Workers, the Communications Workers of America, the International Brotherhood of Teamsters, and the United Steelworkers of America.

You could understand their logic: the trade union movement saw the decline of master agreements, which led to decentralized bargaining and greater administrative costs. There was a sudden decline in organizing and subsequent loss of union revenue. “Mergers came to be seen as a potentially cost-effective alternative to organizing as a means of sustaining membership levels,” writes Kim Moody (Centre for Research in Employment Studies, U Hertfordshire) in the British Journal of Industrial Relations. “With smaller unions looking for mergers to survive, jurisdiction became less important for both those willing to be absorbed and those seeking more members.”

Moody took a detailed look at multi-jurisdictional unionism in the U.S. In particular, he assessed the three major arguments in its favour: that it improves the union’s finances, that it increases organizing capacity, and that it boosts union bargaining power.

Moody’s conclusion: Conglomerate unions “do not achieve notable improvements in these three areas, nor do they perform better than other large unions that have engaged in fewer mergers over time. All that can be said is that mergers may prevent even worse performance outcomes, hardly what the advocates of conglomerate mergers claim.”

Are multi-jurisdictional unions in better financial shape? One measure is the degree to which the membership itself finances the union through dues and fees. All the unions studied by Moody rely heavily on income from investments and the sales of assets to cover total costs. As well, bigger unions mean ballooning staff and administrative costs.

Do union mergers lead to increased organizing? “While greater resources could increase organizing capacity,” Moody writes, “a good deal of these resources appear to go on staff and administrative costs as the number of sectors and agreements proliferate.”

Do these unions have greater bargaining power? The reality is that strikes are more infrequent, real weekly wages have declined, and benefits won in earlier times have been rolled back. “As measured by the outcomes of wage agreements in the major jurisdictions of these unions,” writes Moody, “there is no evidence of improved or above average performance. In fact, many of these agreements fall short of the average increases for unionized workers generally and in their major economic sectors.”

“The Direction of Union Mergers in the United States: The Rise of Conglomerate Unionism,” by Kim Moody; British Journal of Industrial Relations (47:4 December 2009 0007–1080 pp. 676–700)

If you cannot find this journal is your local library, email me for a copy of the article at Alan [at] AlanMorantz.com

photo credit: Tobias Higbie

When it comes to building a compensation strategy, often what’s important is not the size of the pot but the choice of levers. The levers include base salary, incentive pay through stocks or bonuses, commissions, and a range of benefits. Getting this compensation mix right has a big impact on how well an organization performs.

In a non-union setting, managers have virtually free rein to work these levers as they see fit. But what happens in a unionized shop? What is the union influence on the mix of compensation chosen by employers? Richard J. Long (University of Saskatchewan) and John L. Shields (University of Sydney, Australia) set out to answer that question. They studied survey data from 2000 and 2004 for 250 Canadian firms.

Reporting in Relations Industrielles/Industrial Relations, they write that, as expected, firms that are more heavily unionized devoted a larger proportion of total compensation to employee benefits than did firms with a lower level of unionization. Not surprising: an earlier U.S. study found that union presence adds 20 to 30 percent to employee benefits and that indirect pay accounts for almost 35 percent of total compensation for unionized workers versus about 25 percent for non-union workers.

But the researchers unexpectedly discovered that while the more heavily unionized firms in 2000 devoted a smaller share of compensation to individual performance pay, that was not true in 2004. That’s surprising: as a rule, unions have little time for individual performance pay or appraisal-based merit pay.

“Also surprising,” Long and Shields write,”is that more unionized firms did not differ significantly from less unionized firms in their proportions of base pay, group performance pay, or organizational performance pay in either time period.”

Their conclusion: while unions may still have power to influence some aspects of the comp mix, their power may be declining. “Even within the four-year time span of our study, Canadian unions may have lost their ability to affect a key component of the compensation mix — the use of individual performance pay — an ability that they appeared to possess at the beginning of the twenty-first century.”

“Do unions affect pay methods of Canadian firms? A longitudinal study,” by Richard J. Long and John L. Shields; Relations Industrielles/IndustrialRelations (64-3, 2009, pp. 442-465)

photo credit: Darrren Hester

Joel Klein, New York City School Chancellor, has some refreshing perspectives on how to manage the human resources of a school system. In the Oct. 12, 2009 issue of Fortune magazine, he talked about paying for performance and empowering principals. Excerpts follow.

On the culture of the public education system in the U.S.:
“Fundamentally, the only differentiator is seniority. The power in the system in fundamentally the power of the bureaucracy, of the political forces, of the union.”

On paying teachers based on performance:
“I think about it this way: Every university I know pays differently for science teachers than it does for English teachers. But I pay the exact same for a science teacher and physical education teacher. And then I pay the same whether you work in my highest-need school or in my most successful school. Money isn’t the only thing that drives teachers. . . but money is an ingredient in the mix of things that matter to people. Fairly compensating them if they take on tougher assignments, if they’re doing the work that’s harder to attract people, like science and math — that seems to me a critical component.”

On empowering principals:
“When I started, superintendents used to pick the principals and then pick the assistant principals. I said, ‘If the principal can’t put together his management team, it’s not going to work.’ And they said, ‘Well, Chancellor, you shouldn’t do that because our principals can’t pick assistant principals.’ I said, ‘If they can’t pick assistant principals, we’ve got to get new principals.’

“Isn’t that ridiculous? Shouldn’t principals be deciding which administrators they need, which guidance counsellors they need, what community programs they want to bring in . . . and start to differentiate based on their challenges and also take some risks in this game?

“I think people would be surprised by this: Every principal in New York City signs an agreement saying what their prerogatives are, what discretion they have, and also what their accountabilities are. And if they don’t meet their accountabilities, we can terminate them or close their schools. We do that. And that’s a very different way of doing business.”

photo credit: azipaybarah

Charles Cirtwill, Executive Vice President of the Atlantic Institute for Market Studies, spoke about the future of unions in a CBC National Radio interview in June 2009. In the conversation, he focused on the demographic shifts in Canada and in many other countries that will see labour shortages in the years ahead, and what those shifts may mean for unions.

“The fact is that this recession is probably the last warm-up round to what we are really going to see in terms of a significant demographic shift not only in Canada but around the globe. That demographic shift is going to put real pressure on unions and unionized workplaces because what’s going to happen is union membership is going to fall. The resources available to pay for unionized service, and that’s typically public sector unionized services, are essentially going to dry up. That is going to put pressure on union contracts, on unionization, on union membership that no one has ever seen. . .”

With power shifting from employers to individual workers, Cirtwell says, individuals will be able to negotiate better terms than if they were part of unions.

“In a period of labour surplus, the unions were a huge value add to the employee, to the individual worker. The unions were able to get benefits, to get a level of security in jobs, which an individual worker wouldn’t have been able to negotiate on their own. What is going to happen on the flip side as we move into a labour shortage is that the workers’ capacity to negotiate all those things is going to be that much stronger. In fact in many instances – and this is really going to take a leap of imagination for some people – the unions actually are going to become a barrier to individuals maximizing their returns from their skills and the scarcity of labour. As a result people are going to be, individuals, are going to be less inclined to support the unions.

“. . .I think the real impact on union numbers is going to be simple pure raw numbers. There are simply going to be fewer of them 15 or 20 years from now. They are probably still going to be paid a premium for doing those jobs, however in a time of labour shortage everyone is going to get that premium. In fact, union membership and the union contract may be a hindrance to getting a premium. In a labour shortage, people who work in high demand jobs can name their price and their perks. Being limited to the benefits outlined in a union contract will make it impossible to negotiate a better deal on your own. So I think in terms of raw numbers you are going to see a significant decline in union membership.”

Do you think unions will become increasingly irrelevant in the future?

For a transcript of this interview, email me: Alan [at] AlanMorantz.com

photo credit: Tertiary Education Union (NZTEU)

Music provides an intriguing window on the world of work, says law professor Rafael Gely (U of Missouri).

“Throughout the centuries people have used songs while engaging in working activities,” Gely writes in The International Journal of Comparative Labour Law and Industrial Relations. “Workers have used songs as a form of entertainment, as a way to tell stories, as a means to achieve solidarity and as an avenue of voicing their concerns.”

During the pre-industrial era, when labourers had a high degree of control over work processes, songs were used by weavers, domestics, and sailors to set and respond to the pace of work.

During the Industrial Revolution, workers lost autonomy to machines, and machines then dictated the rhythm of the work day. Management theory also evolved to view music as a leisure activity that had no place on the factory floor.

Over time, management tried to use music to boost efficiency, while for workers songs became tools for class struggle. “Songs became a mechanism to voice the workers’ grievances,” Gely writes, “and also a mechanism to transmit the struggle of workers and develop class solidarity.”

Winnsboro Cotton Mills Blues

Old man Sargent, sitting at the desk
The damned old fool won’t give us no rest,
He’d take the nickels off a dead man’s eyes
To buy a Coca-Cola and an eskimo pie.

In the post-industrial era, iPods and other music-listening devices allow workers to regain a measure of control over their workspace. But managers are still using mood music to structure behaviour for both employees and customers.

Gely offers a host of research questions that he says are worth pursuing. To wit:

• How common is it for employers to allow the use of music in the workplace?
• Do policies regarding the use of music vary by industry?
• In the context of unionized workplaces, have labour organizations negotiated over the use of music?
• Are there cultural differences in the way workers interact with music?
• Are there demographic differences in the use of music at work?

Workplace Songs: Developing a Framework for Research and Teaching, by Rafael Gely; The International Journal of Comparative Labour Law and Industrial Relations 25, no. 1 (2009): 49-58

Email me for a copy of this paper: Alan [at] AlanMorantz.com

photo credit: danceonair1986

Instinct tells you that employee-employer partnerships are usually win-win arrangements. By workplace partnerships I mean: profit and gain sharing programs; policies that maximize employee security; extensive employee and union consultation; joint problem solving and planning; and flexible forms of job design.

The critical view of workplace partnership is that, far from yielding mutual gains, such arrangements inevitably benefit employers more than employees or unions.

While there is anecdotal evidence that employer-dominated partnerships exist, the weight of research over the years shows positive performance outcomes from most forms of employer-employee partnerships. The latest bit of news comes from William Roche, an Irish academic. Roche was commissioned by Ireland’s National Centre for Partnership and Performance to conduct a telephone survey of more than 5,000 employees in Ireland, asking, Who gains from workplace partnership?

Roche found there are indeed mutual gains, with the same results in both union and non-union workplaces.

Employees: Gains in work autonomy, information provision, job satisfaction, and fairness. No gains in employment security or hourly earnings.

Employers: Gains in organizational commitment and quality of managerial/supervisory relations. No gains in employees’ willingness to accept change.

Unions: Gains in member commitment, influence, and likelihood of union membership. No gains in perceptions of union effectiveness. Roche does have sobering news on this front: “Ominously for trade unions, organizational commitment is found to be negatively associated with union commitment.”

Who Gains from Workplace Partnership?; William K. Roche; The International Journal of Human Resource Management (vol. 20, no. 1, 1-33)

Email me for a copy of this paper: Alan [at] AlanMorantz.com

photo credit: dekay