Emboldened companies, fed intervention will make 2013 a tough year for labour

MONTREAL—After nearly a year of searching for a job close to home, welder Garnet Cooke is preparing to leave family behind and follow the trail blazed by many other unemployed Ontario workers who have headed west in search of a new life.

“I have been in this field for 35 years (and) I don’t wish to take any more steps backwards,” says the 54-year-old laid-off Electro-Motive worker.

Dave Clark said he’s gone through various stages of grief since he too lost his job at the London, Ont. locomotive plant after 18 years.

“There’s some really bad news out there. People are splitting, families are breaking apart, some people are filing for bankruptcy already. It’s tough.”

Both men say they are examples of the struggles that many Canadian workers have faced over the past year as employers try to squeeze out costs in the face of a weak economy.

While the creation of Canada’s largest private sector union is intended to strengthen the position of labour in 2013, observers—including union officials—say it will still be a challenging year given economic conditions.

Cooke said his life has been turned upside down since U.S. heavy equipment giant Caterpillar Inc. closed the Electro-Motive plant early this year. It relocated to Indiana after workers refused to accept a 55 per cent cut in wages and benefits.

He’s gone from earning nearly $35 an hour to living on $850 every two weeks from employment insurance.

“If it wasn’t for the fact that I had my next older brother move in with me to help alleviate some of the bills and the stress of having to pay full rent, I don’t know what I would be doing right now,” he said in an interview.

Workers received $1,500 parting cheques and severances ranging from $13,000 for those with three years’ service to $148,000 for employees with 30 years on the job.

As an older worker, Cooke says he sees few job opportunities as companies prefer younger workers willing to take deep wage discounts.

So Cooke is working on his red seal—an interprovincial stamp on his welding certificate—and plans to head to the oilsands in Fort McMurray, Alta. From there he’s willing to criss-cross the country back to his birthplace in Nova Scotia if he can secure a job with Irving Shipbuilding, which won a huge government contract.

Clark said his anger has turned to hope as the former General Motors employee awaits for his name to be called from a preferential hire list that will give second-chances for work in Oshawa, Ont., to about 145 of Electro-Motive’s 481 laid off workers. GM sold Electro-Motive in 2005.

“I’m very fortunate, very blessed to have that, but in the meantime I have to survive until March, April to get my call,” the 49-year-old father of three said.

The head of the Canadian Auto Workers union said Electro-Motive is a painful example of the labour climate in Canada, where companies feel emboldened to seek deep cuts in wages and benefits—some earned through decades of negotiations.

“They have a confidence level that I’ve not seen in my 35 to 40 years,” Ken Lewenza said from Toronto.

In addition to cutting wages and benefits, companies are routinely trying to move workers from costly defined benefit pensions, which guarantee payments in retirement, and are imposing two-tiered models where new hires earn less and have to contribute more towards their pensions.

The CAW was able to secure new collective agreements this year for Canadian employees of the Detroit 3 automakers. But the union had to agree to a two-tier wage system, including a 10-year progression to full pay and a hybrid pension plan for new employees.

The automakers wanted to see new hires permanently earn less than current employees.

The as-yet unnamed super union will hold its founding day convention on Labour Day weekend 2013, where it will approve the union’s constitution, name and logo, and elect its first leaders.

George Smith, a labour expert at Queen’s University, said the merged union—which will represent more than 300,000 workers—is a significant event that will help the union put free collective bargaining and labour relations on the public agenda.

But Ian Lee of Carleton University calls the merger a defensive strategy to address the steep downhill decline in union membership in Canada, to 16 per cent of the private sector and 33 per cent overall.

“I’m not saying it’s going to hurt them,” Lee said. “I just don’t see it having any major impact on private sector industrial relations in Canada.”

While private sector workers are feeling the effects of the economy and globalization, they and public workers also face federal and provincial governments willing to intervene in labour disputes.

Smith said 2012 was a tumultuous year for labour relations in Canada, partly because of the “unprecedented” intervention of the federal government.

“I think it’s fair to say that unions and unionized employees, particularly in the public sector, feel they are under siege,” he said.

If labour relations swing at times to favour one side or the other, the current environment has definitely moved in favour of management, Smith added.

Ottawa threatened to prevent strikes by Air Canada workers and imposed arbitrated settlements that mostly ended up favouring the airline. The government also intervened with Canada Post.

In Ontario, parents are bracing for strikes as teacher unions battle the Liberal government’s decision to impose legislation that freezes wages and cut benefits.

Smith, a former Air Canada employee relations director, said the airline may have won the short-term battle with the help of the government but risks longer-term ramifications that will likely surface at the next round of bargaining.

Public sector employees are also under pressure after the federal government pushed through omnibus legislation that forces newly hired public servants to begin collecting pensions at 65 and to contribute more over the next five years.

In the private sector, Lee said workers are going to face ever growing pressure because of globalization, a strong loonie, a slow growing economy and competition from right to work states.

The Sprott School of Business professor said he’s hearing more people talking openly about being thankful to have a job, which suggests that ordinary Canadians realize there’s a new normal about worker compensation.

“I think it’s a year of transition and we’re moving into a world where it’s more competitive, and the impact of globalization is becoming more obvious to workers.”