JANUARY 25, 1979
The Public Interests in Collective Bargaining
AN ADDRESS BY John Crispo, PROFESSOR OF INDUSTRIAL RELATIONS AND PUBLIC POLICY, UNIVERSITY OF TORONTO
CHAIRMAN The President, Reginald W. Lewis
BRIG. GEN. LEWIS:
Members and friends of The Empire Club of Canada: It is not difficult to find in this morning's, or for that matter, any morning's newspaper, a story about a strike, the threat of a strike or the results of a strike.
There are many in this audience today who are entirely immune from what appears to be the constant confrontation between labour and management. But is that so? In reality, however buffered we may appear, labour-management turbulence affects us all.
The attempts to understand the motivations and the concerns of both sides have spawned a relatively new science and expertise under the title "Industrial Relations." So it is that the name of our speaker today is well-known, not only to principals and experts in this field, but also to those of us grouped under the term "the general public" who would learn more about the problems, the interests and the concerns of all those who are involved in this new reality of our society. John Crispo, Professor of Industrial Relations and Public Policy at the University of Toronto, is a name familiar to many as a frequent commentator in the media on current industrial-relations matters, and more so, to those more intimately involved in the solving of problems in this field.
We are sometimes consciously and at other times unconsciously prone to decry the meddling of academics in what we consider to be practical matters of the moment. We cannot level this accusation at Dr. Crispo. Since graduating in 1960 from the Massachusetts Institute of Technology, with a Ph.D. in Industrial Economics, he has paralleled his academic qualifications with practical experience in his chosen field. He has authored four books dealing with industrial relations both here and abroad; he was a member of the Prime Minister's Task Force on Labour Relations; he was Director of Research, Royal Commission on Labour-Management Relations in the Construction Industry and Director of Research for the Select Committee on Manpower Training. At various times he has been a research consultant to the Economic Council of Canada, the Prices and Incomes Commission, the Department of Consumer and Corporate Affairs, the Anti-Inflation Board and the Federal Department of Labour.
During the academic year 1976-77 he was on sabbatical leave in Western Europe interviewing labour, management and government officials on the latest developments in the field of industrial democracy. And during that time I am sure that many of you enjoyed his fascinating and informative articles published in the Globe and Mail.
John Crispo brings to his field of endeavour a balanced outlook and a clarity of expression based on academic achievement, practical experience and on his keen observation and understanding of events. Ladies and gentlemen, I am pleased at this time to introduce to you Dr. John Crispo, who will speak to us today on the subject "The Public Interests in Collective Bargaining."
Ladies and gentlemen: As the chairman indicated, this is a bad time to be defending the collective bargaining system, which is what I'm going to be doing today. It's difficult in this country, where our system appears so strife-ridden and inflation prone. But then, of course, this is the Empire Club. One has only to look at the mother country.
What can one say? It's bad. It's British. But why get upset? They have always muddled through before, and I guess they will again. But it will leave a lot of scars.
I don't intend to dwell on it, but I would make one point. It is the point I will be making towards the conclusion of my remarks about Canada. The British industrial-relations system does indeed look very sick and troubled. It is. But I would argue, and I will argue in the context of the Canadian scene, that that is because British society is in such deep trouble.
Rather than be serious, perhaps I could summarize the situation, and the Canadian situation, by borrowing from a, little ditty. I was told, and I hope I've got it right, that Maggie Thatcher used this little ditty when she was addressing your club two or three years ago. I remember hearing about it, and thinking at the time that she had it all wrong because the labels she was using were inappropriate. And I think in a sense that is still true today.
Let me give you the version she used, and as I go along I will add my own interpretation. I guess she felt inclined, when she was in Canada, to inform Canadians about the makeup of the British nation. She said, "Britain is comprised of four nations. First, the Welsh, who pray on their knees and prey on their neighbours."
Now, who is that in the context of labour-management relations? To me, that is government. And certainly the British government is very good at preying on its people.
"Second," she said, "are the Scots, who keep the Sabbath and anything else they can lay their hands on." Now, who is that in the labour-management context? That's management--the beggars who charge what the traffic will bear. Some of you will not like that, but wait till you hear about the others.
"Third," she said, "are the Irish, who don't know what they want, but are willing to die for it." That is obviously organized labour.
"And last," she said, "are the English, who consider themselves a race of self-made men, thereby relieving the Almighty of a dreadful responsibility." (I don't like the English, in this context, but I'm afraid I fall into several of these categories:
the academics, the arbitrators, the conciliators, the mediators, the media types, the politicians, and everybody else you don't like.)
Now, that's Britain, and I think you would agree, to some extent that is Canada.
Now, tough as it is to defend collective bargaining these days, I think that those of us who know something about the system should defend it more vigorously than ever simply because it is under attack. There is just too much at stake, not only in terms of collective bargaining, but in terms of our total system, for us not to stand back and look at what is going on and recognize the fact that we could be making some drastic changes if we tried to alter too much the collective bargaining system. But I am getting ahead of myself.
What I want to do, in the time available, is talk about three public interests in collective bargaining, and then out of that, try to arrive at a conclusion. These three public interests are as follows: first, the public interest in the preservation of the collective bargaining process as part and parcel of our overall socio-economic-political system; second, the public interest in the procedural results of the collective bargaining process--that is in strikes and lockouts and other forms of lost time due to industrial conflict; third, the public interest in the substantive results of the collective bargaining process. By that I mean the relationship between wage settlements and inflation.
I want to deal in turn with each of these public interests in the collective bargaining process. After that I will return to their competing and conflicting nature and draw some general conclusions.
The first, and to me, primary, public interest in collective bargaining is a very real and yet somewhat philosophic one. It is the public interest in collective bargaining as a vital component of the hierarchy of values and institutions that underpin our society. In essence, these are fundamental western values, liberal democracy, the competitive, enterprise or market system, and collective bargaining itself.
Let me start with what are usually termed fundamental western values. Traditionally, these have included freedom of speech---which to me is basic--freedom of assembly, freedom of contract, and freedom of property. I would add to this list equality of opportunity, which this country is running away from as fast as it can. Currently, with the movement towards higher university fees and towards the abolition of inheritance taxes, we are obviously moving in the opposite direction, as is the attempt being made to scale down some of the programs designed to help the disadvantaged. Others would add freedom from human degradation, poverty and suffering, although here too we have a long way to go. As the right-wing tide sweeps over North America, how much emphasis will we put on these values? Suffice it to say that we may not be able to preserve our more traditional western values unless we update them from time to time to include important new social values.
So far at least fundamental western values have thrived best within liberal democratic political frameworks. The easy way of describing these frameworks is by reference to the American constitutional commitment to government of, by and for the people. Whether congressional, parliamentary or some combination of the two, these systems have best served the interests of those who cherish our traditional western values. This is not so clearly the case when it comes to some of the newer values just mentioned, such as equality of opportunity and protection from poverty.
My third point in this hierarchy that I am building is a little more controversial. I don't think it will be controversial before this audience, but it would be if I were addressing the leftists and militants of the labour movement, let alone some of the kooks that we put up with at the University of Toronto to offset people like myself who are considered unduly right wing. In this audience I am not right wing, but in certain parts of the University of Toronto I am considered so. But it's awfully important to have those kooks around. If they weren't there, we wouldn't look as right as we are! But I have history on my side when I state that there is no liberal democratic political system that has survived, let alone done well, unless it has been coupled with something like a competitive enterprise or market system. I used to use the word "capitalism," but that word has become as charged and useless as "communism." I would remind you of the definitions of capitalism and communism. "Capitalism is a system in which man is allowed to exploit man. Communism is just the reverse."
My point of view is historical. I know of no country that has retained liberal democracy and fundamental western values that does not have a mixed free-enterprise or modified capitalist system. History is not infallible. My friends on the left assure me that somewhere they are going to prove me wrong. I just pray that they are not going to have the opportunity to use this country as their laboratory.
If you have followed me this far, fundamental western values, liberal democracy, mixed free enterprise, then I will get very dogmatic. You can't have your system, you can't go on charging what the traffic will bear and ripping off the public for all you can, whether you are in a corporation or a professional group, unless workers are provided with the same opportunity. Workers have discovered the hard way that for most of them it is impossible for them to do so on their own. They have to have collective bargaining. My point is that it is part and parcel of this whole system. And if they are going to do that, they must have a vehicle through which to do it, and that is the role of the trade union movement.
I am not arguing that this hierarchy of institutions represents the best of all possible worlds. Perhaps in my naive youth I used to think it did. All I would say for it now is that it represents the least of the evils. Within the very imperfect world in which we live, that isn't bad.
So my first point is that collective bargaining is indeed a component part of a whole set of values and institutions that I don't think many of us want to risk, and therefore my fundamental message is that we recognize the vitally significant part that collective bargaining plays in our total socio-economic-political system. I will stress again in my conclusion that we dare not tamper too much with the essence of our collective bargaining process without jeopardizing the rest of this overall system as well.
Let me turn now to the public interest in the procedural results of collective bargaining--strikes, lockouts and everything else that goes with it.
I don't have to remind you of Canada's record in terms of industrial conflict. We are normally in the top five; we are seldom out of the top ten in the world league of strikes and lost time. The only country that we can't beat is Italy. We have tried! Even in 1976 when the Canadian Labour Congress called its day of protest, you all thought it was because they were protesting wage and price controls. I knew they wanted to lead the world league just once. But you can't beat the Italians. If they lose a soccer game they have a national strike.
I used to say to the devil with Canada's lost-time record, and in the past it was perfectly appropriate to say that. We had the most organized, orchestrated strikes on earth. If General Motors was shut down by the auto workers, maybe they hurt each other, but there was no real inconvenience to the general public. Oshawa might suffer, but who cared? Exhibit A right now is Sudbury--a tragic strike but the public is not being hurt by it, so who cares?*
But in the last five or ten years, the whole public service has become organized. Unlike private industry, where we can inventory and stockpile, where we can find ready substitutes, there are many parts of the public service where strikes cause inconvenience and hardship. So the growing public concern is understandable. That has led to calls for bans on strikes in the public service, and I am going to try to argue shortly that that is hopeless.
Everybody says there must be a better way. When the Globe and Mail, the Toronto Star and the Toronto Sun all say there must be a better way, there must be! But read their editorial pages carefully to find out what that is. They just don't have it. I'm going to tell you, there ain't a better way. Indeed, I would argue that there are worse things than strikes and lockouts and lost time due to industrial conflict. Let me turn to one of those.
The one I want to deal with is compulsory arbitration, which is everybody's answer to the problem. We should have learned from the experience in Australia and New Zealand that compulsory arbitration is no panacea. During the last six months I have seen delegations from both countries. Their systems, too, are in serious difficulty. They are in so much trouble that they have come to look at our system. I don't really know what they expected to learn here, but obviously they are desperate!
Let me just briefly review some of the problems with compulsory arbitration. First of all, who are we going to use as arbitrators? Historically, the employers (you people) favoured the judges. It wasn't because they belonged to the Empire Club and you moved in the same social circle and played golf together. That's what the unions said but that is wrong. The real explanation is because judges live in the past. It's called case law, or precedent. You don't change anything unless a legislature tells you to change it. Being for the status quo, it was only natural that employers should favour them as arbitrators.
Now, who did the unions favour? They were desperate! They wanted professors! Why? Because professors are paid to innovate even when it doesn't make sense. That's how you get a promotion. It's a mixed record. People don't love me any more and there are some judges that even the unions like. But in general, we have a terrible time finding arbitrators satisfactory to both.
Then there is the problem of criteria. I don't have time to go into this, but under the Public Services Staff Relations Act you have to look at the cost of living, productivity, internal relativity, external relativity, going increases. And then there is the truck drivers' clause, "any other matter which the arbitrator deems germane to the dispute." He can do what he pleases, and hang it on that! If you saw some of the awards coming out, you would understand that they must have been using that clause.
One thing they don't look at is whether there is a recruitment or a retention problem. If people are already well paid, and there is no problem recruiting, and no problem retaining them, one really has to ask why should we pay them more? Yet try to get an arbitrator to even look at these real world facts. That's one of the reasons why employers are so disturbed about arbitrators.
Then there are the big problems with compulsory arbitration, for example, the effect on bargaining. Who bargains in good faith when you know that there is an arbitrator at the end of the line? The employer pleads poverty. He's down in the basement, saying, "I'm going broke." And the union is up in the stratosphere, saying, "We want forty per cent." And both sides stay there because when they know there's an arbitrator, they know that he's going to split the difference somewhere. No matter how far you move, he will move you farther. That doesn't contribute to bargaining in good faith.
Then I would mention what this does to union decision-making. I stress this point wherever I speak in Canada. There is more collective bargaining going on within unions than between unions and management. Union leaders today are managers of discontent, trying to reconcile the competing and conflicting claims of their members. The graveyard shift wants more, the unskilled want more on the base rates, the skilled want a premium, the old dogs want extra on the pension plan. Somebody has to sort it out and trade it off. When a strike is the only alternative, there is an attempt to sort it out to avoid a strike. But if you have an arbitrator at the end of the line, why should the union leader sort out anything? Why not dump it all in the arbitrator's lap? Let him make the unpopular decisions. This undermines a very important process.
I am very worried about what I call the politics of arbitrating. There is a big buck in arbitration these days--the per diem is good. For every day you sit, you can charge a day for preparation, even if it didn't take a day. And that is what they do. Anybody who arbitrates these days becomes very dependent on that income. They begin to worry about their acceptability, their credibility, their batting average.
They all tell me, and I want to relay this to you, that they never make an award except on the merits as they see them. I frankly don't believe them. I think they play politics. I think if they are getting a bad reputation with labour and a case comes along where they can get that reputation back in shape, they will use it. They would deny that vigorously and they will attack me, for this is the first time I have said this publicly. But I am dubious about their standards and I think it is one of the reasons why employers across this country are now resisting arbitration. Beginning with the British Columbia School Trustees Association, all sorts of public employer groups are now saying, "Give us back strikes. Lord save us from arbitrators." They don't have to answer for anything they do. They can render any award they want. They don't have to raise the tax revenue to pay for it. They don't have to live with the consequences.
I endorse those public employers who say, "Give us back strikes." There are worse things than strikes.
I do agree that we have more strife than we need in this country. Let's reduce the incidence of potential strikes and lockouts. Let me give you the most extreme example of all, which is appalling. Air Canada can be shut down by about ten or twelve unions. I've lost count. The airports can be shut down by another, different, dozen unions. That means that roughly two dozen unions can shut down our airlines. That is madness. If our Ministers of Labour would stop seeking headlines by intervening in these disputes and would stand back and look at the mess caused by union fragmentation, then we might move towards a solution. I will say this, and say it categorically, there should be no more than two sets of negotiations in the situation I have just described: one for Air Canada and one for the airports. I think the public could live with a strike every one or two years, but it does get a little annoying when you have to phone Air Canada not to find out if planes are flying because of the weather, but to find out which one of all those unions might have shut them down that day. That's one of the problems I would tackle.
I still cannot eliminate so-called emergency or essential disputes, but I would refer back ten years to what we said on the Prime Minister's Task Force on Labour Relations, when we reported to God himself, Pierre, and offered him some suggestions, none of which were acted upon. What we called for at that time was a Public Interests Disputes Commission in the federal jurisdiction. Not full-time, not a huge bureaucracy, but a few people who know something about industrial relations, such as Carl Goldenberg, who would be available for advice to government or to Parliament when one of these menacing disputes threatened. I still believe strongly in this. If we had such a body we could get these disputes out of Parliament.
I don't just mean to criticize the Liberals. If you're in office, you are usually defending the right to strike. If you are out of office, you are usually condemning the inconvenience and putting pressure on the government to settle the thing, even when the only way to settle is at an unduly high figure. I would much prefer that we had something like a Public Interests Disputes Commission to which the dispute could be referred for advice as to whether or not it is serious, and if it is serious, what should be done about it.
I am here talking about things that in the United States are called "the arsenal of weapons" or "choice of procedures" approach, where the executive or the legislative branches have a variety of techniques to bring into play in these disputes, ranging from straightforward conciliation, to special fact-finding, to mediation, to partial operation (of which I am a big fan), to seizure, if that's the only way out. And as much as I hate compulsory arbitration, I would allow for it on an ad hoc basis as a last resort when all else fails and the public health, safety or welfare is really jeopardized.
We need more imagination in our procedures for settlement of disputes. The last thing we need is a fixed procedure. Unless the procedures are flexible, unless the parties are in doubt, unless there is uncertainty, they will negate the procedure before you even put it into effect because they will have allowed for it in their strategy and tactics.
If I may conclude this part of my address by coming back to a defence of strikes and lockouts, if you want to live in a free society you had better recognize that they are both necessary and unavoidable. Necessary, because it is the strike or the lockout, or the threat of the strike or the lockout, that is the catalyst in the collective bargaining process. Unavoidable, because you cannot deny a strike or a lockout to a group of workers who are collectively dissatisfied with their lot in life unless you want to live in other than a free society. There are worse things than strikes and lockouts.
Finally, there is the public interest in the substantive results of collective bargaining. Here I want to talk about the alleged relationship between collective bargaining, wages and inflation.
Let us begin by recognizing that, unlike most groups in our society, unions do their dirty work in public. They go after their piece of the action in a very dramatic fashion, often attracting a great deal of public attention because it is accompanied by a strike or a lockout. My view is that because they do so much of their dirty work in public, they bear more than their share of the blame for the inflationary mess we find ourselves in.
Unions are only one of many potential causes of inflation. I am the first one to admit that there are times when unions are one of the main causes of inflation. I believe that was true when, in the late 1960s, we had the "Pearson round," the thirty per cent round. But you also have to look at the government's handling of those disputes, its virtual sanctioning of those levels of settlement, to recognize that it was not unions alone who were responsible. We may now be coming again into a period when unions could be a main cause of inflation, because if this bubble we are going through after controls turns into an explosion, they are obviously going to have to share a lot of the blame.
But let us look briefly at the other causes.
First of all, there is foreign inflation. We are a trading country. If the rest of the western world is inflating, we are bound to inflate. My target for this country has never been more than one per cent below the American rate of inflation. Obviously, it has not just been foreign forces causing our inflation because we have been well above most of our trading partners.
But if you want to look at the real causes of inflation in this country, what really got the present spiral under way, forget about unions, forget about professional groups, forget about management. Look at our government and look at our bank. You can't help but think back to when we went into controls. I hate to mention the white knight who is waiting in the wings to be asked to come back to save us. But the wee Johnnie Turner was, indeed, Minister of Finance in 1975 when they ran a six billion dollar deficit. He then left, for reasons unknown, but he is awaiting the call, while he sends memos and gives speeches saying, "My, what a mess they're making of things."
Now, I grant you that his successor, Jean Chretien, wants to prove that he can double the ante, and he's heading for twelve to fifteen billion this year. But I don't just want to blame them. We had another character, in this province, under Wild Bill Davis, Darcy McKeough, who has also fled to the wilderness, awaiting the call. In 1975, he said, "My, my! We're a third of Canada. If Turner can have a six billion dollar deficit, I get two!" To his credit, he only got to 1.9, and I must add this, he saw the error of his ways and stayed on to fight to get the thing under control. He was forced out by his colleagues over the OHIP increases and other sensible suggestions, which he at least had the wisdom to want to put in place to try to undo the damage he had done in the past.
When we run deficits like that, and we are still running them at the federal level, with the Bank of Canada sanctioning this sort of thing with twenty per cent increases in the money supply, how can you blame labour, management, or anybody else? The main culprits are government and the bank.
But I would argue that even if the foreign scene were under control, and if we had sensible fiscal and monetary policies in this country, we would still have a problem. What we have in this country, and in most western countries at this time, is what I call a rat race or treadmill. There is only one consensus in this country. It is universal. It is held by everyone. And that is as follows: "Everybody else is overpaid, relative to me." Is there anybody in this room who thinks he is overpaid? If you put your hand up, two little people in white coats will come in and take you away, because you are certifiable.
We have absolutely no agreement on the income hierarchy and the pecking order in this country. It has broken down completely. The great beauty of the system of the past was that it was accepted, it was stable. Now nobody accepts anything. Everybody tries to jump a rung or two over everybody else.
Let me say a word about controls, guidelines and other aberrations. My record on this is clear. I opposed the Incomes and Prices Review Board, I opposed the Food Prices Review Board, I opposed the Anti-Inflation Board, not just because I knew they would have limited effects, but also because I knew they would cause all manner of anomalies, distortions and inequities. But far more important to me is the fact that these devices only deal with the symptoms of our problem. They do not deal with the problem itself. If we really have excessive wage increases, excessive salary increases, excessive fee increases, excessive profit increases, or excessive any kind of increases, then the real problem is the abuse of power that lies behind those excesses. You can fiddle around with the symptoms for as long as you want. As soon as you stop inflation will burst out again because you haven't done a thing about the underlying problem, that abuse of power.
For a long time I have favoured what I have described as a Federal-Provincial Incomes and Costs Review Board. Let me make it clear before you get confused. It would not have the power to roll back anything. I want to get away from symptoms. I want to give this body a mandate to ferret out power and its abuse wherever it occurs in the system, be that in labour, management, the professions, government, or anywhere else. It should have investigatory power to move in and figure out what has gone wrong. How much power has each group? Where did it come from? They usually got it from a legislature. There are very few groups in this country with excessive power who did not get it from a legislature. I want that tribunal to recommend to the federal or provincial legislatures, whichever has jurisdiction, what should be done to bring that group down to size.
If we don't do this, we won't accomplish anything. I have a motto that nobody can quarrel with. It goes as follows: "Nobody behaves in the public interest unless it is in their own self-interest to do so." In this country, it is in nobody's self-interest to behave in the public interest. Indeed, it is quite the opposite. You would be foolish to behave in the public interest. Everybody else is trying to run roughshod over the public. If you hang back, you will be disadvantaged. That's where we are at in Canada. The old system of checks and balances is not working any more. Nobody is being called to account for anything. Once you have that kind of situation, you do indeed have the rat race and the treadmill.
We have wasted ten years in this country with these stupid review boards. Even when we had the Anti-Inflation Board, and had three years to work on problems, we didn't do a thing. Unless we are prepared to deal with power and its abuse in our system, I don't think it really matters what you do. I say this plainly, about organized labour. They are no different from any other organized group or powerful individuals in this society. They are going to try to get everything out of this system that they can. They are no better, and no worse, than anybody else. Stop blaming them for our problems, when we are all in it together.
I've really tried to give three speeches in one. You're lucky. I usually speak for fifty minutes. In the university, we are paid for fifty minutes. If you don't go for fifty, they won't pay, and if you go beyond fifty, the students leave.
I'll make one more point, and it goes back to what I said about Britain. It is a word of warning. If you really think that our collective bargaining system is sick and in trouble, and there are signs of that, you must recognize that it is a reflection of the state of our society. Whether you look at the social side of our society, or the political side, or the economic side, you find that it is certainly troubled. But don't confuse cause and effect. I have never thought that an industrial-relations system could destroy a country. If an industrial-relations system is in trouble, it is a sign that the whole country is in trouble. And I don't think you can reform or repair collective bargaining unless you are prepared to reform and repair other parts of the system at the same time.
For a conclusion, we have to go back to the beginning. I hope by now that you recognize that my overriding concern remains the preservation of collective bargaining, because I am convinced that if it goes down the drain, so does free enterprise and so, in the final analysis, do fundamental western values. They are that intimately tied together. My fear is that we are going to so mishandle legitimate public interests in collective bargaining that we will drive the public to demand of the politicians to do certain things about collective bargaining which will so undermine it as to destroy it.
I have cited a few of the things that I would do about the problem of strikes and about the problem of inflation. I think it is all too easy to make collective bargaining the scapegoat. It attracts attention because of strikes and high settlements and it's easy to blame it for all of our woes, but I am very concerned that we could drive our politicians to jeopardize our collective bargaining system.
I want to conclude on a fairly personal note, so that you will realize how strongly I feel. If collective bargaining goes down the drain, everything else goes with it. I say to you that all you are going to lose is your freedom of contract and your freedom of property. I hope that after listening to me you will understand why I happen to believe that's nothing compared to what I'll lose, and that's my freedom of speech.
The appreciation of the audience was expressed by Ian D.C. McPhail, a Director of The Empire Club of Canada.
*Editor's Note: The International Nickel Company's plant at Sudbury, Ontario, was struck on September 16, 1978.