Back-to-Work Legislation: Once started, a difficult habit to break
May 31, 2012 Leave a comment
The federal Conservative government hasn’t been shy about using back-to-work legislation to quell the possibility of strikes in the transportation industry, a sector that comes under the Canada Labour Code’s purview.
First, back-to-work legislation was applied to Air Canada, whose uncertain future was discussed on this blog two months ago. Now it’s CP Rail’s turn.
Back-to-work legislation might be something to be used more sparingly in the future, though, as it can turn into an open-ended invitation for a business to pass the buck to government, and can result in lower wages (and the resulting lower tax revenues).
So suggests a 2010 C. D. Howe Institute report, which reported that back-to-work legislation can end up with the government having to take responsibility for the private sector’s problems — the opposite of what many small-c conservative governments nominally stand for.
These results suggest that back-to-work legislation negatively affects the ability of labour and management to take responsibility for fashioning their own solutions to problems by increasing their reliance on third parties and postponing negotiations to the next round. If the two sides of the agreement know the [government] will make the hard decisions for them, they have no reason to do so themselves. Back-to-work legislation may be appealing as a way to resume public services, but its long-term consequences could be negative.
Among those negative consequences: lower wages in the resulting settlement.
The net effect: real wage levels compared to otherwise similar contracts are lower after back-to-work legislation. Wage levels eventually decrease to 2.9 percent below otherwise similar contracts by the time of the next contract, making the total reduction in take-home pay significant.
Even averting a strike doesn’t necessarily prevent public inconvenience, as the report notes that back-to-work legislation can encourage “work-to-rule, illegal strikes, and slowdowns”.