Workers pay for anti-scab laws
Quebec, since 1977, and British Columbia since 1993, are the only Canadian provinces still burdened with anti-scab measures whose effects are far from positive, whether for the workers they were intended to protect or for the economy as a whole. In essence, and with minor exceptions, employers there can replace striking workers only with management personnel working in strike-bound establishments who were hired before the start of negotiations.
Legislation in the other provinces is either silent in this regard or guarantees strikers merely that they can return to their jobs once a conflict is settled though with no prohibition of temporary replacements during the strike. The Canada Labour Code also contains provisions guaranteeing that strikers can get their jobs back once a conflict is settled. In 1992, Ontario introduced legislation similar to the Quebec and British Columbia laws, but it was abrogated three years later, leaving only a prohibition against the use of professional strikebreakers. No American state has such laws.
By modifying the balance of power in relations between employers and unionized workers, anti-scab provisions lead to perverse effects, in particular for small – and medium – sized businesses. A multinational company hit by a strike can, for example, transfer production temporarily to another plant located elsewhere in the country or even abroad. These alternatives give it some counterweight to the economic pressure it faces because of the strike, although large companies may still be less likely to set up shop where anti-scab laws are in force.
The situation is more critical for smaller companies. They generally operate from only a single production facility, making it much more difficult for them to resist the economic pressure they face because of a strike. The result is that a smaller company will give in more easily to demands so as to avoid a strike it knows it cannot withstand. If a smaller company is nonetheless hit by a strike, it will tend to seek a quick settlement rather than a settlement that would enable it to stay competitive and survive, and to maintain the jobs it has created.
Up against these unfavourable conditions, the logical reaction of a small business owner will be to manage his company in a way that reduces dependence on unionized staff as much as possible. For example, a company could rely more on subcontracts, could hire fewer permanent workers or could increase its production capacity by opening a new plant, often outside the province where it operates, rather than expand the existing plant.
In each case, employment and investment drops. One study by John Budd, published in Labour Economics, shows that in a given jurisdiction, the reduction in the employment rate linked exclusively to anti-scab measures is 0.47%. For Quebec, with a working-age population of 6.2 million, this is equivalent to about 30,000 jobs. For British Columbia, with about half the population, the number is 15,800. Another study, by John Budd and Yijiang Wang in Industrial and Labor Relations, shows that anti-scab measures also have negative effects on investment levels. Using data for 1967 to 1999, it shows that the investment rate in provinces with such measures is 25% lower than in provinces without them.
One of the most frequently raised argument in support of anti-scab laws is that they lead to shorter and less frequent labour conflicts. However, existing studies on the topic contradict this claim, at least for large companies for which data on collective agreements are readily available. For smaller firms, as we saw above, the argument may be valid, but few data are available to prove it.
The most recent of these studies, by Peter Cramton, Morley Gunderson and Joseph Tracy in Labor Law Journal, examined 4,340 contracts negotiated at large private-sector companies in Canada from January 1967 to March 1993. The results, heavily influenced by Quebec’s experience, reveal that the average duration of a strike is 86 days if the hiring of replacement workers is forbidden and 54 days in the absence of such measures.
The same study reveals that anti-scab measures have generally had the effect of increasing the probability of a strike occurring – from 15% to 27%. These findings can be explained in part by the fact that unions, whose power is strengthened by such laws, are more often prepared to endure longer disputes in the hope of being compensated by higher wages.
In the end, all workers suffer, whether unionized or not.
Norma Kozhaya is an Economist at the Montreal Economic Institute and Guy Lemay is a Montreal lawyer specializing in labour law.