Manitoba NDP’s Labour Conundrum

Commentary, Frontier Centre, Uncategorized, Workplace

The union movement has seen better times.

The same forces that are whittling away the membership of organized labour in all developed countries besiege Canadian unions. Their ability to boost wages and salaries in the private sector beyond gains in productivity has been lost. In a global economy with falling trade barriers, excessive wage demands prompt companies to shift production to lower-cost countries. Their exodus is aided by a technology revolution that is eliminating communication costs. The end of long-distance charges looms with the explosive growth of Internet capacity.

Shifts in employment patterns and business practices are also eroding union membership. Out-sourcing and technology that enables shorter, customized production processes tend to move jobs to smaller firms. These are harder for unions to organize and service. Self-employment is also booming as individuals set up their own businesses to gain freedom, a more flexible lifestyle and substantial tax savings. In the skilled knowledge and services sector, a critical and growing component of the new economy, demand far exceeds supply and individuals have substantial market power. They can write their own ticket and enjoy high compensation and benefits. Stock options, employee ownership and other strategies are the order of the day. Unions are irrelevant here.

Public Sector vs Private Sector Union Membership by Province

Union Coverage as a Percent of Total
  Public Sector Private Sector
Quebec 81 27
Manitoba 79 21
Newfoundland 78 21
PEI 77 9
Sask 76 18
CANADA average 75 20
Alberta 76 14
Nova Scotia 71 9
Ontario 70 18
British Columbia 70 22
New Brunswick 68 13
Source: Stats Can Labour Force Historical Review 1999, 71F0004XCB

Statistics Canada figures on union membership confirm the story. About 30% of paid workers belong to unions, down from about 35% in the early 1990s. But these numbers are distorted by the disproportionate weight unions have in the public sector. In 1999, about 75% of Canada’s public sector was unionized. Outside the government sector, union density is much lower, 18.2%. Factor in the rapidly expanding ranks of the 2.4 million self-employed, and unions represent a little more than 14% of those in the market economy.

Manitoba is not immune from these forces. In 1999, 35.5% of paid workers belonged to unions, compared to a Canadian average of 30.1%. Aside from Québec, however, at 79% Manitoba has the country’s most densely unionized public sector. In the private sector only 20% of the workforce is organized, and that figure is dropping.

Against this bleak backdrop, it’s no surprise that Gary Doer’s government is tinkering with legislation to help its supporters in organized labour. Proposed changes to the Labour Relations Act, which primarily affects private employers, make it easier to organize workplaces through the removal of normal democratic mechanisms like secret ballot votes. The bill also tilts the bargaining process to arbitration, an action that gives unions more clout. The proposals have created a backlash in the business community and damaging commentary in the national press. Facts aside, perceptions guide investment, jobs and economic activity. The labour bill creates another reason to avoid Manitoba. Local employers have another reason to ponder out-of-province activities.

Given all this, the government’s indications it is open to softening the proposed law is wise. The long-term decline of the union sector must concern Manitoba’s NDP government. It presents a potentially fatal dilemma for the labour party. Today’s union power base clearly lies in the public sector, a sunset industry in its present form. As outside forces cause membership in private sector unions to slip, it is not unreasonable to assume that civil service unions will increasingly dominate public policy in this province.

For average Manitobans the consequences will be higher taxes and debt, as high-performance service-delivery models are ignored, technology-related downsizing is delayed and non-core activities and assets are unnecessarily retained. The costs will be transferred to the private sector in the form of lower investment, fewer private jobs and higher equalization payments and subsidies at the expense of Alberta and Ontario taxpayers. Young people will move away. Houses will stay cheap.

An objective scan of the province’s public sector heartland raises many questions. Winnipeg School Division Number One "educates" a student for about $7,500 a year. This is almost as much as the tuition for the finest private school in the province, with nowhere near the same results. Health spending is higher than the Canadian average, yet the problems linger and multiply. Statistics Canada figures show that Manitoba maintains the country’s most highly staffed local government sector.

Is it wise to tilt the field further in favour of public sector unions when the areas they dominate are already so richly funded? Bill 42, one of the contentious labour-related initiatives before the legislature, will, for example, remove ability to pay as a bargaining item for school boards. It is causing an unexpected furore among ratepayer groups and businesses.

The NDP is blessed with a Tory opposition in leadership-transition disarray, with little intellectual depth and few solutions. But how long before a more cogent Opposition modernizes its public policy product to focus on the ends not the means? It might some year stumble on to something strategically important. Governments in other places have already realized enormous efficiencies and service improvements by applying the consumer-empowering force that has been eroding the power of private trade unions around the globe-competition brought on by new technology and deregulation. School vouchers (Denmark), medical savings accounts (Singapore) and the break-up of over-scaled, unresponsive city governments (Copenhagen, Rotterdam, London) would shatter the huge collective bargaining units in the government sector that now dominate Manitoba’s union movement.

Unless Manitoba’s governing party diversifies its base of support, that will be the end of today’s NDP.