By Howard Levitt and Kathryn Marshall
Ending use of replacement workers tilts balance too far in favour of unions
On Nov. 9, Labour Minister Seamus O’Regan introduced Bill C-58, fulfilling the NDP’s long-held dream of banning so-called “scab” or replacement workers during labour strikes.
It is a terrible idea, which is presumably why the Liberals voted against a similar measure in 2016. But now that they need the NDP to stay in power because they are in a minority government, Canadians will suffer.
Replacement workers are a key tool in ending strikes. Allowing companies to bring in non-unionized staff to do the work of those on strike puts pressure on unions to come to speedier resolutions. Shorter strikes obviously harm the economy less and disrupt the lives of fewer people. In fact, the unionized workers themselves rarely earn the money back they lose through a long strike given that strike pay is relatively minimal.
Without replacement workers, the balance between employers and unions will swing too far in favour of the unions — companies will have no choice but to either accept union demands or shut down entirely.
Now, understand what happens in a full shut down. Customers will need to find new suppliers and smart suppliers will refuse to take the extra work for what might just be a week or two and will instead demand longer-term contracts. Customers who are unwilling to wait for a resolution will migrate to those alternative suppliers. When the strike ends, the struck company will have lost not only sales from the strike period, but also a substantial chunk of future sales, so much so that sometimes it will not survive.
Even without directly considering customer losses, companies will be more likely to end up in bankruptcy when facing a long strike; that’s because the ability to use replacement workers to continue operating during a strike, even at a higher cost, helps ensure a smooth return to normal after a strike.
Replacement workers are not as experienced or as knowledgeable as the union workforce they are replacing during the strike and are usually more expensive as they are for short-term contracts, often through an agency. That companies can operate during a strike but in a substandard way is part of the balance that this legislation is disrupting.
In other words, the use of replacement workers already puts pressure on companies to end strikes in a timely manner. Banning “scab” workers will embolden unions and encourage them to hold out until companies are forced to fold — sometimes with irreversible consequences — even if union demands are unreasonable.
The prohibition on replacement workers provides unions with dramatically more bargaining power. It could mean more threats of strikes and longer strikes, which given the higher stakes, will be more acrimonious.
The only good news is that this law only applies to federally regulated industries, which employ about a million Canadians.