Why Don't Globalization and Technology Lead to a Collapse in Unionization in Canada?

March 15, 2016

Paul Krugman has agreed to use his blog this week as a jumping off point for great CEPR papers of the past (yes, I’m kidding), but he gives us a great segue into an old paper on unionization rates in Canada with his latest blogpost. In his post Krugman makes the simple point that if inevitable forces like globalization and technology were responsible for the decline in unionization rates in the United States then we should expect to see a comparable decline in Canada. After all, Canada’s economy is even more exposed to trade than the United States and the country has all the same technologies that we enjoy south of the border.

Yet, Canada has seen only a modest decline in its unionization rate over the last three decades. It is still close to 28 percent, compared to just 11 percent in the United States.

The CEPR paper, by former research associate Kris Warner, explains that the difference is the result of differing institutional structures around the unionization process. In most Canadian provinces (labor law is set at provincial level in Canada, as opposed to the national level in the United States), workers can organize through a process of majority sign-up. This means that if a majority of workers in a bargaining unit sign cards indicating their desire to join a union, then the employer must recognize the union.

In the United States workers can organize through majority sign-up but it is at the discretion of the employer. The employer can (and typically does) refuse to recognize a union based on majority sign-up. They can instead demand an election supervised by the National Labor Relations Board (NLRB). This process can take months or even years. During this time, the employer can wage an anti-union campaign, which often includes the firing of organizers. An effective employer sponsored campaign can often change minds and/or intimidate workers, so that they end up voting against the union during the election.

The other major difference between Canada and the U.S. is that most provinces require first contract arbitration. This means that if the employer and the union cannot reach an agreement, an impartial arbitrator will impose one for the first contract.

Refusing to agree to a first contract is another way that employers in the U.S. obstruct unionization. While the law requires that employers negotiate in good faith, this is largely an empty requirement. An employer can come to table and say the exact same thing every day. Even if a union takes the failure to negotiate in good faith to the NLRB and wins, the sanction is that employers have to go back to the table and negotiate in good faith.

If an employer can delay the bargaining process for a year or two in this way, they will often prompt a decertification election. After workers have seen nothing come from a hard fought organizing drive, they will often support decertification.

These differences in institutional structure likely explain the large gap in trends in unionization rates between Canada and the United States. Certainly globalization and technology cannot explain the difference.


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