Facts and Evidence versus Threats and Hyperbole: Dissecting Business’ Case Against First Contract Arbitration

The recent debate in Nova Scotia surrounding proposed first contract arbitration (FCA) legislation offers revealing truths about the contemporary relationship between labour and capital in Atlantic Canada.  Arguments recently presented by the business community to the Law Amendments Committee against FCA can be summarized as follows:

• FCA could hurt the province’s business climate and stymie investment.

• FCA takes away the parties’ freedom to bargain collectively.

• We don’t have FCA and we’re doing fine, therefore it is unnecessary.

When “unpacked”, these claims make clear to the thoughtful observer the true nature of labour relations in Nova Scotia.  More specifically, they reveal that capital enjoys a striking degree of power over its employees (as well as the entire political process), and it is not scared to leverage that supremacy to promote its own self-interest.

The first argument—FCA could hurt the province by scaring off business—was made by Sobey’s Vice-President of Human Resources, David Fearon.  He said the legislation was: “going to prevent organizations, companies from coming into Nova Scotia and we will never understand fully the impact that that has on the economy,” and that this is, “a time when Nova Scotia cannot afford to be putting up barriers to businesses that create jobs.”  While Sobeys enjoys much fanfare in this province, their status as a large employer should not give them intellectual impunity.  These statements were made without evidence, data or sound reasoning.  They are instead baseless, designed to invoke alarm in Nova Scotians in order that they fear progressive legislation and remain compliant to the will of big business.

When we examine the evidence we see that FCA implemented in other jurisdictions has had no discernible negative economic effects.  An extensive 2011 study by researchers collaborating from York and Cornell concluded that: “…the available evidence suggests that parties involved in FCA are able to establish stable bargaining relationships and that this process does not, as critics charge, simply prolong the life of nonviable bargaining units.  In contrast, FCA is a process accepted by both labor and management, and a stable part of the labor relations system.” (Sara Slinn and Richard Hurd, 2011, Advances in Industrial and Labor Relations, Vol 18.)  These sentiments were implicitly acknowledged by Fearon when he admitted to the Committee that he had not experienced any problems with FCA over the course of his 3-year tenure as Sobeys’ Vice-President of Human Resources.

The second argument made by business against FCA legislation—FCA imposes on the parties’ right to negotiate freely—underlines the fact that owners know the status-quo is to their benefit.  When negotiating a collective contract with big business, the workers have much more at stake in the settlement than the business-owners.  We have seen time and time again that large corporations can afford to shut down and move their facilities.  The hard-working parent, struggling to make ends meet, unfortunately does not have that luxury.  Instead, she/he may have invested their entire life in that business (training, a mortgage, etc.) and faces a much tougher reality if their workplace closes.  Because of this asymmetric economic relationship, it is in the interests of business-owners that bargaining be done with as little constraints as possible.

Small-business owners, while they are less-able to leverage their ability to relocate, also fear that the legislation will give unions an equal footing in the bargaining process.  The Canadian Restaurant and Foodservices Association Atlantic Canada Vice President, Luc Erjavec, stated to the Committee that Nova Scotia has: “one of the best labour relations environments with one of fewest lost days due to strikes in the country.”  It is interesting to note that this statement came shortly before he acknowledged that the small businesses he represents are exclusively non-union.  Consequently, they employ vulnerable, low-wage, expendable workers. Lobbyists for small businesses know that the labour relations status-quo works to their benefit.

When advocating against FCA on the grounds that it impinges on their freedom and gives unions the ability to hold business hostage to unreasonable demands, these groups ignore the fact that they too can invoke FCA.  In fact, since its implementation in BC, almost one-third of all requests for arbitration were made by employers.

When business lobbyists make appeals to their right to bargain freely, they are misrepresenting the nature of FCA legislation.  More specifically, when they accuse the legislation of being an obstacle to free bargaining, they really mean it is an obstacle to preserving the unequal economic relations from which they benefit.

The third argument makes clear that business is aware of the benefits accrued to it over past decades, resultant from its afore-mentioned social domination.  Data conclusively shows that, despite increases in productivity, wages have stagnated.  In fact, if wages in 1991 had kept pace with rising productivity, the average worker in 2006 would have been paid $160 more per week.   Instead, all of the benefits from the more than 20% increase in productivity per worker went to business owners, while Nova Scotian workers’ average weekly earnings actually shrank in real value over this period.  Over the same period, the labour share of net domestic product shrank from about 72% to 66%, while the profit share increased from about 5% to 14%.  When business leaders contend that there is no need for FCA legislation, they do so because the status-quo benefits them greatly at the expense of hard-working Nova Scotians.

Business groups have, for years, leveraged their privileged social status against workers.  Their lobbyists’ fight against FCA is a part of this effort, which has resulted in a massive movement of wealth from hard-working Nova Scotian families to the province’s wealthiest elites.  FCA has been proven to promote harmonious labour relations and allow workers and management to focus on productivity. Business lobbyists have forgotten that fact, however, and in their fanatic fervour against the legislation they have presented arguments that consists not of facts and evidence, but of threats and hyperbole.

Jason Edwards

Research Officer, CCPA-NS

Editor and Contributor, www.maritimeperspective.ca