Worrisome legislation on the horizon for workers

With Parliament returning this month, Canadians are getting a glimpse of what the Harper government has in store for this upcoming election year — and a few pieces of legislation are particularly worrisome for those of us who have to work to make a living.

Bill C-377 would force unions to make public any expense greater than $5,000 and any salary greater than $100,000, and Bill C-525 would make it more difficult for federally-regulated Canadian workers to join a union.

The purpose of the first bill, I assume, is to bring greater transparency to spending by labour unions. This is rather odd coming from a government notorious for secretive, undemocratic and suspicious governance, which raises the issue of an ulterior motive. As for the second bill, the motive is, well, pretty clear.

There are several troubling issues at play here. First, once you force unions to reveal their spending behaviour, especially on matters pertaining to their political activities, who is next?  The answer is anyone who may be critical of this particular government: be warned if you are a member of a student group, an NGO, an environmental group, a particular think tank, or the press.

As we know, some of these groups and institutions are already being audited by the Canada Revenue Agency. And now, we learn the government is even spying on academic conferences. Can you discern a pattern here? Sadly, history is full of such regimes.

Second, the relationship between unions and governments has always been tenuous, at best. Unions are under attack from all major political parties, especially conservative ones, who argue that they are harmful to markets and to economic growth; they create unemployment by keeping wages artificially high, and impede the efficient functioning of companies and corporations. As such, the aim is to cripple them, or better yet, disband them altogether.

The first step is to give each Canadian the right not to join a union. After all, who would not want to save a few hundred dollars a month in union fees?

Don't be duped

The reality of unions, however, is quite different, and the economic role played by unions is vastly at odds with the government’s rhetoric: strong unions mean a strong economy! Unfortunately, this is a message that has been lost, although it does not make it less true. If you buy into the unions-are-bad story, you are being duped.

There is strong evidence to suggest that higher unionization rates translate into higher salaries, which in turn fuels consumption-based economic growth with less, not more, household indebtedness.  Yet, the decline of unionization in Canada and elsewhere in the last 4 decades has had devastating results.

If we look at the post World War II era, from 1945 to now, we notice two very distinct periods with very striking differences.

Consider, for instance, the period right after World War II from, say 1945 to roughly the early 1970s, which is what many economists now refer to as the Golden Years — and for a reason. Unionization in Canada was growing and the Canadian economy underwent a massive expansion. In fact, unionization grew steadily throughout this period, as did hourly earnings.

In fact, you could argue that hourly earnings increase with unionization. Unemployment was lower on average, as was inflation, and economic growth was healthier. What more can you ask for?

Unions+higher wages = economic growth

Since the 1970s, however, Canada changed for the worse.

This is where unionization began to decrease. It peaked at roughly 37 per cent in the early 1970s and began a slow decline, as did hourly earnings.

As a result of that and other influences, the Canadian economy slowed down and unemployment has been, on average, substantially higher. As for inflation, after hitting record highs, it has been tamer in the last few years but mostly as a result of weak increases in wages. As of 2013, unionization in Canada stands at a shocking 30 per cent (as a share of non-agricultural paid workers).

So what’s going on? Higher unionization means stronger unions, and stronger wage gains. Economies grow as a result of spending. So higher wages mean more consumption and growth. It’s that simple.

When governments try to quell unions and labour movements, they are actually hurting prospects for domestic growth. The same logic applies when governments reduce public spending, but that is a matter for another day.

The Harper government, however, sees history in some other, twisted, way. This government has remarkably proven it cares very little about facts and statistics, just ideology.

Unfortunately for us, if these bills go through and become law, the government’s obsession with ideology will triumph, and we will be the ones suffering the consequences with lower wages and higher unemployment.

Are you ready?

Louis-Philippe Rochon is an associate professor at Laurentian University and the founding co-editor of the Review of Keynesian Economics.