Productivity: Unions still have a role to play

Every autumn we can count on three things: leaves changing colour, Toronto Maple Leafs fans dreaming of Stanley Cup success, and the Fraser Institute contributing to anti-unionism in Canada.

{mosimage}The conservative think tank’s push for union oblivion in a recent National Post article and in their September/October edition of Fraser Forum is not helpful. What would be helpful is a reasonable conversation about how unions can better serve their members and partner with industry for greater success. 

There’s little doubt that we need a public discussion about how unions can contribute to the productivity and prosperity of Canada. Union leaders should take a hard look in the mirror and ask whether their approach to labour relations meets the needs of the 21st century worker-including the success of business.

Many European countries have embraced unions as valuable partners. Instead of moving in the direction of limiting union activity, employers, unions, and government sit together to negotiate and discuss issues relating to particular industrial sectors in official committees called the Social Dialogue. Another form of institutional cooperation is the European Works Councils, which encourage input from workers, including unions, by providing seats on corporate boards of large companies. Going a step further is the Danish government, which has a partnership with its labour unions to administer and distribute employment insurance to workers.

These are examples of progressive public policy arrangements that could work in Canada. European policy makers assume unions and workers are part of the productivity solution and ask them to come to the decision-making table.

The assumption, spread by organizations like the Fraser Institute, that unions lead to wide-scale inefficiencies in the economy is simply false. 

As a case in point, take the study conducted by popular academics James Medoff and Charles Brown in the 1970s that claimed unionized firms increased productivity by 20 to 25 percent. A more recent analysis of this study by Barry Hirsh debunks the large claims made by Medoff and Brown and argues that 20 years of research into the connection between rates of unionization and firm productivity demonstrate that unionization has zero effect or is slightly positive. The conclusion, therefore, is not that unions lead to poorer productivity and profitability but rather that unions have, at worst, a neutral effect. Although this is not a clear endorsement for unionization, it surely is not an endorsement for limiting unionization either.

When considering what has the greatest impact on productivity it is not the presence of a union that is most important, but the level of cooperation between the workers and management that is most important. Stephen Derry and Roderick Iverson, a couple of industrial academics, found that a positive labour relations climate translates into increased organizational commitment, job satisfaction, and union loyalty, which leads to improved productivity, higher quality service, and better work attendance. What employer wouldn’t want these returns on their human resource investment?

Derry and Iverson’s research provides a better explanation than the Fraser Institute’s anti-union rant about why some firms are more successful than others. Unionization is not the most important variable in a firm’s success. Instead, it is labour and management’s level of cooperation that makes the biggest difference.

Perhaps the most direct assault on labour unions is the Fraser Institute’s suggestion to make union dues voluntary, like they are in so-called right-to-work states in the US. These states have the lowest unionization rates compared to other states without voluntary dues payment. Although right to work is a popular argument supported by claims that it is more worker friendly and democratic, it’s really an attempt to undermine the ability of unions to thrive.

Would the Fraser Institute support the notion that citizens should voluntarily pay taxes? After all, some citizens did not vote for the current government and disagree with their money being used to support a war they are against or a cultural centre they don’t want. It’s called the free rider problem, and some form of coercion, as any government knows, is necessary to ensure that everyone equally shares the burden of government services.

Although the payment of mandatory union dues is not negotiable from a union perspective, union membership should not be a condition of employment. Workers should have the choice to join or not to join a labour union. Unions should also stick to their knitting and not use member dues in support of social or political causes unrelated to the workplace. Such causes are properly a matter of personal conscience.

Since unionized workers are required to pay dues, union spending should be publicly transparent so that Canadian workers can choose the union that they believe will use their dues in the most effective manner. To do this, they need to have union financial data for comparison. Public transparency of union spending will force unions to compete for support on the basis of quality service, low cost, and better investments in workplace relations innovations.

Next year the leaves will change colour and Maple Leafs fans will dream that this might finally be the year. But instead of another anti-union study from the Fraser Institute, how about a gathering of progressive labour unions, think tanks, employers, and governments to talk about how to promote cooperation in our workplaces? Will they agree? Sometimes. Sometimes not. But they will be listening to each other. And that can’t help but foster ideas for greater productivity, prosperity, and a voice for workers.

Chris Bosch is the Director of Research and Education for the Christian Labour Association of Canada (CLAC). Chris would be delighted to discuss any of these points further, contact him at [email protected]. CLAC is an independent Canadian labour union that applies Christian social principles of justice, respect, and dignity to the workplace community. It provides quality representation and a wide range of benefits and training for its members, and active member advocacy that strives to build healthy work communities based on mutual respect and partnership. CLAC is a certified union representing workers in many sectors across Canada since 1952. Visit for more information. This article first appeared in CLAC's Guide magazine, and is reprinted with permission.