February 1981
Page 9
Myths about unions explored
A re you a labor illite ra te ?
Editor's note: The following
article appeared originally in
Canadian Labour. The piece was
written by Ed Finn. In a preface to
the article, Finn wrote: "M ost
Canadians are labour illiterates,"
and that surely applies to most
Americans as well. "They accept
as truth numerous lies and
distortions about unions that have
no more factual basis than those
superstitions o f the past that they
now ridicule."
We are indebted to the Mon
tana Public Employee for finding
this article.
Union-won wage increases are
the chief cause of inflation, so
controls on wage increases will
keep down the cost of living.
If this myth hasn’t been
permanently punctured by our
experience with wage controls
(1975-1978), i t never w ill be.
During that period, average
wage settlements were reduced
to less than one-third their pre
controls level. I f wages really
are the chief factor in inflation,
that should have produced a
sharp drop in prices. But it
d id n ’ t. P rices kept sky
rocketing, forcing most work
ers to take cuts in their real
income. H ie truth is that wage
increases do not cause price
increases.
Wages go up as a response to
rising prices. That has been the
finding of every objective,
s c ie n tific
s tu d y . M o s t
economists would agree with
economic co lu m n ist Dian
Cohen’s statement: “ There has
not been a shred of evidence. . .
th a t wages have added
anything to the Canadian rate of
inflation.” Over the past 50
years, total labor income, as a
percentage of the Gross
National Product, has fluc
tuated only a few percentage
points — proving that rising
wages and salaries have simply
maintained their usual share of
a growing GNP.
Wages are continually sub
ject to restraint through the
m achinery
of
co lle ctive
bargaining, compulsory con
ciliation, and real restrictions
on the right to strike. Unlike
other forms of income —
profits, stock dividends, rents,
professional fees — wage levels
m u s t be
set
th r o u g h
negotiations with employers.
The only fa ir (and effective)
form of wage control is price
control. If lim its were enforced
on price increases, it would
automatically lower workers’
needs and expectations, and
they would gladly settle for
correspondingly lower wage
hikes.
Labor-management conflict
can and should be replaced by
labor-management co-opera
tion.
As an ideal, this is quite ac
ceptable. But unfortunately we
live in a society that is based on
competition, not cooperation: a
society in which we are all
supposed to compete with one
another for our respective
shares of the national income.
That’s the underlying principle
of private enterprise.
No doubt the jungle, too,
would be a much better place if
the animals would stop hunt
ing and killing one another.
Given their nature, however,
the suggestion that the lion and
lamb lie down together is not
very practical. P articularly not
for the lamb.
The world of industry and
employment is also a jungle, a
world in which the strong
prosper and the weak languish.
Many persons in both unions
and companies wish it were
otherwise. But they are trapped
in the present system. They
know that it w ill take a com
plete reversal of basic beliefs,
and the abandonment of our
entire economic philosophy,
before a change to labor-
management co-operation can
take place.
Conflict is built into the
present system, and strikes are
sim ply one of its m ani
festations. As long as the
relationship between man
agement and labor is based
on their respective power, the
extent of that power w ill oc
casionally be tested — if only
because so many employers
refuse to take workers' requests
for better pay and working
conditions seriously unless they
are w illing to strike for them.
Unions don’t need, and
3S l
shouldn't be given the right to
strike.
Although i t ’s not generally
realized, the right to strike is a
fundamental right no less
important than freedom of
speech or freedom of the press.
Why? Simply because it is a
vital part of die collective
bargaining process.
Free collective bargaining is
the only instrum ent that
workers have to protect and
promote their interests in our
economic system.
Without the ultimate right to
withdraw their labor, they
would have no strength to
bargain, and would have to
accept whatever wages and
working conditions their em
ployer decided to impose on
them.
The only thing workers have
to bargain with is their skill or
their labor. Denied the rig h t to
withhold it as a last resort, they
become powerless. The strike is
therefore not a breakdown of
collective bargaining, it is the
indispensable cornerstone of
that process.
Unions are always making “ un
reasonable" wage demands.
What is “ reasonable” wage
demand?
One that meets the workers’
needs? One based on the em
ployers’ ability to pay? One
that’s tied to productivity?
The fact is that nobody has
yet devised a workable formula
for determining wage increases
that would be considered
reasonable by the workers, by
their employer, by the public,
the press and the government.
Besides, most employers —
except occasionally when in
genuine financial stress—still
refuse to open their books to
union negotiators. Unions are
thus denied access to the data
on profits, productivity and
labor costs that they must have
in
o rd e r to
fo r m u la te
“ reasonable” demands. The
only alternative in our private
enterprise society is to go for as
much as they think their
members are entitled to get.
The right to strike should be
replaced by compulsory ar
bitration.
Compulsory arbitration has
n e v e r w o rk e d
in
any
democratic country where it
has been tried. I t has been a
dismal failure in Australia,
where the incidence of annual
strikes is three to five times the
Canadian average. I t has
flopped in both B ritain and the
United States as well.
When British Columbia in
troduced com pulsory a r
bitration of labor disputes in
1968, the number of mandays
lost through strike s and
lockouts in that province
quadrupled in the next two
years. The B.C. experiment
fizzled out shortly afterward.
The Canadian Federal Task
Force on Labour Relations
ruled out compulsory a r
bitration as an acceptable
alternative to the right to strike.
“ The inconvenience caused by
strikes,” said the Commission
in its historic report, “ is a small
price to pay for the main
tenance of the present collec
tive bargaining system and the
basic human rights on which it
is founded.”
In any event, a ban on strikes
is impossible to enforce in a free
society. Only in a police state
can workers be forced to work
against their w ill. In a free
society, compulsory arbitration
doesn’t eliminate strikes; it
merely makes them illegal.
Strikes are the main cause of
low p ro d u c tiv ity and do
irre p a ra b le h a rm to the
economy.
The cost of strikes are greatly
exaggerated, amounting on
average to the loss of only one-
half worker-day per year for
each employee in Canada.
As the Federal Task Force on
Labour Relations pointed out,
this is only a small fraction of
the time lost through illness,
accidents and unemployment.
An effective and anti-flu
vaccine would save fa r more
working time than the most
repressive anti-strike law.
Most companies can now
completely offset the loss of
production during a strike by
stockpiling beforehand and
using excess capacity and
overtime afterward. Most of the
business allegedly lost during
the strikes is merely deferred.
This is borne out by strike
studies showing that most
business firm s affected by
strikes have been able to
m a in t a in
th e ir a n n u a l
production norms.
There is no reliable standard
for assessing the effects of a
strike or the damage ( if any) it
causes.