Portside

Canadians have a natural if unfortunate tendency to evaluate ourselves by comparison to our southern neighbours. Our taxes are higher. Our healthcare system is better (small comfort for Canadians who can’t find a doctor). Our football game is quirkier, if less accomplished – and of course we’re better at hockey. John Kenneth Galbraith was born in Canada, but got famous in America. As did Shania Twain. (The Yanks can keep Justin Bieber.)

This tendency infects discussions about labour relations, too. Exhibit #1: Starbucks. I’ve lost count of how many reporters have breathlessly inquired of me whether the Starbucks organizing drive making headlines in the US is spreading to Canada. And if not, what’s wrong with Canadian unions?

Where do I start?

The unionization rate is almost three times higher in Canada (almost 30 per cent) than in the U.S. (10 per cent). Our labour laws (including helping unions achieve that all-important first contract) are fundamentally fairer. We typically have more days lost to strikes and other work stoppages each year than the entire US economy (with nine times as many workers). There are far larger union organizing drives happening in many other Canadian industries: including broader healthcare, manufacturing, transportation, and gaming. 

But what about Starbucks, they ask? Yes, workers at Canadian Starbucks are trying to unionize. In fact, many Starbucks locations were unionized decades ago, in the 1990s. Those certifications were defeated, however, by the challenges of organizing in fragmented, high-turnover franchises (leading many experts, myself included, to conclude we need different laws, like sectoral bargaining arrangements, to lift standards for these workers).

In short, all these questions comparing Starbucks in Canada to the US confuse more than they illuminate.

Exhibit #2: Major auto negotiations. After two tough decades, auto workers in both countries are itching to make significant progress with their employers: GM, Ford, and Stellantis (formerly Chrysler). The companies are hugely profitable, the industry is rapidly transitioning to electric vehicles, and workers want a fair share of the gains.

On the US side, the drama has been amplified by the election of a new slate of United Auto Workers (UAW) leaders, determined to rekindle the UAW’s activist history – in contrast to the bureaucratic, concessionary approach of their predecessors (several of whom were jailed for corruption). The new leaders issued an audacious set of opening demands, including a 46 per cent raise and a four-day workweek, and broke with tradition to bargain simultaneously with all three automakers at the same time. Then the UAW launched escalating strikes at targeted plants of all three companies beginning September 15.

The UAW’s ambition is celebrated among unionists on both sides of the border. It is another sign that the labour movement is rising. But there’s no doubt their counterparts in Canada (represented by Unifor) have been similarly ambitious. Unifor’s leaders also saw an opportunity this year to make historic gains: taking advantage of the companies’ record profits, relatively low unemployment, and recent investments in Canadian facilities (including huge new EV and battery plants) that secure the industry’s footprint here.

Unifor followed the traditional approach of “pattern bargaining”: choosing a target company to strike the first deal, which is then replicated at the other companies. Pattern bargaining is a Holy Grail for unions, setting industry-wide benchmarks so that companies no longer compete by driving down labour costs (but instead battle on productivity, quality, and innovation).

Pattern bargaining was common in the postwar heyday of private sector unionism, but has been largely defeated by company efforts to break the pattern system – so they can whipsaw workers against each other and restart the race to the bottom. Unifor bucked this trend, preserving pattern bargaining in major auto and some other sectors (including energy, forestry, private long-term care homes, and car dealerships).

On September 19, Unifor reached a pattern-setting contract with Ford, extending its strike deadline one day to cement the deal. The agreement is likely the richest in the history of the Canadian auto industry. It features big wage increases, dramatic changes to the wage scale for new hires, extra raises for skilled trades workers, reinstatement of a full quarterly cost-of-living-adjustment (COLA) system, job protections during the EV transition, and reintroduction of defined pensions (instead of individual accounts dependent on the vagaries of the stock market).

Total wage gains (including likely COLA adjustments) for production workers will exceed 20 per cent over three years. Skilled trades workers get more. For junior workers, the deal is game-changing: a worker with one year of seniority will get wage gains of 80 per cent over three years. Over at the Bank of Canada, Tiff Macklem is no doubt banging his head against the wall over this union’s refusal to ‘tone down’ wage demands to help battle inflation. (Of course, wages had nothing to do with post-COVID inflation, anyway.)

The agreement was ratified by Unifor members at Ford, but by a surprisingly narrow margin: 54 per cent. This continues the recent trend of narrow ratifications or outright rejections of tentative agreements by Canadian union members. Even very rich agreements (like recent BC public sector deals, undoubtedly the best in the country) have received narrow endorsements (53 per cent for BC government employees). Other seemingly-good contracts have been turned down: including by Ontario construction workers, BC port workers, and Toronto-area supermarket workers.

This is both a challenge and an opportunity for Canadian unions. It shows that workers are angry (rightly so, after a pandemic, inflation, and decades of trickle-up inequality), and have high expectations. That strengthens union power. On the other hand, unions need to harness that anger in ways that win concrete progress and consolidate internal solidarity – also essential to union power.

The second company in Unifor’s sights, General Motors, initially refused the Ford deal. It was even more expensive for GM, which has both more new hires (with wage hikes up to 80 per cent) and more retirees (who receive new quarterly health stipends under the pattern). Unifor members struck for 11 hours, and GM backed down. This time the deal was ratified by an 80 per cent margin.

Now Unifor is bargaining with Stellantis, the last of the Detroit Three. Some voices suggest Stellantis workers will not be satisfied with the pattern. And this is where comparisons to US bargaining have garnered much attention – as with Starbucks, causing more confusion than enlightenment.

Some commentators suggest Canadian auto workers want to ‘keep up’ with the supposedly ‘more militant’ UAW. The UAW is demanding 46 per cent wage gains, but Unifor ‘only’ got half that. They hint darkly that Stellantis workers might break the pattern to try to get more up-front cash.

Where do I start? Here are just some of the problems with this phony horse race commentary:

Demanding versus Winning: The oft-quoted 46 per cent wage demand was the UAW’s opening position. The union has since softened that to 36 per cent. We all hope U.S. autoworkers win substantial wage gains; they thoroughly deserve it. But anyone with collective bargaining experience knows a union’s opening demands are never accepted holus-bolus by the employer. To compare wage gains in an actual contract, with an opening demand by a union in another country, takes apples-and-oranges comparisons to a ridiculous extreme.

Contract Term: The Unifor contract extends for three years; the UAW is proposing four years and eight months. Unions generally prefer shorter contracts, letting them bargain more often; on this basis, Unifor’s approach is preferable. Moreover, wage comparisons must be computed according to contract length. The base wage gains over three years in Unifor’s pattern will produce annual compound wage growth (more than six per cent per year) comparable to the UAW’s hoped-for 36 per cent over 4⅔ years. By this standard, Unifor has already won what the UAW is still striking for. New hires and skilled trades get more.

Other Gains: Other improvement in the Unifor pattern deal are historic in qualitative terms. Reinstating quarterly COLA adjustments (which employers in most industries successfully eliminated since the 1980s) is a huge victory that should inspire workers in other sectors. Reinstating secure defined pensions is another game-changer, after decades of employers shifting to RRSP-style individual accounts. The changes in the new hire grow-in system are an emphatic rejection of the two-tier system employers have been pursuing for decades.

History: Since the Canadian Auto Workers (now Unifor) broke away from the UAW in 1985, it pursued different strategies and priorities, and this is vital context for comparing the two unions today. The Canadians emphasized core wage gains rather than lump sums, profit-sharing, and other employer-friendly gimmicks. As a result, real auto wages have grown 16 per cent in Canada since then (despite recent tough times), contrasting with a nine per cent decline over the same period in the U.S. 

Some observers have even suggested Stellantis members might break the pattern system to win profit sharing. This turns history completely upside down, since rejection of profit-sharing (which undermines wage stability) was a core idea for forming the CAW in the first place – and it’s paid off in wages that are both higher and more predictable.

The Canadians also resisted a full two-tier wage system, and kept better health, pension, and job security provisions. Structurally, Unifor is very different, too: its 325,000 members are spread across dozens of sectors (thanks to mergers and organizing), while almost half the UAW’s 380,000 members are in the auto industry. This history is crucial for any comparison of the two unions today.

Pattern Bargaining: Companies have tried for decades to destroy the pattern system. Why would workers now toss it aside, in search of a bit more short-term wage growth?

Some academics suggested workers at GM and Stellantis might want more than the Ford deal, because those companies are bigger and more profitable. Firstly, this is factually wrong: Ford has been the most consistently profitable of the three firms, the only one to avoid bankruptcy in the 2008-09 financial crisis, and has the second-largest North American footprint of any auto manufacturer. More importantly, this view reveals ignorance about how pattern bargaining works, and why it’s important.

When I worked for the CAW in the late 1990s, a very few local union reps at GM (which recorded historic profits at the time) similarly advocated for ignoring the pattern and demanding higher GM-specific wages. They were strongly out-voted. A decade later, GM was on death’s door, and the pattern system was vital in helping GM workers preserve everything they could.

Stellantis workers will reflect on this history as their bargaining unfolds. The choice they face is far more complex than the one defined by the horse-race commentators: “Do you want the pattern, or do you want more money?” They have to consider whether they could win higher wages, even with a long strike, and the consequences of a broken pattern system in the long-run. The fact Stellantis has yet to confirm long-run plans for its big assembly plant in Brampton, Ontario, raises the stakes on this choice even further.

Ultimately, autoworkers in Canada and the US are fighting for the same things: fairness, job security, and respect after the sacrifices of the last brutal years. Both unions have new leadership, who are already forging a close and cooperative relationship: Unifor’s Lana Payne and the UAW’s Shawn Fain have liaised frequently as their respective bargaining has unfolded, heralding more cooperation in the future. Both unions have advanced ambitious demands, but in the context of very different histories, different structures, and different priorities.

Pigeon-holing these two great unions into a simplistic contest over “whose wage demand is bigger” does a disservice to both. And whether it’s baristas or autoworkers, it’s vital to study the history and unique features of Canadian unions, to understand where Canadian workers are headed.

Jim Stanford is economist and director of the Centre for Future Work, and divides his time between Vancouver and Sydney. He has a PhD in economics from the New School for Social Research in New York, and also holds economics degrees from Cambridge University and the University of Calgary. He is the author of Economics for Everyone, which has been translated into six languages.

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