When in doubt, just blame the unions


(12 April 2004) -- Here's an enlightening experiment you can try at home. Go to Google, and search on the following phrase: "union intransigence." You get 485 hits -- about half of them, it seems, sparked by the continuing mess at Air Canada.

Now search on this: billionaire intransigence. You get exactly zero hits. No mention anywhere of Victor Li, the sometime-Canadian magnate who pulled out of his proposed investment in the airline, purportedly because unions wouldn't give up their pension plan.

Here was an epic confrontation between irresistible force and immovable object. Li demanded elimination of the defined-benefit pension plan; unions insisted on its preservation. The most you could say is that both sides were intransigent. Like they tell you in marriage counselling, it takes two to tangle. And since Mr. Li was the one seeking a concession (after all, he had full knowledge of Air Canada's pension arrangements when he considered buying the airline in the first place), an objective observer might reasonably conclude that his actions were the more lamentable and provocative.

So why do unions get all the blame? The words "intransigent billionaire" just don't roll off the tongue very easily. This reflects the overwhelming anti-union bias of business commentators, repeated so often it infiltrates popular common-sense wisdom. The bias becomes part of the backdrop, allowing otherwise credible analysts to say outrageous things about unions without fear of challenge.

Ironically, targeting unions as the scapegoat for whatever economically ails us has never been less believable. Canada's economy is more business-dominated, deregulated and free-wheeling than at any time in our history. Profit-seeking private business accounts for 85 per cent of our GDP, the most ever. If something goes wrong with that free-enterprise economy, perhaps it is time to blame free enterprise.

Given the motley cast of characters populating Canada's perpetually crisis-ridden airline industry, it is especially incredible that unions get all the brickbats. Victor Li considered investing, then backed away -- though no fundamental aspect of the business before him (labour costs, competition, unpredictable fuel costs) changed. Meanwhile, the credibility of Air Canada's bosses to negotiate a rescue was destroyed when they took $20-million in personal payouts from Mr. Li; they became front-men for his growing demands.

The federal government is another sorry actor, architect of the 1987 deregulation that has produced 14 money-losing years in 17 for the whole industry, not just particular companies. Its completely inconsistent policy on Air Canada (first blessing its merger with Canadian Airlines, then sabotaging it) contributed hugely to the current fiasco. Indeed, with Ottawa's politically convenient inaction, labour concessions can make no conceivable difference to the industry's never-ending crisis. Even if unions (and pension plans) were eliminated from the industry tomorrow, airlines would still be pushed to the financial brink by cut-throat competition and an inescapable tendency to concentration. The only difference is that airline workers would be a little poorer and a little more desperate as the sorry saga continued to unroll.

And how about WestJet, the "model" we should all now follow? Its executives preach free and fair competition, but expend considerable energy in Ottawa to win increasingly bizarre forms of protection against competition from Air Canada -- that is, when they're not defending themselves against allegations that they hacked into confidential data from competitors' computers.

They don't lose sleep over the choice between defined benefit and defined contribution pension plans, however: WestJet employees have no pension plan, period. CEO Clive Beddoe received total compensation last year (including option gains) of $1.9-million, and sits on WestJet shares worth upwards of $100-million. He's not worrying about his golden years. But his youthful, sweatshirt-clad employees -- the ones who sing those chirpy songs in flight -- will some day need to think about how they'll get by, once their usefulness to the employer has run its course.

Ultrarich capitalists break contracts, line their own pockets with sweetheart deals and rake in millions while denying the most basic protections to the workers who created their wealth, and governments that let them do it in the name of market efficiency. All this sounds like a very good reason for unions to exist.

And the more intransigent they are, the better.

* Jim Stanford, a former redisdent of Halifax, is an economist with the Canadian Auto Workers union. This comment was published in the Globe and Mail, April 12, 2004.

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