Proceedings of the Standing Senate Committee on
Social Affairs,
Science and Technology
Issue 35 - Evidence
OTTAWA, Tuesday, June 8, 1999
The Standing Senate Committee on Social Affairs, Science and Technology met this day at 10:05 a.m. to consider the dimensions of social cohesion in Canada in the context of globalization and other economic and structural forces that influence trust and reciprocity among Canadians.
Senator Mary Butts (Deputy Chairman) in the Chair.
[English]
The Deputy Chairman: Our witness this morning is Dr. Jim Stanford. Thank you very much for coming. I just learned that you have a new book out. I am sorry we could not get hold of it or we would be lined up for signatures.
We have spent a few months studying social cohesion in Canada in the context of globalization and technology. We have heard from many institutions in Canada, including the leaders of some of your clients, customers or friends -- I am not sure what you would call them. Now we are very anxious to get your definitive and learned opinion so that you can top off our research. We expect that we saved the best for last.
If you have a statement, we would be glad to hear it. Then we will open it to questions from the committee.
Mr. Jim Stanford, Economist, Canadian Auto Workers: Thank you very much, honourable senators, for the invitation to meet with you today. I do want to applaud your committee's initiative in investigating the important topic of social cohesion. Your timing is good because some fascinating research is being conducted now within the economics profession on the economic and social benefits of social cohesion.
Communities with more inclusive and mutual structures and networks tend also to be communities that are more efficient economically. Social cohesion, it is now recognized, can have all kinds of different economic benefits ranging from things like higher labour force participation right down to the micro level with the easier formation and enforcement of implicit contracts.
The idea of social capital as a valuable or even essential economic input is gaining wider and wider acceptance, even among very traditional mainstream economists who typically break into uncontrollable hysterics every time the word "social" is mentioned. "What is that word `social'?" they say. "It has nothing to do with supply and demand." In fact, it is turning out it has a lot to do with supply and demand.
Your committee is approaching the end of this stage of its investigations, but if you have not yet had a chance to hear from Professor Lars Osberg from Dalhousie University, you are missing something. He is heading up an interdisciplinary project that has done some tremendous research out of which will come a book on the economic implications of social cohesion. The University of Toronto will release it later this year.
Obviously, I share the concerns that have motivated your inquiry about the breakdown of social cohesion and solidarity in Canadian society and the emergence of inequalities of outcome and access that are persistent and very damaging in different regions and different social groups within Canada.
I do not think that globalization and technological change are really the root causes of those problems. We have had globalization and technological change in varying degrees more or less continuously for about the last three centuries. Yet, there have been times during those processes when social cohesion improved dramatically. Obviously, both globalization and technology raise issues of adjustment and change and facilitating change and compensating people hurt by change, but I believe those issues should be quite manageable in a socially and economically beneficial way as long as we do not accept a mentality of "everyone for themselves". If we leave everyone to survive as they might in a law-of-the-jungle, survival-of-the-fittest-kind of approach, then any type of change, whether from globalization or technological change or anything else, will raise damaging consequences for certain groups of society, and those groups quite naturally are going to resist that change as much as they can.
On the other hand, if we try to manage and regulate change in a way that is more universally beneficial, then the opportunities posed by that change can be grasped without undue social damage. But that will not happen on its own. That will not happen as a result of the magic of free markets. It will only happen if we, as a society, intervene and choose to make it happen.
Let me give you one example of why I do not think globalization and technology are the root cause. I will use an industry that obviously is important to us, the Canadian auto industry, where about one-third of our union's members work. This is perhaps Canada's greatest industrial success story. Our auto industry now is highly globalized. It has always been part of international trade. Without foreign trade and foreign investment, this industry would not exist in Canada. The tens of thousands of direct jobs and probably hundreds of thousands of indirect jobs that depend on that industry would not be here.
Our industry has gone through tremendous change in terms of technology and global investment patterns. In technology, for example, virtually every single auto assembly plant in Canada has been completely gutted and refitted during the 1990s with new equipment that includes a heavy reliance on robots and other labour-saving forms of technology. Thanks to that investment, Canada's industry is actually more productive than the auto industry in the United States by any of the physical measures of productivity that you can look at. There is a whole discussion in Canada about falling productivity, but the auto industry is actually an exception to that rule, and it is thanks to that investment, thanks to the technological change embodied within that investment, that our industry is so productive and so competitive.
As a union, rather than try to resist this technological change, we actually recognize that there is a beneficial potential embodied in that technology. We have tried to sit down with companies and find ways to negotiate and explicitly regulate the introduction of that technological change so that it helps rather than hurts our members and at the same time helps the industry as a whole.
We have put a heavy emphasis through the last decades on measures to reduce the work week, the standard hours of work in the industry. The most innovative project is a program we call the spa program, through which our auto assembly workers now get five paid weeks off work, scheduled at regular intervals. They get one paid week off work approximately every eight months, and that is on top of their regular vacation time, which is already quite generous. In other words, we have negotiated for an additional five weeks off work between 1993 and the present time.
That is an explicit recognition that this new technology has reduced the demand for workers by the assembly companies. Without measures such as this one, it would also reduce the demand for workers, and fewer Canadians would have access to what is a relatively privileged job, a relatively well-paying and good job in the auto industry. We think those measures have created at least 2,000 jobs that otherwise would not exist in the auto assembly industry, and those are very good, well-paying jobs.
We had to drag the companies kicking and screaming through this, and that is why I say that it will not happen on it its own. If it is left to the supply and demand forces of private companies and private individuals, these types of measures, designed explicitly to regulate change and ensure that it benefits people instead of harming them, will not occur. It happened in a regulated environment where we as a union sat down with the companies to put restrictions on it.
Not every work place is lucky enough to have a union with the sort of bargaining power that we have in the auto industry. That is where government has to step in and play an important role.
In short, change, whether it results from globalization or technology or anything else, should not in and of itself be a fundamental threat to social cohesion. Workers, for the most part, do not resist change in and of itself. Workers may resist having their pockets picked, but that is something different from resisting change. If we can find ways to ensure that average Canadians can share in the promises of globalization and technology, then the process will happen.
What do I think has been important in explaining what most of us would agree has been the deterioration of social cohesion in Canada? I would certainly highlight what I view as very negative trends in social and fiscal policy in Canada through the 1990s, in particular the very dramatic cutbacks in fiscal support for transfer payments to individuals and also transfer payments between levels of government. For example, the unemployment insurance program is roughly half as generous as it was in terms of average benefits paid per unemployed worker.
I organized a panel last weekend at the Canadian Economics Association meetings in Toronto. We heard a very interesting and, in a way, alarming presentation from Alan Zeesman, who is a research director at HRDC here, and might be someone worth hearing from for your committee. He showed quite convincingly that cutbacks in unemployment insurance benefit eligibility have been a crucial source of rising poverty in Canada in the 1990s and particularly of the rising ghettoization of poverty -- that is, the concentration of poverty in particular identifiable communities in different regions of the country.
Sharp cutbacks in government-to-government transfer payments have also played an important and, in my view, negative role. All of those cutbacks are now being cemented in a long-term way with tax cuts that, at the provincial level, have certainly benefited high-income earners disproportionately. I fear that if the federal government follows the lead of provinces like Ontario, we will see the same thing federally.
I believe that this whole trend in social and fiscal policy has definitely promoted and reinforced an idea in Canadian society of everyone for themselves and has undermined the ability of Canadian programs to moderate the effects of change. To reverse that, I would argue for reinvesting some of the looming fiscal surpluses in social cohesion-promoting programs, both traditional ones like unemployment insurance and new ones like home care or pharmacare in the medicare area or a child tax credit and other forms of support for parenting.
A second factor that I would argue is behind the decline in social cohesion is what I see as a growing imbalance of financial wealth in Canada, and the political, social and economic implications of that growing imbalance.
There is a stereotype out there in the advertisements from mutual funds and other financial products and institutions that Canada is now a nation of personal investors, that we all have a stake in the stock market through our mutual funds. We used to open the paper to check the hockey scores in the morning, but now we open the paper to check the mutual fund scores to see if we went up or down a point in the previous day's trading. I view that stereotype as quite wrong and one that is deliberately promoted by the financial industry, which likes to argue that we all have a stake in the markets and a stake in paying the 2 per cent commissions that the financial industry takes on every trade.
Unfortunately, there is a lack of data on the ownership of wealth in Canada. Since 1994, Statistics Canada has not published official data on the distribution of financial wealth. You know we get a lot of information on the distribution of income, which is a more familiar concept to most Canadians, but we do not collect official data on the distribution of wealth. That will change in the next year. Statistics Canada has started a new survey on this subject and we should get some very interesting data on that. In the meantime, while they do not list wealth, a variety of indirect sources, such as income tax returns, do list income received from wealth in the form of dividends, interest payments, investment income and so on. We have data on RRSPs and who contributes to RRSPs by income level -- data that is derived from sources such as the stock exchange and some of the major banks that have conducted public opinion surveys on financial wealth ownership.
On the basis of all of those, I am fairly confident in arguing that it looks like as much as 40 per cent of all net financial wealth in Canada is owned by just the top 1 per cent, the richest 1 per cent of society. That is an absolutely incredible degree of inequality. Think of how much concern has been generated in Canada over the distribution of income, yet the distribution of income is far, far more equal than this distribution of wealth.
The whole process has benefited from the payment of very significant public subsidies, believe it or not, in forms such as the very generous support for the RRSP program and other forms of subsidy for personal financial investment.
The consequence for social cohesion, I would argue, is that you get a very concentrated power base: people who have a very large and disproportionate stake in the financial industry and who, as a result, will argue for the types of financial and economic policies that will benefit the financial industry -- often, I would argue, at the cost of those who actually have to work for a living in the real economy, the economy that produces actual goods and services that we consume, rather than the economy that trades financial assets.
You also get a shift in culture that goes along with it, in part thanks to the advertising for mutual funds and other products. People start to identify their future financial security in retirement with, for example, the size of their RRSPs.
The cold facts of the matter are that for the vast majority of Canadians, no matter how hard they have scrimped and saved for those RRSPs, personal wealth holdings are simply not going to do it in the big dollar world of funding their own pensions. On the basis of this data, I estimate that fewer than 20 per cent of Canadians have enough personal financial wealth to buy a retirement annuity at age 65 that would pay $150 a month. You know that $150 a month is not much to live on, yet only one in five Canadians has enough private resources to fund even that absolutely abysmal level of monthly pension. Most Canadians are going to have to rely on public pensions and on the collective pensions that they are able to negotiate or get through their work place for their retirement security. Ironically, however, this sort of pro-financial shift in our economic policies and even in our culture is undermining the degree of confidence and support for those public programs.
My view is that we should start shifting our economic and social policies in an effort to downplay the general economic role and influence of private financial markets -- things like the stock exchange and so on -- and certainly to limit and reverse the growing importance of financial markets in our social policy.
We are a highly developed economy of 30 million Canadians and our federal government alone takes in hundreds of billions of dollars in revenue each year. Why is it that we have to rely on the stock market to fund things like university scholarships? Now we have measures like the Millennium Scholarship Program or the Registered Education Savings Plan which rely on these financial markets to fund something as central to our economic and social future as education for our young people. I think we have to go back to an explicitly collective, publicly organized and publicly funded social policy system in those areas. That would make a contribution to social cohesion, as well.
We can pursue some these topics in more detail in the discussion. I thank you for your attention, senators, and look forward to any questions you have.
Senator Cohen: You have given us much food for thought from an entirely different focus, which I welcome.
You mentioned that when the technological changes took place in the auto industry, you were lucky to have the union sit down and help regulate the changes, while most people do not have the benefits of a union. That is where you feel that government should become involved. Perhaps you might elaborate on how you see governments getting involved in businesses that are changing when there are no unions involved.
Mr. Stanford: From the perspective of a union, one thing the government can do is recognize the valuable role that unions play in exactly this type of situation. Unions are often portrayed as being barriers to change, as being inefficient economically and so on. But, in fact, where you get a good working relationship going, as we have with some of the auto companies, unions can be very effective in ensuring that change and competitiveness happen in a way that is beneficial and relatively smooth. Honestly, I think that companies with whom we deal well, like Chrysler or Ford, would today acknowledge the CAW as being an important factor in their success.
For the most part, this falls under provincial jurisdiction and is therefore outside of your realm, but labour laws have definitely shifted in an antiunion direction during the 1990s, making it much harder to organize unions and making it harder for unions to do what they should be doing. As a result, the proportion of employees in Canada who are members of unions has slipped, not dramatically but rather steadily, through the 1990s to about 30 per cent today.
Where unions do not exist, governments can still play a role by setting a regulatory framework in which companies would be forced to recognize and deal with the interests of the workers that they have, rather than viewing labour as a kind of disposable input that they take when they need it and throw away when they do not. When something like technological change comes along, how many companies operating today just pick the employees they do not want and send them out the door? For the most part, they are allowed to do that according to labour law. If we had better provisions regarding issues like notices of layoff and job security and if we had incentives to encourage or force companies to try to negotiate technological change issues in a mutual way with their work force rather than view it as a dictatorship in which the workers are hired when they are needed and laid off when they are not, then you would see change happening in a more balanced way.
Senator Cohen: How can we ensure that long-term unemployment does not lead to social isolation and to the collapse of all our social networks that really bind the individual to the community?
Mr. Stanford: It would be extremely difficult to ensure that long-term unemployment did not do those things. Actually, social isolation, ghettoization, poverty, hopelessness and withdrawal from economic life are exactly what you would expect from the condition of long-term unemployment.
The way to solve the problem is to eliminate long-term unemployment as a feature of our macro-economic landscape. We would argue for a set of measures that would emphasize, both on the demand side and the supply side of the labour market, measures to bring down long-run unemployment. Much of the evidence now suggests that this problem of long-run or structural unemployment is in a way a self-fulfilling situation.
Any time you have high levels of unemployment that persist for a long time, they are going to convert themselves into what is called structural unemployment, simply because people who have not been in the labour market for several years may initially have had the skills and the contacts and the competitiveness to succeed, but after several years of down times they start to lose that ability to come back in. That is why it is very important to do what you can economically to reduce unemployment.
I would argue for measures like lower interest rates on a sustained basis from the Bank of Canada and a little less worry about an uptake in inflation if that is the cost that you have to pay for bringing down unemployment in a sustained way.
We have a long way to go in Canada. Our official unemployment right now is just over 8 per cent, but that does not count several hundred thousand people who have withdrawn from the labour market officially since the early 1990s and who therefore do not show up in the labour market statistics. We are going to need several years of very tight labour markets both to bring the unemployment rate down and, more importantly, to bring some of those people back into the labour market. If jobs are available, if there are employers who actually have positions they cannot fill, that is when you will see those people who do not have the context, who are not at the top of the list right now, being pulled back into the labour market. It will happen eventually just because employers need it.
Government can help with measures like retraining programs and job-finding assistance and so on. But if the jobs are not there on the demand side, those measures will not be effective.
Senator Cohen: Could I ask you the name of the person you referred to in HRDC who has done a lot of work?
Mr. Stanford: Speaking of job vacancies, I hope I am not getting him into trouble by saying this, but his name is Alan Zeesman. He is a research director at HRDC. He has overseen a number of projects on income distribution issues. In particular, he targeted the unemployment insurance cutbacks as a factor not just in the rise of poverty, but also in the concentration of poverty in certain regions, certain hard hit communities.
The Deputy Chairman: In relation to the information you just conveyed about your own union, is it easier to do that with a private sector union than with a government union?
Mr. Stanford: Do you mean in terms of facilitating change?
The Deputy Chairman: Yes, and having the good relationship that you talked about. Given that there is a lot of trouble about strikes and so on with public sector workers, I am wondering if it works better in the private sector.
Mr. Stanford: Senator, I would not argue that view. There have been several problems with strikes in the private sector as well. In both the public and private sectors, the kind of rise in industrial conflict that we are seeing now can very much be attributed to the lopsided way our economy unfolded for most of the 1990s.
The Deputy Chairman: What is the secret of your success in the auto workers union?
Mr. Stanford: It would be two things. In the first place, we were operating in a relatively more favourable economic environment. We had employers who were doing quite well, whereas most public sector unions and many private sector unions were dealing with employers who were extremely strapped financially and who were therefore more resistant to things that spread the benefits around or cost the employers something. That resistance was much stronger in the public sector and in certain sectors of private industry as well.
The second factor quite fairly would be to say the union itself. We are a strong union. We are a union with a history of activism on the part of our members who are willing to get involved and go on strike when they need to. So we are an active, mobilized, educated membership and we are willing to take on issues, like bargaining over technological change and shorter work time, that many unions would steer away from.
The resistance we got on that was not only from the employer, let me tell you. The idea that we would explicitly try to limit work time as a way of sharing the employment opportunities in this high-wage industry is extremely controversial within our own ranks. We have many members who stand up every time we do this and say, "What the heck are you guys doing? You are trying to take money out of my pocket. I want to make as much money as I can here." That is not the kind of mentality that we promote as a union, and we will actively fight with segments of our membership to bring them on side of a more inclusive and solidaristic approach to economic development. Many unions will not do that simply because they do not feel confident enough in their own leadership positions and their own organizational integrity to take on controversial issues within their own ranks.
The auto industry has been a unique example in that the industry has done well and it has what I would view as a progressive and strong union. Both of those factors are not fully generalizable across Canada's economy, but some of the lessons we have achieved could certainly be applied elsewhere.
The Deputy Chairman: In other words, your leadership is partly responsible.
Mr. Stanford: When I say "leadership" I do not necessarily mean whoever is at the top, although that is important as well. I also mean our local leadership. Those are the people in a factory in a place like Windsor, for example. The minivan plant in Windsor, Ontario, employs about 6,000 people. For years, until we started negotiating this type of pattern, people in that plant could work as much overtime as they wanted. There would be people in there working seven days a week, getting overtime pay and taking home $80,000 a year. People became in a way addicted to that money, at the expense, I would argue, of social cohesion even in their own families and communities. Obviously, you cannot have a healthy, well-balanced life if you are working seven days a week just to get in as much overtime as you can so that you can buy a better recreational vehicle or something.
That is why we had local plant leadership who would actually go out onto the floor and say, "No way. You have a good, well-paying job. Yes, you can work some overtime. Yes, you want to get some money, but we have to think of our broader community. We have to think of the next generation." I am sure you know about the difficulties young people today have finding jobs in the higher-wage sectors of the economy. As a union, we have to take some proactive measures to address those imbalances. That is fiercely controversial.
Union democracy is an amazing thing when you have an active and educated membership. I have never seen elections as fiercely contested as those we have in many plants for our local stewards and our local leadership. Those people take a risk going out and arguing for something that causes controversy in the interests of a broader economic approach.
The Deputy Chairman: Do you think the fact that you make cars and most people can make do with the car they have for another year, in contrast to essential industries, is also a factor? I know some of your union people who work in homes for senior citizens or homes for special care, for example, and it is a disaster when you have to resort to a strike. It is a disaster for the inmates and it is a disaster for the union itself in view of the PR that they get for it.
Mr. Stanford: No union takes a strike lightly, believe me. Going on strike is a tough thing to do, even when the union feels that has to take that kind of ultimate measure to defend its bargaining position, because the members are losing the money from their pockets that they need to pay the bills. Every time you go on strike there is a risk that something is going to blow up in your face, that the company will close the plant and move somewhere else or something.
I do not think any union takes the right to strike lightly. In auto we have been lucky in the sense that, for the most part, our labour relations with the companies have been free of government interference that has been very one-sided and ultimately quite damaging. In many cases where an employer is arguing that its services are essential, instead of sitting down and actively bargaining with the union and trying to reach a mutual compromise, they just call in the government to declare this an essential service and make sure there is no strike.
We are seeing that now with the air traffic controllers in Canada who have not had a raise in eight years. Their strike deadline is still a month away, but Parliament is going to ban their right to strike simply because they fear the disruption and they do not want to come back from holiday in July in case there is an air traffic control strike then. This is quite cavalier now across the country. In Saskatchewan, even an NDP government, which is supposed to be a friend of unions, legislated the nurses back to work within hours.
In auto, we have had the freedom to find a way of relating to our employers that makes mutual sense. The fact that we are in an industry where government has not intruded to the extent that it has elsewhere has helped. I would argue that even in industries where government clearly has to take measures around certain essential services, the lack of respect that has been shown for the right to strike and for free collective bargaining processes by governments of all political stripes is in the long run very damaging to the ability of employers and unions to sit down and find a way to work together.
The Deputy Chairman: Do the unions you represent encourage corporations to invest in social capital, like childcare at the work place or letting workers take time off for volunteer work and things like that?
Mr. Stanford: We have certainly tried to make that a priority in our bargaining. Again, I do not want to blow our own horn too much here, but I do believe the CAW has been a leader in targeting those issues by kind of downplaying the idea of getting as high a wage increase as possible and promoting channelling some of the attention and bargaining power in other directions instead.
We negotiated among the first onsite daycare programs in the private sector earlier in the 1990s to set up company-run daycare centres at some of the major auto facilities in southern Ontario. We have been out front in terms of winning things like family emergency leave for parents who have to miss work because of sick children and that kind of thing.
We have also put an emphasis on lifetime learning by our members. The stereotype of a blue-collar worker is someone who wants to go to work and make widgets and then go home and watch TV. That is a very unfair stereotype. Even factory workers are interested in learning things, in developing their personalities and their horizons in ways that may or may not impact on their direct work performance. All the economic evidence shows that people who are taking lifetime learning and adult education and that kind of thing are more motivated and more socially interactive and therefore better workers, even when what they are learning has nothing directly to do with their work.
We have taken some initiatives in terms of our own in-house education programs. We have an innovative paid educational leave program that we have built up over the last couple of decades where we have negotiated a fund with our employers. They pay into the fund at a certain rate, say 3 cents per hour worked, and then the fund is used to buy a certain number of workers some time off work for perhaps a four-week education course, which we conduct and run as a union independently at our own education facilities in Fort Elgin, Ontario. The courses are on a whole range of things ranging from the economics of the industries they work in to things like the history of the labour movement to kind of nitty gritty things like health and safety enforcement and that kind of matter.
Each year we get hundreds of new CAW members going through these residential courses that we have negotiated. The employers are not always happy about it because they think that the people who come out of the courses are going to be union activists, and many of them are. But, on the other hand, it certainly promotes the concept of life-long learning.
We have tried to make those types of policies a priority in our bargaining and to downplay getting the highest wage possible. That is an interesting thing for a union like ours in an industry like auto where we have some bargaining power. Those employers are running full out right now. Canada is an extremely cost-competitive location for them. If we put the full, sole emphasis on getting the highest wage increase possible for our members -- we are going into a round of "big three" bargaining this fall -- we could probably go in and win something like 6 per cent a year over three years. Obviously, people would be happy with 6 per cent in their pockets, but we explicitly downplay the wage increase. I will say we are going to get a good wage increase this fall anyway, but we are going to put more emphasis on things that we think will build social cohesion, like pension packages that would allow people to retire earlier, thereby bringing some young people into the work place; good supplementary health and insurance programs that protect families in the event of illness and so on; and the education programs and other measures.
Again, that gets controversial within our own ranks. There are people who, in the short run, would prefer to see as much money in their pockets as possible, but, in the long run, in the interests of a strong and cohesive union and strong and cohesive communities that we live in, we recognize that you have to take a broader approach.
The Deputy Chairman: In a sense you are building up a model union. I am wondering why you are expanding into workers in homes for special care and things like that. The auto industry is unique; it has a couple of competitors, but it is owned by the Americans.
Mr. Stanford: With respect to the issue of foreign ownership, I do not actually see globalization as a problem. People will come and say that it is a global world and there is nothing we can do, but we have had a globalized auto industry for as long as we can remember in Canada and we have actually done very well with it. I do not think the issue is globalization. The issue is what choices you make as a society in a global world about the type of society you are going to have.
We have all kinds of choices that we can make in Canada. The idea that because the world is global we have to follow a certain cookie cutter approach with no options is quite wrong when you look at the experience of different industries and different regions and different countries in the world.
The extent that we as a union are able to take what we do in the auto industry and apply it elsewhere varies from industry to industry. We have expanded and diversified as a union. Now only about a third of our membership works in the auto industry. We are doing things in public services or private service or other manufacturing and transportation industries. It varies from case to case. It depends a lot on what type of bargaining power we have as a union, because none of the things that I have talked about are things that employers handed us on a silver platter. We had to bring them out of the employers. They are all things that we negotiated thanks to our organized efforts as a union.
What we can do varies a lot on the state of the industry, what kind of profits they are making, whether they are hiring or laying off. It also depends on the state of our union and what level of consciousness our members have in different industries.
Thus, the pattern varies a lot but we have tried to apply some of the principles quite universally. Those principles include measures like emphasizing education and lifelong learning opportunities for our membership and, where we can, reducing working hours to bring in new workers instead of having layoffs. We are trying to do something different as a union, but time will tell how successfully we are able to take what we have done in auto and apply it elsewhere.
Senator Cools: I applaud your presentation. In recent years, unions, particularly in the public service, have become extremely politicized and political, and quite often some of them see their task as causing governments difficulty. Remember many, many years ago it used to be thought that civil and public servants should not be political. Do you have any thoughts regarding the politicization of the unions within the public services?
Mr. Stanford: It is not just in public services that unions have become political. Our union has always viewed itself as a political union. If you followed the Ontario election this last month, you know that our union was right in the middle of it. I would argue that that is quite legitimate.
Some of what we are arguing for -- the types of policies, a broader, more inclusive approach to economic and social markers -- are things that cannot be accomplished solely at the bargaining table with one individual employer at a time. We do what we can at the bargaining table, but we cannot do everything there and, just as important, what we do at the bargaining table depends a lot on the institutional and legal context in which bargaining occurs. That is why we, as a union, view ourselves as having a very important stake in what direction economic policies, labour law and social policies take. Like any other group within society, we do what we can to exercise that influence, just like the business community and other constituencies do.
Senator Cools: You have not really answered my question. All you have said is that your union is very politicized too. What are the legal, constitutional, moral and political principles behind the concept of the politicization of the unions?
I appreciate your position. I see your union as different from a public service union. But you have said that you are doing it, too. What I want to know is what justification and what moral, legal and political thinking is behind the politicization of unions. If you have not thought about it, I understand that. But I am saying to you that I view private sector unions as different from public sector unions.
Mr. Stanford: I am not the greatest expert on this, but I can certainly give a basic statement that the people who work for governments, whether they are teachers, civil servants, firefighters or whatever, are citizens and therefore have basic democratic rights to organize themselves and express their views. I do not see anything out of the ordinary about the stands that public sector unions have taken. In fact, given the incredibly tough times that public sector workers have experienced in the 1990s in terms of wage rollbacks, problems in their working conditions and the absolutely unprecedented suppression of their rights as unions to go on strike and organize themselves, I am not surprised that public sector unions are as political as they are.
Senator Cools: We did not cover this issue at all during our studies on social cohesion. I had not thought of it, quite frankly, until now. Some committee, if not this one, should at some point study the unions and the developments on the ground within unions.
Remember that unions came into existence decades ago because of the old Marxist concept of the law of value, which essentially said that rich employers were making profits off the backs of the poor workers. Quite frankly, those issues and concerns were extremely valid and the unions played a vital and important role.
Since we are hearing some of these questions raised again and again, at some time maybe some of us senators could propose or move that we begin to look at the issue, because I do not think we have looked at either the problems or the situations facing unions on the ground. In this committee so far we have been dealing with conclusions, but I would be willing to support a proper study so that people like Mr. Stanford and some of the public service unions could tell us about the problems they face in a context where we are studying the issue.
The Deputy Chairman: I should like to add a supplementary to Senator Cools' line of thought, especially on something that is going on just now around here. What is your take on using union dues to support political parties?
Mr. Stanford: Obviously, that question relates to what Senator Cools was just discussing. My argument would be that as democratically constituted organizations, unions have as much right as anyone else to use their resources for promoting the interests that the leaders of the unions have identified and prioritized.
Companies spend their money supporting political causes. In fact, they spend many times more money supporting political causes than unions do. Our union is a democratically run organization. Our leaders are elected and I would view it as quite natural that we should support our political statements with resources, whether they be non-partisan, in the sense of just out law being on a particular issue, or partisan, in the sense of intervening in an election campaign.
The Deputy Chairman: Of course, the argument against that is that individuals in that union pay dues not to support a political party but because the union asks them to. With a corporation, on the other hand, the whole board of directors could decide to do. I do not think that the analogy quite fits.
Mr. Stanford: I do not see why. I pay money to Bell Canada for my phone service, yet Bell Canada pays hundreds of thousands of dollars to political causes.
The Deputy Chairman: That analogy does not fit. If I join a group and pay dues for the group, it is for the aims of that group and it is not for the aims of a political party.
Mr. Stanford: Right. And when I pay my phone bill I pay it so that I can get phone service, not to support whatever political causes Bell Canada supports.
Senator Cools: But not quite, Mr. Stanford. When a client pays Bell for a telephone, they are buying a service from Bell.
It is too bad we did not think of this particular subject a couple of weeks ago when we first started out. Senator Butts, this dialogue shows that there is a need to study this and begin to air the issues. It has been many generations since Judge Rand made his historic decision, and this may be a perfect time in history to begin to look at the issues and to hear people such as this witness.
Senator Wilson: I should like to support what Mr. Stanford is saying. You join any group and wherever the will of the group ends up, that is what you support. Quite often you disagree. You may join a political party and quite often disagree with what that party is doing, but you do not withdraw from it. That is part of the price you pay. Any human group has the authority within its own constitution to make those decisions. I would support what he is saying.
The Deputy Chairman: But you do not have to pay dues to a political party.
Senator Wilson: Sure you do, if you belong.
Senator Lavoie-Roux: You can pay your own dues to a political party, but this is the first time I have heard about paying dues to a union and then the union uses those to support a political party.
The Deputy Chairman: In most shops you have to join the union.
Mr. Stanford: Actually, that is not true, senator. Under the Rand formula, individual members have the right to opt out of joining the union and they can arrange to have the equivalent of their union dues paid to a charitable organization. Union members who are not happy about the union supporting political causes can do other things. They can vote within the union to have the union stop doing that or, ultimately, they can vote as workers to withdraw from the union and decertify themselves as part of the union.
Union members have a lot of choice and discretion in influencing how unions spend their money -- probably far more than I have over how Bell Canada spends its money.
The Deputy Chairman: The problem is that it is different in every province. You are talking about a provincial law. In many provinces workers do not have all of those options. That is like a lot of problems in Canada.
Senator Wilson: It is interesting to me, though, that this argument comes up mostly only in relation to unions. It never comes up in relation to corporations. As a stakeholder in a corporation, I may disagree with what they are doing but the same objection is not raised there.
Senator Cohen: You talked about shorter work weeks and said that you give five paid weeks off for your workers. Some of your workers would like to work longer to put more money in their pockets. How do you placate people who really have their ire raised because you want to make these changes to be fair to other people within the union? That really fascinates me. Perhaps you have a magic formula that you want to share. Why does it work so well? Is it because there is strength at the top?
Mr. Stanford: It is not easy and it is not at all certain either that it will continue to happen that way. What we are able to do as a union depends very much on the social and political context in which we operate.
So far, in most cases, we have been able to convince our membership that this is good for them, their families, their communities and their union. If we view the union's work as going in and trying to make ourselves as individuals as rich as possible, we may have some short-term successes but we will isolate ourselves as a union from the communities in which our members live and we will ultimately limit our successes.
We have viewed our goal and our role as a union to improve the quality and equality of our whole communities. That model is called social unionism, where the union sets its sights much more broadly than on simply getting as much money as possible for its own membership. It is always a controversial model. In fact, the negative and more individualistic, anti-cohesive direction of society makes it much harder for us to do that with our own membership.
I will be quite frank with you. In the Ontario election, a significant proportion of our own membership voted for Mike Harris and the types of policies that he is proposing, which are precisely to put more money in your own personal pocket at the expense of policies and structures that would promote social cohesion. When those individualistic policies are advocated in the media, by our leader and politicians and certainly by business leaders, it becomes more difficult for us to say, "No, as a citizen, as a worker and as a member of a community, you have a broader responsibility than simply trying to get as much money as possible in your own pocket."
As a union, we have some good traditions and strong feelings about a commitment to social cohesion, but the direction that Canadian society is moving makes it harder for to us do what we can as a union simply because of the ideological direction that our members are headed. That is apart from the first-round negative implications of those policies in terms of cutbacks for social programs.
Senator Cohen: It is frightening.
Mr. Stanford: On the other hand, it is also an opportunity for us to show that the principle of social cohesion is supported or can be supported at the grassroots level of society when it is done right.
Senator Cohen: Combined incomes in families are stuck at a fixed level and even those people who have jobs are hurting. Otherwise, cutting down hours of people who are employed so that others can have a chance to earn would be a wonderful way to increase equality in the work force. But that is just pie in the sky until either we raise incomes or the minimum wage or we put a fair EI system back in place.
Mr. Stanford: There is some tremendous potential for using shorter work time to reduce inequality by reducing unemployment and giving more people an opportunity, especially young people. The jobs created by our shorter work-time program in places like Windsor were some of the first good, high-wage auto jobs in over a decade that young people could apply for and get. That is one of our greatest achievements.
On the other hand, there are limits to what you can do with shorter work time and there are problems facilitating it. The Dutch have had some tremendous successes this decade with trying to reduce working hours as a way of drawing more people into the labour market, and we can learn a lot from them. The Netherlands is tiny country in an integrated continent in an integrated world, and they have done an incredible experiment with a policy motivated precisely by concerns over social cohesion. Clearly, the idea that we have no choices in a global economy is completely false.
Senator Poy: Dr. Stanford, you mentioned that the workers in the CAW can opt out from being part of the union. What happens with their wages? When the unions negotiate wages, are their wages affected as well or are they out of the negotiations altogether?
Mr. Stanford: Under the Rand formula type of union protection clause that is in place in most of Canada, the union negotiates for everyone in the bargaining union. If the union negotiates a higher wage, everyone gets it whether or not they are in the union. That creates a free-rider problem where people would say, "Why should I pay for the union if I get the same wage that everyone else gets?" To address that, some 50 years ago Justice Rand proposed a system where everyone would have to have an amount equivalent to union dues deducted from their pay cheque but if, for political or religious or other reasons, they did not want to join the union and they did not want their money going to the union, they could have it devoted to a charity or some other good cause. That eliminated the free-rider problem without forcing people to join a union or give money to a union.
You would have a free-rider problem in taxes if you made taxes a voluntary thing. That is why we make taxes compulsory; otherwise, we could not collect taxes and fund social programs.
As the senator mentioned, the law is structured differently in different jurisdictions, but that is the general principle in place in most of the country.
Senator Poy: Does that apply to other unions apart from the CAW?
Mr. Stanford: Yes. It is reflected within labour law in general. Again, however, the specific implementation depends on which province you are in.
The Deputy Chairman: Thank you very much, Dr. Stanford. You have shed a lot of light on several issues that we have been dealing with. I am sorry I did not have time to get into the whole question of the media, as you spoke of the importance of the media portraying the notion that we can all invest in these things and we can all get our share, when in fact it is not so.
I was looking at an article from The Vancouver Sun in which I think you too are a victim of the media. The heading is "Union Economist Supports Tax Incentives For Businesses". That is unfair unless they explain what you want the businesses to do with the incentive. Is that right?
Mr. Stanford: I did get a few calls from friends in Vancouver about that headline.
The Deputy Chairman: It is so bare and bald, and I find much of what you have given us depends on the intention of something, which is below the fact. Take RRSPs, for example: They put them in a credit instead of in a deduction, which is the same thing they do with money going to political parties but not with money going to charities. I find it interesting that they put the RRSPs in a category that helps the rich much more than it helps the poor.
Mr. Stanford: I agree with you.
Senator Cohen: You certainly validate John Kenneth Galbraith's saying: To comfort the afflicted we have to afflict the comfortable.
Mr. Stanford: Thank you very much, senators, for your attention.
The committee adjourned.