VANCOUVER, BC-In order to encourage employment growth as
Canada comes out of the recession, the country needs more
balanced labour relations laws, concludes a new study from
independent research organization the Fraser Institute.
"Empirical evidence from around the world indicates that
jurisdictions with more flexible labour markets enjoy better
labour market performance," said Niels Veldhuis, Fraser
Institute senior economist and co-author of
An Empirical Comparison of Labour Relations Laws in Canada and
the United States: 2009 Edition
"When we compare labour relations laws among Canadian
provinces and U.S. states, we see that Canada greatly lags the
U.S. in terms of balance and laws that allow for labour market
flexibility. Regulations in Canada are much more prescriptive
and tilted in favour of unions. Ultimately, this will restrict
future economic growth."
An Empirical Comparison of Labour Relations Laws in
Canada and the United States: 2009 Edition
, Veldhuis and his co-authors provide an empirical assessment
of labour relations laws in the private sector for the 10
Canadian provinces, the Canadian federal jurisdiction, and the
50 U.S. states. The study's Index of Labour Relations Laws
provides an overall measurement of the extent to which
jurisdictions achieve balance in their labour relations
"Canadian labour relations laws inhibit the proper and
efficient functioning of the labour market because they favour
one group over another, prevent innovation and flexibility, and
are overly prescriptive, imposing a resolution to labour
disputes rather than fostering negotiation between employers
and employees," Veldhuis said
Of the Canadian jurisdictions measured, Alberta has the most
balanced and least prescriptive labour relations laws, earning
it a score of 5.3 out of 10, the only province to score more
than 5.0 on the Index of Labour Relations Laws.
By comparison, the Canadian federal government and Quebec
have the most biased labour relations laws, with the federal
government scoring 1.1 out of 10 and Quebec 1.3 out of 10 on
the Index of Labour Relations Laws. Manitoba is the third worst
jurisdiction, at 1.8 out of 10; followed by British Columbia,
New Brunswick and Newfoundland & Labrador, each with a
score of 2.8 out of 10. Prince Edward Island scores 3.0 out of
10, with Saskatchewan next at 3.2 out of 10. Nova Scotia (3.3
out of 10) and Ontario (3.4 out of 10) round out the Canadian
"Alberta stands ahead of other Canadian jurisdictions
although it falls well short of competing with U.S. states,"
"Alberta has the same basic failing as all other Canadian
jurisdictions in areas such as successor rights and the absence
of worker choice laws. If Alberta, and indeed all other
provinces, wants to pursue more balanced labour relations laws,
they will have to diverge from the Canadian standard on these
The highest ranking jurisdictions, scoring 9.2 out of 10 on
the index, are the 22 U.S. states with Right-to-Work
regulations that allow employees to opt out of joining a union
or paying union dues. The remaining 28 U.S. states have an
overall score of 7.5 out of 10 on the index. These states allow
full choice with respect to union membership but only allow
workers to opt-out of non-representation related union dues
such as political spending.
Canadian workers do not have the same level of choice with
respect to joining and financially supporting a union as their
U.S. counterparts. Instead, Canadian unionized workers are
forced to pay for the political or social activities of unions
with which they may not agree, Veldhuis said.
"Overall, U.S. states are superior to Canada in maintaining
balanced labour relations laws focused on providing workers and
employers with choice and flexibility."
The study emphasizes that labour market flexibility is
important because it determines how well labour markets respond
to changes in economic conditions. Flexibility means employees
can shift their efforts to endeavours that provide the greatest
return or benefit to them. For instance, workers in a flexible
labour market would be able to shift their efforts easily from
one industry or region to another. Similarly, flexibility
allows employers to change the mix of capital and labour to
respond to market changes.
One of the key issues in this regard is that of successor
rights, provisions that determine whether, and how, collective
bargaining agreements survive the sale, transfer,
consolidation, or otherwise disposal of a business.
Veldhuis points out that with so many companies
restructuring, merging, or dealing with bankruptcy as a result
of the global recession, successor rights become an even more
important aspect of labour relations laws.
"If someone were to purchase assets from a foundering
business such as GM or Chrysler, Canada's stringent successor
laws will impede the reorganization of the business and the
efficient reallocation of its capital."
Legislation in every Canadian province as well as the
federal laws make an existing collective agreement binding upon
a new employer when a business, in whole or in part, is sold,
transferred, leased, merged, or otherwise disposed of. In other
words, a purchasing employer is bound by an existing collective
agreement that it had no part in negotiating. There is little
variance in the treatment of successor rights across Canadian
Conversely, it is rare in the United States for a purchaser
to be responsible for the incumbent collective bargaining
agreement. While successor employers may be bound to recognize
and bargain with the incumbent union, the general direction
taken in the United States is not to consider successor
employers to be bound by the provisions of a collective
bargaining agreement negotiated by their predecessors.
"Giving workers increased choice regarding union membership
and dues payment, and making the labour relations laws less
prescriptive would dramatically improve the functioning of
Canada's labour market," Veldhuis concludes.