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What Happens to Truth

United Auto Workers In Canada Map Out Different Route—
But Is It A Better One?

January 1, 1985 -

"Lump sum means you get it this year but then you have to bargain again next year. We did not want to start that process . . . Canadian workers did not want to gamble on profit sharing" (New York Times, October 28, 1984).

That, said Bob White, Canadian director of the United Auto Workers (UAW), was why 36,500 employees of General Motors of Canada went on a 12-day strike in October. Just a few weeks earlier, 350,000 American GM workers had settled for a 'new contract without a strike. The Canadian strike, which forced the layoff of 40,000 U.S. auto workers, was on the surface all about dollars and cents expressed in direct wages and benefits. In reality, the differences were more fundamental.

The three-year agreement between the UAW and GM in the U.S.A. provides for a base rate increase of 15 cents, to a total of $12.82 per hour. The rest of the increases will be in the form of lump sum payments, profit sharing and cost-of-living allowances. In addition, GM will establish a $1 billion job bank to pay for the retraining of employees who are laid off because of subcontracting, automation, or productivity gains.

The three-year Canadian agreement provides for a first-year base rate increase averaging 2.25 per cent. In addition, the workers will receive 25 cents per hour (Special Canadian Adjustment) to be put into the cost of living (COLA) float during the first year, 25 cents in the second, and 24 cents per hour in the third year of the agreement. At a 5 per cent inflation rate, the total COLA increase during the term of the agreement will be $1.58, bringing the hourly wage rate of an assembler to $15.59 at the end of the contract. There are additional improvements in income security plans, premiums, and insurance coverage in the Canadian agreement.

But What is the Real Difference?

The total monetary difference between the UAW-GM collective agreements in the two countries may not amount to very much in the end (apart from the difference in the exchange rate between the American and Canadian dollar). The real difference lies in the approach. This was summed up in an article by Professor Quinn Mills of the Harvard Business School in the New York Times of October 7, 1984. He believes that the agreement between the UAW and the General Motors Corporation in the U.S.A. is not a victory for one side nor a defeat for another, but is a "landmark pact that shows labor and management in a new cooperative relationship."

Mills believes that the traditional perception of labour-management relations became unstuck in the 1960s and 70s when worker discipline, quality and productivity deteriorated. The unprecedented first-time losses suffered by General Motors in 1982 forced both company and union to search for a new approach. To ensure job security, the UAW adopted three main strategies. First, they agreed to substitute bonuses tied to profits for pay increases, thus giving GM more flexibility in its labour costs. Secondly, via labour-management committees, they worked with GM to expand the company's business. An example of this cooperation is the establishment of a New Business Venture Development Group, which will investigate possibilities for GM to move into non-traditional business areas. Mills writes that "union representatives in this group will have a remarkable opportunity to sharpen their business understanding and to influence the corporation's long-term direction, representing a noticeable leap of unions into entrepreneurship."

The third strategy is the establishment of a $1 billion fund to pay for the retraining, relocating and readjustment required in adapting to a competitive market. Mills concludes that the new partnership of GM and the UAW in the U.S.A. amounts to "a revolution in American industrial relations."

The "Traditional Pattern" is not Good Enough

A number of Canadian authors essentially agree with this positive evaluation of the U.S. settlement. For example, a Globe and Mail editorial written during the Canadian UAW strike (which had immense potential for harming the fragile Canadian economy), argues that UAW director Bob White is not ready for the future. At a time when Canada's industry needs flexibility, innovation and productivity, White is "looking stoutly backwards" and leading his membership on to the picket lines in order to perpetuate the old rigidities that have caused so much trouble in the past. The Canadian Labour Congress's call for a 32-hour work week with no loss of pay (supported by White) will create less work instead of more, the editorial points out, "yet Mr. White opts for an attack on the productivity of an industry that is just recovering from a sobering brush with mortality, and which would face more foreign competition with the abolition of car import quotas, a move that cannot and should not be long delayed." White has insisted that his union should not abandon the bargaining strategy that has 'worked for the past 25 years. Concluded the Globe and Mail: "Surely we are all more aware of our place in a dynamic world than we were in Mr. White's past 25 years. We must go beyond, not embrace, the last quarter century in our economic relationships, paradigms and strategies. If this strike for the past continues much into the future, many people suffer. Is the 'traditional pattern' for the few worth so much?" (The Globe and Mail, October 19, 1984).

One other factor which the Canadian UAW would do well to ponder is that GM has shifted its North American employment toward Canada. Since 1978 GM has phased out about 90,000 jobs in the U.S. and has added 6,000 jobs in Canada. General Motors of Canada has been careful not to raise the issue of overall North American strategy. And admittedly, this is a delicate issue which easily arouses nationalist sensitivities on this side of the border. But unions that insist on maintaining the old rigidities may well be instrumental in eroding Canada's industrial economic base. Flag waving and strident trade union rhetoric should not blind us to this hard reality.