Heeding the Times from Harry Antonides' Desk

Profit Sharing to Improve Labour-Management Relations

April 1, 1984 -

In an effort to foster increased cooperation and productivity in Canadian workplaces, the federal government recently established the Registered Employee Profit Participation Plan (REPPP). The REPPP is designed to work alongside the normal collective bargaining process, and is not intended as a substitute for wage increases. Finance Minister Marc Lalonde explained that as employees participate more directly in the benefits of better productivity and efficiency, both management and workers will increasingly recognize their mutual interests. This, hopes Lalonde, "will contribute to a greater sense of partnership between business and labour throughout our economy." (Gain Sharing for a Stronger Economy, February 1984.)

The government has created tax credits, to a maximum of $1,500 per employee ($900 to the employee, $600 to the employer), to participants in the scheme. To qualify for these tax credits, the REPPP must be registered with Revenue Canada, and must meet the following requirements: all employees in the group must be eligible to join; a minimum of 10% of the company's profits must be shared; and a labour-management committee must be formed to set up and monitor the plan.

But will it work?

A recent survey by the Toronto Stock Exchange revealed that employee incentive plans, such as equity participation and profit-sharing plans have become very popular in the last decade. Herb Brown, president of the Profit Sharing Council of Canada, said: "Profit sharing seems to work best when the employee can make a (direct) contribution to profits. For example, in a retail store, in a small manufacturing firm where there is a considerable amount of labor, or in a service operation, it would probably be more effective than in a highly mechanized company."

Art Gruntman, vice-president of the 10,000-member western division of the Canadian Paper workers Union (recently engaged in the B.C. pulp and paper industry conflict), rejects profit sharing outright. He stated that management cannot be trusted to give a true picture of their finances and profits and believes that profit sharing is "another way of destroying the militancy of our members." He said: "The companies want to play it so we'll become meek and mild and they can do what they want with us. But it's an adversary system we operate under and that's the way it's going to stay" (The Financial Times, February 20, 1984).

Gain-sharing plans can indeed help to rid us of the adversary system by bringing awareness that a healthy enterprise requires the partnership of labour and management. This cooperation will be essential if Canada wishes to thrive in tough economic times and increasingly competitive markets.

This article originally appeared in Comment magazine, a journal founded by Harry Antonides. Find all of Harry’s pieces, and thousands more, at http://www.cardus.ca/comment