Chapter 14: Union Growth and Incidence
Unions and Collective Bargaining in Canada
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unions are collective organizations whose primary objective is to improve the wellbeing of their members
o in Canada this objective is met primarily through collective bargaining with the
employer
there are two basic types of unions:
o craft unions represent workers in a particular trade or occupation, such as
construction workers and teachers
o industrial unions represent workers in a specific industry, such as the steel and
forestry industries
in addition to their collective bargaining activities, unions play a role in social and
political affairs; in Canada unions have had close ties to the New Democratic Party
a significant fraction of the Canadian labour force are union members and the
importance of unions in Canada has increased over time
o as shown in Table 14.1, union membership as a percentage of non-agricultural
paid workers, a commonly used measure of union density, rose from 16% in
1920 to about 31% in 2005, peaking at 36% in 1985
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for general information about Canadian unions, click on the Canadian Labour Congress
home page, which includes links to all affiliated unions:
http://canadianlabour.ca/
The Legal Framework
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union representation and collective bargaining in Canada are regulated by an
elaborate legal framework that has changed substantially over time, reflecting the
changing social attitudes towards unions
o labour law discouraged collective bargaining prior to Confederation and then
took a neutral position up until 1944
o since 1944 labour law has facilitated union formation and encouraged the
spread of collective bargaining
the law provides workers with the right to form and join unions, and establishes
procedures for administering and enforcing these rights
o for example, unions and employers are required to bargain in good faith
Canadian labour legislation has also traditionally regulated the use of work stoppages
o strikes and lockouts are prohibited during the term of a collective agreement
and there is a compulsory 'cooling-off' period prior to the initiation of a work
stoppage after a collective agreement has expired
jurisdiction over labour legislation rests mainly with the provinces, with federal
jurisdiction limited to about 10% of the labour force
Factors Influencing Union Growth and Incidence
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as shown in Table 14.1, union growth in Canada has been substantial but somewhat
erratic
o union membership increased from an average of about 15% of nonagricultural
workers prior to 1945 to over 36% in 1985, but has declined somewhat since
the mid-1990s
as shown in Table 14.2, union density differs substantially across countries and
Canada is in the middle of the distribution of OECD countries
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in the late 1990s, union density, as measured by the percent of paid workers
who are union members, was highest in Sweden (86%), Finland (76%),
Denmark (75%), Norway (56%) and Belgium (53%) and was lowest in France
(10%), the United States (13%), Spain (16%) and Japan (24%)
as shown in Textbook Figure 14.1, union density in Canada and the United
States followed a similar pattern from 1920 up to the mid-1960s, but then
there is a substantial divergence with union density in Canada rising to over
35% and falling to less than 15% in the U.S. (for a discussion of possible
reasons for this divergence and the decline in unionization in Canada, see
Exhibit 14.1 on pages 434-35 and Exhibit 14.2 on pages 437–438)
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in Australia and many European countries there is a large difference between union
membership and collective agreement coverage; under such circumstances, union
membership may substantially understate the influence of unions in the economy
o large differences between union density and collective agreement coverage
can arise because of centralized bargaining at the level of the industry, sector
or entire economy, and because union agreements are frequently extended to
cover unorganized workers in the same industry or sector
o as also shown in Table 14.2, the percent of paid workers covered by collective
agreements is over 90% in Austria, Finland and France; this is despite
relatively low union membership (e.g., France at 10%)
collective agreement coverage in Canada is lower than in most OECD countries and
substantially below levels that prevail in many European countries
o in Canada, there is typically a very small gap between union membership and
collective agreement coverage (e.g., 1 percentage point difference in the mid1980s)
as shown in Table 14.3, in Canada the extent of union organization varies considerably
by occupation, industry, and various individual employee and employer characteristics
unionization is highest in nursing, teaching, and blue-collar occupations such
as construction and machine operators, and lowest in many sales and service
occupations
o about 75% of public sector workers are union members compared to less than
20% of private sector workers; public administration, education, health care,
and utilities are extensively unionized, while trade, finance, business and
professional services have little unionization
o individuals with a postsecondary diploma or university degree (many of whom
work in the public or quasi-public sector) are more likely to be represented by
a union than workers without postsecondary education
o workers in large establishments are much more likely to be represented by a
union than workers in small establishments
o the likelihood of being unionized increases sharply with age to 45–54 and then
declines
o the gender unionization gap has narrowed considerably, largely because of the
rapid expansion of female employment in the public sector, and males are now
only slightly more unionized than females (see Exhibit 14.3 on page 445)
economists use a demand and supply model to explain variations in unionization over
time and across industries, regions, and types of workers at a point in time
o the demand for union representation emanates from employees and depends
on the expected benefits (higher wages/benefits and greater job security) and
costs (union dues and the potential loss of income while on strike) of union
representation; those enterprises in which a majority of employees perceive
substantial net benefits from being represented by a union will have a high
demand for unionization
o on the supply side, bargaining and administering contracts and organizing new
bargaining units are costly activities and unions allocate their scarce resources
to activities that are expected to yield the greatest return; the supply of union
effort will be greatest when the per-worker cost of organization and
representation is low
o employers actions may influence either the demand or supply of union
representation by altering the costs and benefits to employees and to union
leaders and organizers
o
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Empirical Evidence
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the growth of unions over time and the extent of union organization across industries,
regions, occupations, and establishment and employee characteristics are
systematically related to a number of economic, social, and legal/institutional variables
social attitudes toward unions and the legislative framework governing collective
bargaining (which in turn may reflect society's views of unions) appear to influence
union growth and decline
o a number of legislative changes, such as the extension of the right to
collective bargaining to public sector employees, encouraged union growth
o more recently, legislative changes in several provinces, such as requiring
secret-ballot elections for union certification, have made union organizing
more difficult
aggregate economic conditions also affect union growth, with the rate of union growth
varying directly with the rate of growth of employment and the rate of price inflation
(workers view unions as an effective vehicle for maintaining real wages)
industry and enterprise characteristics such as establishment size, industry
concentration, capital-intensity of production, and the extent of job hazards contribute
to explaining the large variations in union incidence across industries and
establishments
worker characteristics such as part-time employment, blue collar employment, age,
experience and position in the wage distribution also contribute to the determination
of union status
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these observed relationships are generally consistent with a demand-supply
framework for understanding the growth and incidence of unions
o for example, most of the increase in public sector unionization can be
attributed to the lower per-worker costs of organizing large government
organizations