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Worker choice the next logical step in reforming Canada’s labour relations laws says report

The Fraser Institute
By The Fraser Institute
September 3rd, 2015

While new federal legislation improves union accountability, unionized workers in Canada’s private sector still face a lack of choice when it comes to joining and financially supporting a union, finds a new report released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“Governments could give workers a true reason to celebrate Labour Day by enacting worker choice legislation that would empower workers, ensuring they can decide for themselves if they want to join and financially support a union,” said Charles Lammam, co-author of Improving Union Accountability with Worker Choice and director of fiscal studies at the Fraser Institute.

Currently, workers can be forced to become union members and pay union dues as a condition of employment.

The report follows the recent Royal Assent given to Bill C-377, federal legislation that requires Canada’s labour organizations to publicly disclose basic financial information (such as expenditures, revenue, and their financial position) and details on how much money and time is spent on political and social causes.

While the new law makes it easier for workers and interested third parties to learn how unions spend membership dues, Canadian workers can still be forced to join a union and pay full dues even if they disagree with the causes that unions spend resources on.

By contrast, laws that allow workers to opt-out of paying full union dues exist in 25 out of the 50 U.S. states (the so-called Right-to-Work states).

In the remaining 25 states, workers are required to pay partial dues but can opt-out of dues that are allocated for activities unrelated to labour representation. In all U.S. states, workers can opt out of union membership.

The report notes that unionization rates are lower in jurisdictions where workers have more choice. In Right-to-Work states, the private sector unionization rate (4.7 per cent) is less than half the rate in non-Right-to-Work states (9.6 per cent). By comparison, the 2014 rate in Canada is much higher at 16.8 per cent.

“Worker choice laws don’t prevent unionization but they empower workers by giving them a choice,” Lammam said.

The legislation and its outcomes in the United States suggest that, when workers are given more choice, union leadership becomes more accountable and responsive to its membership.

For example, a recent American study found that union workers in Right-to-Work states pay dues that are, on average, 14 to 15 per cent less than union members in states with less worker choice.

The study also found that salaries of union executives tend to be lower in Right-to-Work states.

“When union membership and dues aren’t mandatory, unions must convince workers of the merits of unionization and the value of paying union dues,” Lammam said.

Research also points to worker choice laws leading to a stronger labour market and economy — all things that would truly benefit workers.

One study found that from 1977 to 2010, worker choice laws were associated with a 1.8 per cent spike in state-level economic growth and a one per cent jump in employment levels.

“Increasing worker choice not only empowers workers and encourages unions to not take the financial support of their members for granted, the research also points to an association between worker choice laws and stronger economies,” Lammam said.

“This is particularly relevant for a province like Ontario — now in close geographic proximity to several Right-to-Work states such as Michigan, Indiana, and Wisconsin. While there may not be any quick fixes to Ontario’s economic woes, giving workers more choice could be a good start.”

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