Dismantling Canada: Labor Fights Back

On November 2, 1982, the Iron Ore Company of Canada, a U.S. branch plant in Canada, shut down operations in Schefferville, Quebec, throwing 526 people out of work and virtually destroying the small northern town. The company claimed that the recession of the early 1980s left it with no choice but to close down the plant. A few days after the plant-closing, however, news reports revealed that Iron Ore had replaced investments in Canada with investments in low-wage Brazil. Explaining the shut-down in Schefferville in this context required some clever arithmetic and skilful rhetoric. For this, and much else, Hanna Mining Company, the Cleveland-based owner of Iron Ore, relied on the president of Iron Ore of Canada, Brian Mulroney.

Mulroney provided what Hanna needed; he made catastrophic ruin seem an inevitable result of impersonal and remote market forces. Almost 10 years later, as prime minister of Canada, Mulroney is still doing much the same thing, demonstrated most recently by his handling of the Public Service strike in Canada.

On and off strike

Having suspended its ten-day, nationwide strike only five days earlier, the Public Service Alliance of Canada (PSAC) resumed its strike on September 23. PSAC, which represents approximately 160,000 federal government workers across Canada, had suspended the strike after the government agreed to drop all preconditions and bargain in good faith. But, when negotiations quickly broke down again,PSAC members returned to the picket line. According to Colette Gervais, strike captain at the Department of Supply and Services, "the federal government was not interested in negotiating, let alone negotiating in good faith."

In the February 1991 budget, the Conservative government instituted wage controls on public servants and threatened workers with severe job losses should they reject these controls. Despite the current recession and an inflation rate hovering at 6.4 percent, the federal government offered public servants no salary increase this year and only the possibility of a 3 percent increase the following year. According to the government's proposal, every 1 percent wage increase will be accompanied by the elimination of 2,000 jobs. Public servants will now be forced to choose between small pay increases that do not keep pace with inflation or jobs for their neighbors.

Workers say the government's proposal is woefully inadequate. France Belanger, a single mother of a ten-year-old boy and a clerk with the Department of Energy, Mines and Resources, says, "the government's wage offer means that I will be unable to adequately provide for my son and will force me to continue living below the poverty line."

In addition to higher wages, the PSAC is demanding that the government fairly compensate women workers. More than half of the union's members are women working in undervalued jobs. Despite pay equity legislation passed in 1977, the government has failed to take any voluntary action to fulfil its obligations under the law. In fact, the government is now fighting a 1990 Canadian Human Rights Commission ruling that pay adjustments made for the three female-dominated bargaining groups are unacceptable. In spite of its legal responsibility to institute pay equity, the government continues to deny female employees fair salaries and to operate the largest female job ghetto in Canada. "Many single mothers in my department, earning anywhere from $17,000 to $25,000," Gervais relates, "simply can't make ends meet. [They] visit food banks each week to supplement their meager pay checks."

Negotiations between PSAC and the federal government first broke down in early May, when it became evident that no agreement would be reached. At the request of PSAC, a conciliation board was established to find grounds of possible agreement. According to the board report, the employer was "immovable." As a result, the board stated, "There have been no meaningful negotiations between the parties." Having treated its wage restraint policy as a "fait accompli," and thus precluding the possibility of any meaningful negotiations, the government had turned the conciliation process into a "virtual charade," the Board concluded.

The Conservative government invoked back-to-work legislation on its return to the legislature on September 16. When the PSAC resumed its strike (after the back-to-work legislation had been suspended), the government again enacted back-to-work legislation, on October 2. By inciting its members to strike, the government charged, PSAC had "gone beyond the limits of what is reasonable." The government chose to ignore that PSAC was in a legal strike position and that it exercised its right to strike only because the government failed to negotiate in good faith. This is not the first time the Canadian government has taken such a position. With one of the most restrictive strike laws in the industrialized world, invoked on 43 occasions from 1980 to 1987, the government of Canada has vigorously attempted to undermine collective bargaining and the democratic rights of workers.

With its inflexible negotiating stance and the back-to-work legislation, the government hopes to encourage other employers to hold the line against worker demands. In the words of Treasury Board President Gilles Loisell, the back-to-work legislation "was an important signal to other employers in the economy that they should exercise restraint in their own wage settlements." For the union, the conflict has taken on importance beyond the particular issues of the government workers and has turned into a test of whether the Canadian labor movement will capitulate as the U.S. labor movement did after the 1981 air traffic controllers' strike.

Targeting workers

Receiving only 16 percent support in the most recent polls, the Conservative government has tried to improve its public standing by attacking the so-called fat-cats of government. It has attempted to market the myth that the Canadian public service is bloated, inefficient and overpaid. Above all, it has argued that the recession requires concessions on the part of everyone, including government workers. In its opening remarks to the Conciliation Board, for example, the federal government stated, "it is not unreasonable to expect [government] employees to moderate their salary expectations during difficult economic times. Many Canadians are facing wage freezes or wage reductions and suffering job losses."

The government says the austerity program was necessitated by the government's budget deficit. According to Loiselle, "these measures are made necessary by the weak state of the economy and the government's deteriorating fiscal situation."

The strength of the government's commitment to sacrifice was undercut, however, when, the day before the government imposed wage restraints on public servants, 50 top executives of crown corporations and government agencies received pay increases of 4.2 percent to their six-figure salaries. Some of these increases were as much as $10,000 to $15,000, roughly the amount most low-income earners take home. And in March 1991, senior federal public service managers received salary increases as high as 10 percent.

To PSAC members, the government's message seems to be that economic restraint need be borne only by those on the lower end of the pay scale. "The government's offer to public servants," asserts Gervais, "is totally unfair and an insult to our integrity."

The camouflaged corporate agenda

The executive pay increase lends strong support to the belief that the government is wholly insincere in its position on PSAC wages and that its approach has almost nothing to do with the deficit and everything to do with trimming the public sector and breaking the union. As past budgets demonstrate, the Conservative government, along with its corporate associates, is philosophically opposed to having the public sector play an active role in the economy.

Last May, the government announced that it intended to continue "streamlining" the public service and to privatize government services. Since 1984, as the Mulroney government often boasts, "streamlining" has resulted in the elimination of more than 13,000 public sector jobs and the selling-off of 20 crown corporations and corporate holdings.

Canadians have watched the Conservative government slowly dismantle and subsequently privatize VIA Rail, Air Canada and Petro Canada. Canada Post and the Canadian Broadcasting Corporation (CBC) are next in line. The method has been the same in each case. The Conservative government cuts funds to these institutions to such an extent that they can no longer operate efficiently; it then argues that such institutions deserve further funding cuts or should be privatized because they are inefficient.

Many of the services that the Conservative government is privatizing and contracting out have been, and could be, provided less expensively by civil servants. The government currently spends an estimated $5 billion a year on privately contracted services, even as it claims to be trying to save taxpayers' money. Daryl Bean, PSAC National President, states that "contracting out under the Mulroney government is driven by ideology, not economics. At a time when federal government workers are increasingly unable to provide quality service to the Canadian taxpayer [because of understaffing and underfunding], one must question the massive diversion of financial resources away from the public service." Not only is contracting out more expensive, it also provides much greater opportunities for corruption and patronage.

Notwithstanding Conservative rhetoric, the annual deficit and the total debt continue to increase, with the debt now reaching 55 percent of the gross domestic product, compared to less than 20 percent in the mid-1970s. The government's attempt to blame the growing debt on excessive social spending, as a recent study by Statistics Canada reveals, is fundamentally misdirected. According to the study, the large increases in the federal debt over the past 15 years were caused mainly by corporate tax breaks and high interest payments on the debt. The study shows that 44 percent of Canada's debt is a result of tax breaks for corporations, 50 percent has gone to high interest payments and only 6 percent can be explained by government spending. Since the Conservative government came to power in 1984, personal tax revenues have increased 103.5 percent, whereas corporate tax revenues have increased only 17.7 percent, considerably lower than the 29 percent rate of inflation over the same period. In 1987, moreover, more than 93,000 profitable corporations paid no income taxes at all. The Mulroney government can now boast that personal tax revenues as a share of GDP are both the highest in Canadian history and among the G-7 countries.

None of this is surprising. Since the Mulroney Conservatives' first election victory in 1984, the Business Council on National Issues (BCNI), which represents the wealthiest and most powerful corporations in Canada, has helped map out Conservative economic policy, including free trade, high interest rates and most recently, the Goods and Services Tax. According to BCNI strategists, "the Canadian economy will have more difficulty competing with the United States if the private sector has to support a government sector which has been allowed to get too far out of line." Canadians have thus witnessed the slow and deliberate destruction of their highly valued social programs, increased taxes for low- and middle-income wage earners, delays on such programs as national day care and job training and tax breaks for large corporations and wealthy individuals.

Brian Mulroney's role in the assault on collective bargaining and the public service is much the same as it was a decade earlier, when he was employed by the Hanna Mining Co. Paving the way for reduced wages, benefits, opportunities and expectations has required some clever justification, just as closing Iron Ore of Canada's Schefferville facilities did. Today the justification is that the deficit must be cut so that Canadian business will be better able to compete in the world economy. The PSAC strike is a bold attempt to challenge the corporate agenda advanced by Mulroney's government behind the camouflage of deficit reduction.

Jill-Anne Chouinard is communications coordinator for the Action Canada Network. Douglas Dollinger is a freelance writer living in Ottawa.