Canada’s labour relations laws restrict worker choice, discourage investment and job growth

VANCOUVER—As Labour Day approaches, Canada’s biased labour relations laws are failing workers, restricting their choices, and potentially stunting job growth and investment, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

The study, Labour Relations Laws in Canada and the United States, provides an empirical analysis of labour relations laws in the private sector for the 10 Canadian provinces, the Canadian federal government, and the 50 U.S. states. The study’s Index of Labour Relations Laws provides an overall measurement of the extent to which jurisdictions achieve balance in their labour relations laws. “Overall, Canadian provinces as well as the federal government dramatically lag behind U.S. states in terms of providing workers with the choices and opportunities that come from balanced, neutral labour relations laws,” said Charles Lammam, study co-author and resident scholar in economic policy at the Fraser Institute.

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According to the study’s Index of Labour Relations Laws, Alberta, with a score of 5.3 out of 10, has the most balanced labour relations laws in Canada. But Alberta is the only province to score above 5.0 on the index, an indication of how badly Canadian provinces trail the U.S. states. Ontario and Newfoundland & Labrador were the next best, tied with a score of 3.4, while the federal government (1.1) and Manitoba (1.8) have the lowest scores. By comparison, the 24 states with Right-to-Work legislation -- which allows employees to fully opt out of paying union dues -- score 8.5 out of 10. The remaining 26 states each score 6.8 out of 10. Unlike Canadian workers, U.S. workers cannot be compelled to join a union as a condition of their employment. “Despite having the best rating among provinces, Alberta still trails all U.S. states and has the same basic failing as all other Canadian jurisdictions in areas such as mandatory union membership and dues payment,” Lammam said. The study highlights how jurisdictions with balanced labour relations laws create a more flexible labour market which in turn leads to higher job-creation rates, lower unemployment and higher investment. This occurs because balanced labour relations laws provide workers with more choice, allowing them to more easily change jobs in search of higher pay or better working conditions, and allows employers to better respond to market changes. The study also points out several specific problems facing individual provinces. Chief among them is the recent changes in Michigan and Indiana’s status from non-Right-to-Work states to Right-to-Work states, meaning that Ontario is now bordered almost entirely by Right-to-Work states which offer their workers significantly more choice with respect to union membership and dues payment. “Competitiveness is a particularly acute problem for Ontario and this is but one more example where the province seriously lags its neighbours and competitors,” Lammam said. British Columbia and Quebec are also singled out as the only two jurisdictions in North America that ban the use of replacement workers, which has been shown to affect business investment decisions. “The evidence shows that more balanced labour relations laws benefit workers and the overall economic performance of a jurisdiction. Giving workers increased choice regarding union membership and dues payment, and making the labour relations laws less prescriptive would improve the functioning of Canada’s labour market,” Lammam said. Charles Lammam, Resident Scholar in Economic Policy, Fraser Institute