Written by: Jamil Ahmed, Policy & Research Analyst
We have put together two articles that provide an overview of two closely intertwined economic indicators: inflation and unemployment in Manitoba and the federal government’s proposal to introduce anti-replacement worker legislation.
Read our analysis and hear our position on these two important issues impacting your business below. ⬇️
Banning Replacement Workers: Concern for employers in all jurisdictions?
The Government of Canada has plans to introduce new legislation by the end of 2023, which would rule out federally regulated workplaces from using replacement workers during a lockout or strike. As a result, the Minister of Labour launched a public consultation period to gather input from those concerned or impacted by these proposed changes. The proposed legislation, which affects about one million workers in Canada, comes at a time when the labour market is very tight, and businesses are facing high inflationary pressure.
A replacement worker is a person a company employs to do the job of an employee who is on strike or has been locked out. Employers in Canada can’t hire replacement workers permanently, as the employees have the right to return to work once the strike or lockout ends. The legislation that has been proposed aims to address the issues of the businesses that employ temporary replacement workers. The only two jurisdictions where using replacement workers is prohibited by the applicable provincial labour relations regimes are Québec and British Columbia.
In the event of strikes or lockouts, many businesses rely on their replacement labour to maintain operations. Under the proposed legislation, unionized and non-unionized businesses will bear heavy consequences as it might change the dynamics of collective bargaining. In addition, the proposed legislation would significantly impact employers’ ability to function their businesses properly as it will impede the supply chain.
The federal labour rules will become prejudiced and unfair due to the ban on replacement workers because of the significant effects of a socially regulated labour market. Numerous studies have demonstrated that their ban on replacement workers negatively impacts economic outcomes. Global empirical research shows that countries with flexible labour markets have more productive labour markets (greater rates of job creation, lower unemployment, and higher earnings), which raises the quality of living. Noteworthy publications, such as that by Botero et al. (2004) [i] published in the Quarterly Journal of Economics, have influenced policy discussion by demonstrating the significant negative effects of labour regulation on labour market outcomes.
There is no such evidence where a problem has been identified with the use of replacement workers in strikes or lockouts. The Canada Industrial Relations Board (‘CIRB’) has not yet had to rule on a single case in which it was claimed that replacement workers had been used unlawfully. The parts of the economy governed by federal regulation and covered by Part I of the Code would be impacted by the ban on replacement employees and modifications to the maintenance of activities procedure. Part I of the Code applies to about 985,000 people and 22,000 companies. [ii]
Part I of the Code specifically covers the majority of Crown businesses; banks, including authorized foreign banks; telecommunications; radio and television broadcasting; air, rail, and sea transportation; and the federally regulated private sector (for example, the Canada Post Corporation).
Our position on the issue
The proposed ban on using replacement workers has been met with criticism from the business community. Critics argue that the ban will result in operational disruptions and decreased efficiency as businesses struggle to maintain productivity during labour strikes. In addition, some argue that the ban unfairly limits the options available to employers and may discourage investment in certain industries. As the labour market continues to evolve, its effects on the business community are yet to be fully understood and remain a source of debate.
The business environment faces many obstacles, including critical workforce issues made worse by increasing retirement rates, persistent supply chain issues, rising interest rates and a looming recession. We need the federal government to put the interests of the Canadian economy first. The Winnipeg Chamber of Commerce echoed with over 75 associations and local chambers across Canada and signed a joint letter regarding the government’s proposal to introduce anti-replacement workers legislation.
The Winnipeg Chamber of Commerce believes current labour laws are a good balance between the interests of business and labour and should not be changed. To encourage productive economic activity, it is crucial to have balanced labour laws. The proposed ban on replacement workers would create supply chain issues, and injure employment, investment and labour force.
[i] Botero, J. C., Djankov, S., Porta, R. L., Lopez-de-Silanes, F., & Shleifer, A. (2004). The regulation of labour. The Quarterly Journal of Economics, 119(4), 1339-1382.