Back to Work Legislation: If Cost is a Reason, Prove It

Today, the Canadian federal government introduced back-to-work legislation to end the strike at Canadian Pacific Railways. As my colleague David Doorey has so eloquently described over at his blog, this fourth piece of federal back-to-work legislation represents a very disturbing pattern of intervention. Critics from both union and management positions have said that these acts hamper the effectiveness of collective bargaining, not only in the immediate situations, but also in long-term bargaining relationships, where the parties will either be unwilling or unable to reach agreement on their own.

I’ll also point out that the government has done an extremely poor job of justifying the economic rationale for stepping in to end these disputes. There’s a very interesting quote in this story:

[Federal Labour Minister Lisa] Raitt said Wednesday that the government estimates a strike could cost more than $500 million a week.

But [Fadi] Chamoun [a research analyst at BMO Capital Markets] says he doesn’t “know what to make of [that figure], to be honest.”

He gives a “rough estimate” of $100 billion for the value of all the goods that move annually on CP in some form.

So that’s one estimate of the value of the goods that are moved by CP: $1.9 billion a week (assuming that the amount of goods and their value is consistent throughout the year). But we don’t know how much of those goods could be moved by alternative means if CP isn’t available, so in and of itself the figure doesn’t tell much about the financial impact of the shutdown. (And we shouldn’t forget that there is economic loss on the strikers’ side, too, since they are not being paid their salaries while they are not working.)

As far as I can tell, Raitt has offered no explanation of her cost estimates, for this strike or for any of the others in which economic necessity has been invoked as a reason for back-to-work laws. If “our fragile economy” is such a compelling reason to interfere with collective bargaining – especially while our Prime Minister is claiming that Canada has the strongest economy in the world – then surely this business-oriented accountability-focused government should be giving us more substantial and reliable economic reasoning.

UPDATE: Armine Yalnizyan, an economist with the Canadian Centre for Policy Alternatives, gave an excellent interview to CBC RadioToronto’s Metro Morning show regarding the calculations of the “cost” of the CP strike. You can listen to it here.

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