Canada-US: Two-tier wages, second-class workers

By Sam Gindin

When Canadian Auto Workers president Buzz Hargrove makes new pronouncements, they carry weight both within and beyond the labour movement – even when, as has recently been the case, they seem to undermine what Canadian unions have always stood for. What, then, to make of his defiant declaration, in response to the permanent two-tier system negotiated in the United States, that this is “one automotive import that won’t cross the border into Canada” in bargaining this fall?

The significance of the two-tier system is that it takes the inequalities that have been growing within the work force to a new stage: It brings them right into the workplace and includes the union as an accomplice. Last year’s agreement between the United Auto Workers and GM, Ford, and Chrysler divided jobs into “core” and “non-core” jobs. The wage rate for new workers hired into the non-core jobs will be permanently cut in half and benefits still further – even though these workers will be doing exactly the same work as those getting the higher rate. This agreement was sold on the basis of needing to compete with the Japanese transplants and doing do in a way that would shift the concessions to future workers. For the young workers to come, this has not only reduced their access to decent-paying jobs, but done so in a way that formally defines them as permanent second-class workers – hardly a formula for generating the enthusiasm so critical for any revival of unions.

But is it possible, in this most integrated of industries, for Canadians to ignore the developments in the United States? The high value of the loonie is a serious problem for the Canadian auto industry, and manufacturing more generally. But the operations still benefit from Canada’s health-care system; even shifting the risk of health care to employees, the companies’ share of costs for active workers and of the new funding arrangements remain high relative to Canada.

Factoring in the high productivity and quality of Canadian plants, the likelihood of a long-term Canadian dollar in the 93-to-95-cent range, and the fact that labour costs represent less than 10 per cent of a vehicle’s price, the loonie is not actually that decisive. As the past three decades could not have made any clearer, jobs depend on both larger corporate strategies and circumstances beyond the companies’ control. Since 1978, when the era of concessions began in the United States, UAW Big Three membership has fallen by almost 80 per cent – from 750,000 to under 170,000.

Yet if U.S. auto wages do start moving to half their present level, Canadian autoworkers clearly would be unable to simply bargain as usual. The key lies in how American workers themselves respond. Many of them did vote against this agreement (almost half at Chrysler and one-third at GM) and more are coming on side as they come to see that even in terms of competitiveness, the two-tier system is a sham.

Japanese auto companies have a well-developed two-tier system at home, but have not implemented it in their U.S. plants for fear of driving their workers to unionization. With the UAW now bringing it into American plants, the door will be opened for the Japanese companies to follow suit. Net result: lower wages for workers at the Big Three and the transplants, paying for higher salaries to corporate executives and greater dividends to stockholders, with absolutely no change in relative competitiveness and job security.

This dawning recognition has led to an impressive U.S. opposition that is determined to cast out this offensive system in its own bargaining in 2011. In this context, what happens this coming fall is crucial. A Canadian surrender would weaken that movement, but if the Canadians do challenge it, this has the potential to inspire and deepen the U.S. resistance, easing the longer-term pressure on the Canadians.

There are those in the labour movement (and perhaps some within the CAW) who treat Mr. Hargrove’s promise to take on such a fight with great skepticism. They raise the concessions earlier made in Oshawa, Bramalea and elsewhere, and note that he was hardly worried about the inequalities facing workers when he came out in support of politicians who bore a large responsibility for the policies that aggravated those inequalities. They point to the Magna agreement, which, in surrendering the right to strike and the right of workers to democratically determine their own in-plant structures, essentially created a two-tier system within the CAW. And some question whether if the CAW does reject the two-tier system, it will do so only by letting the companies achieve the same results in other forms (such as outsourcing) or at the expense of concessions elsewhere.

Still, Mr. Hargrove’s strong statements against the U.S. agreement are surely welcome. He has stuck his neck out, and if the CAW does takes on this fight, the rest of the labour movement must be there in support – for reasons of solidarity and self-interest. (Globe and mail)

Sam Gindin is former director of research for the Canadian Auto Workers union.

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