Canada's broken labour relations model is costing us billions

Canada's broken labour relations model is costing us billions. Strikes and lockouts are not inevitable Canada must implement a collaborative labour paradigm.



The current labour relations model in Canada, characterized by confrontation and conflict, is increasingly detrimental to our national economy and the well-being of everyday Canadians. Strikes and lockouts have become routine, yet we cling to an antiquated approach that emphasizes adversarial negotiations over collaborative solutions. It is time for a reevaluation of this tactic. For decades, Canada has followed an adversarial labour relations framework, rooted in the Wagner Act model adopted from the United States in the 1950s.

This system positions unions and management as opponents in a contest, rather than partners seeking mutually beneficial resolutions. The entrenched adversarial mindset results in frequent disruptions to daily life, substantial economic losses, and breakdowns in essential services. Take, for instance, the recent threats of railway strikes, which highlight the economic implications.

Canadian National Railway and Canadian Pacific Railway transport approximately $1 billion worth of goods every day. A disruption, such as a strike or lockout, can cost Canada about $341 million daily, which represents roughly four percent of the country's gross domestic product (GDP). These interruptions lead to product shortages, increased consumer prices, decreased business productivity, and significant harm to our national competitiveness. Despite the evident economic repercussions, political leaders remain hesitant to pursue comprehensive reforms, fearing backlash from powerful unions and established interests. Compounding the issue, Canadian courts have broadly interpreted the right to strike, undermining governmental efforts to resolve labour disputes quickly.

This judicial activism reinforces a confrontational system that ultimately works against the public good. There is, however, a more effective approach. Countries like Germany and Sweden exemplify collaborative labour relations systems that greatly reduce the incidence of strikes and lockouts while ensuring fair negotiations. For instance, Sweden boasts a highly unionized workforce, yet it experiences far fewer disruptions compared to Canada. The cooperative framework between Swedish unions and employers focuses on consensus, dialogue, and the common good, contributing to economic stability and competitiveness, even amid global economic fluctuations. Similarly, Germany's system of workers' councils fosters collaboration between employees and management, encouraging productive discussions rather than adversarial standoffs. Workers' involvement in decision-making processes helps support businesses while safeguarding employee rights and interests, significantly reducing the likelihood of drawn-out strikes and lockouts. Canada would benefit from emulating these successful international models.

Essential services, particularly critical infrastructure like railways, should be formally recognized as vital to mitigating disruptive actions. All levels of government should retain the ability to impose binding arbitration when labour disputes endanger national interests. Additionally, there needs to be a reassessment of judicial activism that allows disruptions to occur at the expense of economic stability.

Utilizing Section 33 of the Charter—the notwithstanding clause—could allow governments to prioritize public welfare during significant labour disputes without recurring judicial interference. Moreover, the federal government should reconsider its prohibition on replacement workers in federally regulated workplaces. Lifting this ban would incentivize quicker resolutions by restoring balance to labour negotiations, thereby reducing the duration of disputes. Finally, dismantling public-sector monopolies in health care and education would significantly protect Canadians from disruptive strikes. Introducing competition in these critical areas would enhance efficiency and service quality, while safeguarding the public. By shifting Canada's labour relations toward a model based on cooperation and collaboration, we can reap numerous benefits.

Economic disruptions would be less common, labour disputes would see faster resolutions, and the public interest would no longer be vulnerable to adversarial tactics. Canadians deserve a fair and balanced labour-relations system where unions, employers, and governments collectively work to prevent economically damaging conflicts.

Canada requires a labour relations framework suitable for the 21st century, moving away from confrontation toward a collaborative, consensus-based approach that ensures stability, fairness, and prosperity for all citizens. Joseph Quesnel is a senior research associate at the Frontier Centre for Public Policy and the author of the report, *The Pressing Case for Prioritizing the Public Interest in Canadian Labour Relations*.
Bosman