Labor Management Relations in North American Multinationals: Legal, Cultural, and Economic Environments
The North American Agreement on Labor Cooperation calls for the Council of Labor Ministers to promote cooperative activities among the three countries on labor issues. Pursuant to this directive, the National Administrative Offices (NAOs) of the three countries have developed a Cooperative Activities Program under which they sponsor trilateral, tripartite events on a regular basis. These activities are coordinated by the three NAO Secretaries: Irasema Garza, United States, May Morpaw, Canada, and Rafael Aranda, Mexico.
This conference on Labor-Management Relations in North American Multinationals: Legal, Cultural and Economic Environments, held in Washington, D.C. on October 29, 1998 was one of a series of conferences focusing on industrial relations.
I would like to extend my sincere appreciation to the speakers who participated in this event. Thanks to their insight, and the guidance of moderator John McKennirey, the discussion was fruitful and engaging. I would also like to acknowledge Don Carter from the Department of Labor, Office of the Solicitor,the staff and students from American University, and my staff for assisting with the coordination of this event.
The views expressed by the individual participants are their own and do not necessarily represent those of the governments of the United States, Canada, or Mexico. Please note that remarks made in Spanish and French were translated to English.
Irasema Garza, NAO Secretary
A Cooperative Activity of the United States, Mexico, and Canada
Labor-Management Relations in North American Multinationals: Legal, Cultural and Economic Environments was a cooperative activity under the North American Agreement on Labor Cooperation (NAALC), presented by the United States, Mexico and Canada. The conference explored labor-management relations in the context of the operations of multinationals in the NAFTA countries. The goals of the conference were to:
The moderator gave a brief introduction to the session topic, and then each member of the panel of experts delivered a short presentation on the topic. The panel members and the round table participants then discussed the topic, guided by the moderator. At the conclusion of the discussion, each member of the panel of experts provided brief observations and conclusions based on the discussion.
U.S. DEPARTMENT OF LABOR
LABOR-MANAGEMENT RELATIONS IN
Washington College of Law
UNITED STATES DELEGATION:
MARLEY S. WEISS
STEVE M. BECKMAN
JOHN A. COLEMAN
ALESSANDRO RUBIO MAGANA
FRANCISCO LUIS SAENZ GARCIA
GILBERTO A. GONZALEZ TREVIÑO
ISAAC MAYA PEREZ
TABLE OF CONTENTS
Remarks by Heads of Delegations
The Adjustment of Multinationals to Each Country's National Environment, and How Unions deal with Multinationals
Round Table Participants:
Differences in Negotiated Conditions of Employment in the NAALC Countries
Round Table Discussion:
MS. GARZA: Good morning and welcome to the Labor-Management Relations in North America Seminar, part of our cooperative programs for 1998.
Before our introduce our Heads of Delegations, I'd like to mention a few administrative details.
One is that you've got translation equipment. And you can find the English translation in Channel 4, the Spanish translation in Channel 5 and the French translation in Channel 2.
Also, I'd like to mention that on the table right outside this room there are a number of publications related to the North American Agreement on Labor Cooperation and the work of the NAO. Please help yourselves to those materials.
Now it's my great pleasures to introduce to you Mr. Andrew Samet. Mr. Samet is the Deputy Under Secretary for International Labor Affairs at the U.S. Department of Labor. On January 1st, 1998, Mr. Samet was appointed to serve as the Deputy Under Secretary for International Affairs. In his current role he is responsible for U.S. Government participation in the International Labor Organization, the ILO, and represents the United States Government on the governing body of the ILO.
He's forming policy on issues related to worker rights in the international labor standard and he's responsible for the Department of Labor's studies and programs on international child labor issues.
The Bureau of International Labor Affairs which he heads also implements the North American Agreement on Labor Cooperation. And it's the labor side agreement to the NAFTA. In other words, Andrew Samet is my boss.
Prior to joining the Clinton Administration in 1993, Mr. Samet served as legislative director to Senator Daniel Moynihan. Mr. Samet joined Mr. Moynihan's staff in 1987 and his responsibilities included international trade, transportation, environment, labor and welfare policies.
And prior to joining the government, Mr. Samet was in private law practice. He's a graduate of Yale University, Carlton University in Canada, with a master's from that institution, and he has a law degree from Georgetown University.
He's written numerous articles and edited two books on international trade and human rights issues.
Please join me in welcoming Andrew Samet.
MR. SAMET: Thank you very much, Irasema. All of that was true and obviously understated, except for being Irasema's boss, as many of you know. (Off mike.)
So, let me welcome all of you and thank you all for being here. And let me also acknowledge May Morpaw and Rafael Aranda Vollmer from our counterpart institutions and operations, and thank them for all the work they've put into today's efforts.
We are, as you know, here as part of a series of efforts that we've had on labor-management issues and industrial relations throughout the process of building, even before the North American Agreement on Labor Cooperation was signed and implemented and subsequently. This has been a very important subject for us and we place a lot of emphasis on establishing a strong effort in this regard.
As you also know, this program is part of the overall cooperative activities efforts that our three countries undertake as part of the NAALC. Let me use that term, NAALC. I'm sure all of you are familiar with it.
And really, the purpose of this effort is to continue to increase the understanding of the laws and the institutions and the practices of labor relations in the three countries. We always look for common ground and common understanding, but we also always recognize that all three might be doing things differently in many ways. And that's obviously part of the benefit of this kind of exercise is getting a better perspective on what you do, based upon looking at it through contrast and comparison to what others do.
I also think it's worth noting that we're meeting here today in the same month that our three Secretaries -- if I can apply that word to Canada, for the moment -- Secretary Herman, Secretary Bell and Mr. McCauley -- have been meeting. Had a meeting earlier this month in the beautiful place on Prince Edward Island. We all very much enjoyed the opportunity to visit Prince Edward Island.
And they also met in fact again this month -- indeed, last week, Viña Del Mar, Chile, where they were altogether as part of the meeting of the Hemisphere Labor Ministers, which comes out of, in many ways, the direction of the leaders of the Hemisphere who met in Chile earlier this year as part of the Hemispheric Integration Process.
And the leaders have adopted visions on the labor dimensions now and all the Labor Ministers are very much engaged in working on that subject.
Indeed, what we've done in the context of this agreement is obviously very helpful and will continue to be helpful as that process goes forward.
Let me just mention and review for you, as some of you are well aware of, that previous at conferences that we've had on this topic and in fact, the relationship between the three countries began even before the NAALC itself was negotiated.
1992 was the first conference between the three countries on labor protection. And this began a building block which led, under President Clinton, to the negotiations of the NAALC, and subsequently a much more accelerated and deepened relationship under the agreement on this subject.
In 1994, we had a conference which focused on issues of labor-management cooperation and productivity concerns, and we had conferences in Canada in 1996 which examined the ways that industrial relations practices in the North American countries had just changed with the global economy.
In this period, I think it's fair to say that we have come quite a long way in terms of the base of knowledge about each other, the practices and how they actually work, as well.
Today's conference is designed to take an additional step in this regard by looking at labor relations in the context of multinationals, companies that operate industries in the three countries.
Although obviously, again, there are many similarities, there are some very important differences in the ways that business is done in terms of labor and management in each country. And by looking at how multinationals address some of the different legal, cultural and economic environments, we again hope to expand our base of understanding in this area.
I think it's also important to note, as I alluded to earlier, that what we do here will also helps to guide us as we look at these labor-management issues in other forums beyond our NAALC context.
If we look at the United States, at least I believe it's fair to say that with the other countries involved, we're becoming much more focused on this activity in various other fora. We're engaged in these questions in the context of our relationship with the European Union. We're engaged in a number of activities pertaining to this subject.
This is an issue in the APEX context. And obviously, as I said before, the Hemispheric Labor Ministers have adopted very important additions to the work plan that takes in much of the issues of labor-management relations. And so a lot of the work that we've done in this context, I think, will emerge as an important guidepost in how to effectively deal with these issues elsewhere.
We've designed the conference to try to maximize and extend the dialogue between us. In the first two sessions we want to look at how multinationals adjust to each country's national environment and how unions work with these multinationals. In the second session, we'll look at differences in negotiating conditions of employment in the three countries and examine how they impact operations in North American countries.
Obviously to engage in any valuable discussion it's important to bring all the parties into it and to elicit an exchange and have a true dialogue. And in this conference, each of the sessions will include a panel of academic experts from the three countries and a roundtable selection that includes labor and management representatives.
Obviously, in addition to our delegations from each country today, we're very lucky to have Mr. John McKennirey here, who's the Executive Director of the Committee for Labor Cooperation, and he will play a very pivotal role in guiding the discussions.
If there's anything that I want to emphasize today, it would be that we really would encourage a full discussion. We want everyone here to feel part of this dialogue and to fully participate.
It's our hope that this meeting, along with the other cooperative activities under the agreement, will again enhance and further our understanding of labor-management systems in the three countries. I hope each and every one of you find this a valuable experience and that we'll be able to draw upon your participation in future activities.
And with that, I'd like to thank everyone; Irasema and her staff and everyone from the other countries who made this day possible. And most of all, thank each of you for being here and I hope you will fully participate.
MS. GARZA: Next, I'd like to introduce my counterparts from Canada and Mexico.
From Canada, Ms. May Morpaw, and from Mexico, Mr. Rafael Aranda Vollmer.
May, would you join us at the podium?
MS. MORPAW: (translated from French) Good morning, everyone. (return to English) Good morning. (translated from Spanish) Good morning. (return to English) I get a strange feeling. I've been looking at the back of all these heads. (translated from French) Good morning again. On behalf of the Canadian Delegation, I wanted to tell you how happy we are to be here in Washington today, not only for the conference, but also for the tour...[inaudible]...this morning and also for...[inaudible].
(return to English) On behalf of the Canadian delegation, I would like to say how pleased we are to be here at this conference on Labor-Management Relations in North American Multinationals. We understand and appreciate the interest of the U.S. National Administrative Office in organizing and hosting this conference today.
In closing, let me take this opportunity to extend my thanks in advance to the Canadian speakers and the roundtable participants. They are here on short notice and I thank them very much for taking up the challenge and I look forward to everyone's participation in the discussions that will follow.
MS. GARZA: Thank you, May. And welcome to you and the Canadian delegation. On behalf of the U.S. Department of Labor, we're very happy you're here and could join us for this event.
And likewise, I'd like to invite now my counterpart from Mexico, Rafael Aranda, and welcome to the Mexican delegation and Rafael to the United States. We're very happy to have you here today.
MR. ARANDA VOLLMER: (translated from Spanish) Good morning. We are very happy to have this opportunity to participate in these forums. This is a unique agreement for the future of the three countries, with their different cultures and situations, with respect to better working conditions and productivity [off mike]
The success of this achievement stems from the effort put forth by the three countries to expand the construction of a mutual foundation of labor systems, with seminars, conferences, and workshops at which they will solve some of the economic and social differences. We have always tried at these conferences to make them a forum for working together to find solutions for labor-related problems. These conferences afford us the opportunity for a dialogue on this situation and to respond.[off mike]
It is important that we take advantage of this exchange of information to build systems that are adapted for cooperation.
I want to end here by thanking...[off mike]. Thank you very much.
MS. GARZA: Thank you, Rafael.
It's my pleasure to introduce to you Mr. John McKennirey, who's going to serve as our Moderator. Mr. McKennirey, in April of 1995, was appointed jointly by the Secretary of Labor of the United States, Secretary of Labor and Social Welfare of Mexico and the Minister of Labor of Canada, to be the first Executive Director of the Secretariat for the Commission for Labor Cooperation.
The Ministers earlier this year approved a second three-year appointment, so we have John for another three years.
As many of you know, the Commission for Labor Cooperation is composed of the Council of Ministers the Secretaries from Mexico and the United States and the Minister from Canada, and its governing body has an international secretariat as its administrative arm, and John is the Executive Director of that administrative agency, so that the Secretariat is really our international institution under the agreement, as opposed to the domestic officers which are the National Administrative Offices.
Mr. McKennirey, in 1993, was the chief negotiator for the NAALC. (Off mike.)
Immediately prior to his current appointment, Mr. McKennirey was Director General of Staff Relations and Compensation in Canada's Department of National Affairs. Mc. McKennirey has also held a number of other senior positions in the Canadian public service.
Mr. McKennirey holds a bachelors from Brock University and a masters from the University of Ottawa, and he's also pursued graduate studies at the University of Lourain in Belgium and the University of Ontario.
Please join me in welcoming John McKennirey.
MR. McKENNIREY: Thank you, Irasema.
This is a marvelous room for this kind of meeting today because it really facilitates participation by the audience as everybody is close to one another and we can create the kind of day that the organizers hoped to achieve.
This is a day in which all of you will be able to participate almost as much as the panelists taking part in this. And we will blur the distinction between the panelists and the audience. And I know from looking at the list of participants and the audience, that this is a wise idea.
Let me say first of all a word of encouragement for everybody to feel free to speak in French and Spanish because we have excellent simultaneous translation and this may make it a lot easier for you to participate.
We all probably, and I must give this message to myself, could speak a little more slowly to give the translators the opportunity to keep up with us. This also gives me the opportunity not to get two or more sentences ahead of my brain.
Here's our format for this morning and this afternoon. We'll be asking three experts, one from each country, to give us a 10 or 12 or 15 minute brief set of introductory overview remarks devoted to our morning and afternoon topics. We'll then take a coffee break this morning, which will be about 35 minutes from now or so, for 10 or 15 minutes.
We'll come back and ask each one of our roundtable participants to give us a couple of minutes of observations on what they've heard.
This is a surprise conference. Nobody's seen the papers and nobody knows what they're going to hear. And a lot of people said when they were coming in, they didn't know what people were going to discuss.
So it should be interesting to hear and the panelists have the challenge to develop some observations when we come back after coffee.
And then we'll throw the floor open to all of you to pose questions or make comments addressed to individuals on the panel and we'll have a discussion. Please use the microphones for translation purposes and amplification purposes.
And that will be our format.
The moderator is supposed to make a few introductory remarks I see in my notes, and I don't have any introductory remarks. And I think we've had a lot of introductions. But if you don't mind, I would like to read a couple of sentences from a marvelous article I was reading by Duncan Campbell of the ILO, the International Institute for Labor Studies, on the interdependence of the labor markets, just because I thought it made such a good introduction to today's discussion to leave out my remarks with Mr. Campbell's.
He says this. That trade structures an international division of labor through the product market but the cross-border dependencies of labor markets are being even more deeply forged through the expansion of international production. With international production -- that is, production that involves various subsidiaries or parts of a single firm -- with international production, labor markets are linked through bonds of ownership or contact in a tighter more systematic way than through the impersonal workings of the market. And at the center of this expansion are the activities of multinational corporations whose number has increased from 7,000 in 1970 to over 37,000 today, with over 150,000 affiliates worldwide.
Although MNC's, multinational corporations, employ directly just over 70 million persons worldwide, which is a tiny fraction of the global labor force but an enormous number, an estimated one-third of the world's private sector output is under the governance of MNC's.
In 1992 the global value of sales of MNC's and their affiliates surpassed $500 billion, a figure 25 percent greater than the value of total world exports.
So we're dealing with, as we all know, an enormously important phenomenon, this phenomenon of international production and the intensification is deepening of the interdependencies of global markets between countries that it brings about. And it's implications for labor relations are hopefully the topic of today.
Well, without further introduction, I'm going to introduce our experts in the order in which they appear in their agenda.
Professor Samuel Estreicher -- by the way, I'm not going to give long introductions. We've got to get into the meat of this sooner or later today. You have their bios in your packages.
Professor Samuel Estreicher from New York University School of Law. Also, I think he's practicing in the area of employment law.
Professor Anthony Giles from the Department of Industrial Relations at Lavale University in Quebec will speak from the Canadian point of view.
And Yvonne Stinson, who is to my immediate right, is a consultant and now jack-of-all-trades, and making millions of dollars in the private sector, having formerly been in the public sector, has a lot of experience in international trade and now a leading consultant in Mexico City.
Those are our three experts and I'm looking forward to hearing from them.
Professor Estreicher, if you will.
MR. ESTREICHER: Thank you, John.
When I first got the invitation, I thought it was a mistake. First, seeing the word expert was a bit discomfiting, on all three countries. I had enough trouble knowing how to get home at night.
Secondly, reading the agenda and not being able to figure out what to say this morning was the second problem.
The third problem, the more serious problem. I knew this was a mistake; offering an academic 10 minutes. For an academic, 10 minutes is barely enough time to prepare one's throat.
As I see it, our mission this morning is to sort of lay the foundation for the later discussions, sort of to set out the legal, cultural, economic and other social factors that underlay the labor-management relations system and then we will then turn to how the multinational corporations and the unions and all are faring in that environment.
We're laying the groundwork, the foundation. The later sessions will build the house.
What I'd like to do is sort of set out seven dimensions or seven factors that we might want to consider. And there may be others that might be helpful. And then I'll say a few words about each factor as it pertains primarily to the United States.
The first factor is the level of formalization or the level of transparency of the system. And what I mean by formalization and transparency is to what extent is the labor relations law as it is on the books, the statute books and code books or the caselaw, to what extent does the formal law actually describe practices on the ground. Because we know that countries and unions are not theorists. They're practical people. And they're going to care about how the law actually impacts behavior.
Now, I would think that the U.S. and Canada are at the high end of that transparency dimension in the sense that the law you see on the books pretty much reflects the law that's going to impact the parties involved. And unless you're in Mexico -- I have a sense that companies in Mexico will need to be much more into consulting the code or even their expert lawyers. They will have to get a better feel for the institutions on the ground and the power, for example, of labor unions, which will not be reflected in the code books.
That's one. You may disagree with what I've just said, but I think that's an important dimension.
The second dimension is public policy support for labor organization and collective bargaining. And we want to think about how these three countries array themselves in that dimension. I know less about Mexico, but my sense is that Canada is considerably more supportive of labor organizations and collective bargaining than is the United States.
Why? Because they have laws that make it easier for unions to obtain bargaining authority without elections. Two, they have laws, as in Quebec, which make it very hard for companies to maintain operations during strikes. That has implications for bargaining power, bargaining leverage. Three, they have rules which impose arbitration in first-time bargaining situations where the parties themselves are unable to reach agreement. And in the United States, we have none of those features. I'll talk a little bit about some of the features we do have.
But we want to look at public policy support for labor organizations and collective bargaining.
A third variable or dimension is to look at the extent to which unions are faring well or badly in private companies. I think it's useful to exclude from the discussion unions in government offices because government tends to be relatively immune from market forces and the kinds of cross-border market forces that are the subject of today's conference.
In the United States at the present time, trade unions represent no more than 10 percent of workers working in private firms; 10 percent private union density. And, by the way, in the United States, the numbers to not vary. Members and non-members covered by collective bargaining is about the same percentage.
In Canada, I believe, and there has been debate about this, but the range is between 25 and 30 percent of private sector workers. It's a declining number in Canada but the numbers are declining much slower than in the United States.
Now, I don't know the union density figure for Mexico but I hope to be enlightened on that by this Ms. Stinson.
That's the third dimension I'm offering you to as the extent to which unions are faring well or badly in private firms.
A fourth dimension is the extent to which the government dictates or regulates the terms of the labor contract or the employment contract. In Europe, Continental Europe, we have a tradition of governments spelling out a great many of the terms of the employment contract, by which I mean the pay, benefits -- you know, a pension benefit and what level; severance pay if there's a termination of the employment relationship; and rules governing dismissal, both individual and collective. In Continental Europe there is a great deal of regulation of the content of those terms. It's not subject to labor by collective bargaining or by individual contracts.
I believe that here in North America, in general, Canada and the U.S. follow a tradition of voluntarism, where by and large we allow these terms to be decided by contract, with some exceptions. In the United States, we do have the Fair Labor Standards Act which sets our minimum wages and also requires the payment of an overtime plan for work over 40 hours a week. We have some minimum occupational safety and health standards for the workplace, and we have antidiscrimination laws by the dozens.
We do not have a wrongful dismissal law in the United States. There's one state that does, and that's Montana. Montana is the only state in the Union that has a wrongful dismissal law. And we do not any laws that require the payment of severance pay, and we do not have any laws that require the provision of pensions. Pensions are a matter of contract.
Once you do have a pension and you are seeking an exemption or a deduction for your expenditures for contributions to the pension plan, then you have to follow certain federal standards. But there's no federal law obligation or state law obligation that you have to provide pensions.
I know less about Canada, but I suspect Canada is closer to the voluntarism than maybe Mexico and certainly than Continental Europe.
So that's the fourth dimension; state regulation of the content of the employment contract.
A fifth dimension, scope of bargaining and where does bargaining occur. Now, those familiar with Continental Europe would assume that bargaining occurred at the multi-employer level. If you want to establish a business say in the textile industry or in the steel industry or in the automobile industry, you might join a multi-employer association just so you could have a say in the terms negotiated on your behalf. And if you stood outside of the multi-employer association, you would find Canada and -- sorry -- in Germany and France that there's an administrative mechanism imposing the collective agreement on you.
So, there are a lot of pressures in Continental Europe to join the multi-employer association and bargain on the multi-employer level.
I know less about Mexico but I believe that the bargaining does occur on a multi-employer industry wide level in Mexico. We certainly will be enlightened on that point.
In Canada, I believe there is more multi-employer bargaining going on than in the United States, and nothing like the Canadian model. I'm sorry. Nothing like the Continental model, Continental European model.
In the United States there's been a decline in the multi-employer bargaining but we see it only in several industries. We see it still in construction. We see multi-employer bargaining in trucking to some extent. We see multi-employer bargaining in the maritime and in longshoring, and we see it, interestingly enough, in the film and theater industries and sports industries, sort of the high end of the labor market. But it is a declining phenomenon.
I think if you looked at the American labor relations scene in 1945, you have seen multi-employer bargaining as a larger part of the scene than it is today. It's declining everywhere.
We do not have in the United States that they do in Continental Europe to provide for the extension of multi-employer agreements to the non-union sector. Thus, if you are setting up a company in the United States, all of the incentives are to stay away from multi-employer associations if you can, and operate either non-union or operate on a level of bargaining that is very decentralized. In otherwise, site by site, and require the unions to organize unions site by site.
I should say also in this connection that under U. S. labor law, pre-hire contracts are unlawful outside of the construction industry, so that actually the employers and unions cannot enter into agreements before the workforce is hired. That is the law in the United States outside of construction. Which again is another factor that I think depresses the incidence of multi-employer bargaining.
And that's the fifth dimension, the scope of the bargaining.
A sixth dimension is the nature of the regulation of the bargaining process. If you do have a union and the union has bargaining authority, what are the rules governing the manipulation of the process.
In the United States, again it's largely a system of voluntarism. We do not regulate the substance of collective bargaining with some very limited exceptions. We do not tell the parties that they have to reach an agreement, that they have to make concessions, what the terms of the contract should be. It's voluntarism.
We do not have a tradition in the United States of resolving disputes in the private sector by interest arbitration. There are just arbitrations where the parties or a state designates a third party to decide the content of the collective agreement. In the event of an impasse, we do not have substitute jurisdiction over states. Indeed, if one parties wants interest arbitration, it is not a mandatory subject of bargaining. It may not be insisted upon by that party over the reluctance of the other party's discussions. So, interest arbitration is a very insignificant feature of the United States.
I believe in Canada, in most of the provinces -- I'll be corrected on this by John and by our friend from Laval University, but I believe in most of the provinces they have the provision of interest arbitration for bargaining failures in first-time relationships. We do not have that. Of course, that is something maybe we would like to see, but we don't have it.
What American labor law does do is regulate the process of collective bargaining. It doesn't regulate the substance of collective bargaining. It regulates the process.
American labor law decides whether a subject is a mandatory subject. As I just illustrated before with my example of interest arbitration, certain subjects are not mandatory. And that means that the parties don't have a duty to bargain over the subjects. And moreover, the party that wants some change in that subject can't insist, can't make it deal breaker. There is no duty to bargain let's say over interest arbitration and it cannot be a deal breaker. If you make it a deal breaker, that is a failure to bargain in good faith.
Say the union wants a seat on the corporate board. As I understand it, that's not a mandatory subject of bargaining. The union can't make it a deal breaker. We do see union members on corporate boards but that usually is the result of concession bargaining leading toward more concession in the context of it. Concessionary bargaining of course you're willing to listen to what the union wants in exchange, even if they're permissive subjects.
So we regulate which subjects are mandatory in the sense in which there's a duty to bargain over them, and two, they can serve as deal breakers. That is, you can insist upon them in an impasse.
The law also regulate when you have an impasse. Now, we do this in two different ways in the United States. Under the Railway Labor Act, which is the statute that governs the airline and railroad industries, a federal agency called the National Mediation Board ultimately decides whether the parties are at impasse. It's only when the NMB decides the parties are at impasse. It's only at that point that the parties can resort to self help, whether it's a strike by the union or a lockout by the employer, or implementation by the employer.
In the other industries that are covered by the National Labor Relations Act, the impasse determination is made by the parties themselves and they basically take a gamble that they're going to get it right. And so the parties will engage in bargaining and at some point the employer or the union will say there's no further need to talk. We're at impasse. They then resort to self help, let's say. And then at some later point there might be a legal dispute about that, and the Labor Board will tell you whether in fact they qualify as impasse.
By and large today -- I'm running out of time. Two minutes.
By and large today, it is the employer who's seeking to declare impasse and not the unions. And it's the employer that takes this risk. Under American labor law, unions can strike even before impasse outside the railroad and airline industries.
An employer can maintain operations. A strike force is lawful. And employers can maintain operations during strikes. We do not have laws like the Quebec laws which bar the hiring of replacements, whether permanent or temporary, or laws like the Quebec laws that use management help to maintain operations during strikes.
There are very few limits on what employers can do to maintain operations. I believe they cannot bribe strikebreakers. They can't offer strikebreakers more than they offer the union. And they also cannot engage in extraordinary rewards, like offering strikebreakers seniority. But short of those kinds of things, employers can attempt to maintain operations by the hiring of permanent or temporary help or management help.
Now, I should say something about the work of the permanent replacement. The permanent replacement could be tantamount to discharge but need not be because you still are an employee and as jobs open up you have the preferential right to those jobs once you declare you're willing to come back to work. They can. It can be the same.
The final dimension is firing costs. And you might say why am I have firing costs here? Well, the firing now would be to the matrimonial laws. If you make it hard to dissolve a marriage you'll have fewer people going into a marriage. And the Continental Europeans do not understand this point. They think they can make it hard to divorce and at the same time -- (off mike).
The Americans try to make it very easy. I'm sorry. Most of the states try to make it very easy to dissolve the relationship in the hope that relationships will form.
We have serial monogamy in the United States; serial marriage; and we have easier divorce. And that's our matrimonial law. But it's also our labor law.
And we are not (inaudible) in the United States, but there's also very few restrictions on firings. If you're under a union contract with a just cause provision and if you are a non-union contract, there are no federal or state laws that require that you justify your dismissal to some outside agency. Again, with the exception of Montana. (Off mike.)
You do have to pay vested benefits if there's a pension plan. Under the federal Plant Closing Law, you have to give notice of a plant closing or you can buy out the employees by paying them the equivalent of the notice period, and you have a very healthy array of discrimination laws. So there are lawsuits over the discrimination laws but there are no laws for dismissal generally either individually or collectively.
I'm sure there are other dimensions but those are the ones I wanted to bring up this morning.
MR. McKENNIREY: Thanks very much, Professor Estreicher.
Professor Anthony Giles from Laval University.
MR. GILES: Thank you, John, and good morning gentlemen.
What I'm going to try to do in the next 10 minutes or so is to point out quickly and crudely a few of the key similarities and differences among the three countries in their labor regimes. Then I'm going to go on to ask whether these differences are all important for multinationals. And if so, how they cope with them.
And then I'm going to finish up by commenting again, extremely briefly, on the implications of multinational labor relations strategies for unions and the connections between the North American Agreement on Labor Cooperation.
We don't have to go over the detailed differences that we've just heard about. It think it's important to begin though by mentioning that in all three countries it's about the same basic set of formal labor principles: freedom of association, right to collective bargaining, right to strike, and so on.
And although there are a host of differences in the detailed way that the state regulates employment or, as we heard, the different division of power between federal and provincial and state jurisdictions, different way that (inaudible) are regulated or the way the union bargain is framed in the countries, instead of looking at these differences through the prism of formal legal principles, what I thought I'd do is look at the three systems from the point of view of a company that's trying to decide where to set up a plant in each of the three countries, or the kind of company that's already in operation in the three countries and is trying to figure out how to cope with these differences.
So what, from that point of view, are the key differences.
Well, the first one is that it's obviously a lot harder to unionize in the United States than in Mexico or in Canada, largely due, as we've just heard, to legal differences in the three systems for unionizing.
Second, where the workforce is already unionized, the U.S. and Canada begin to look a lot more similar and Mexico becomes (inaudible), since most unions there enjoy somewhat less independence from the state and from employers than do unions in Canada and the U.S.
Third, in all three countries the predominant level of negotiation is probably the enterprise or establishment level, although someone locating in Mexico will have a slightly greater chance of encountering multi-employer bargaining and industry bargaining.
Fourth, it's my impression anyway that collective agreements in Mexico are on average in comparison with American collective agreements, less detailed and regulate the workplace in less depth than in the other two countries. Conversely, Mexican collective agreements are more likely to be shaped by the laws than they are in Canada and the United States.
A fifth difference that a company will find is that the regulation of strikes is most advantageous for employers in the United States in the sense that they have the most (inaudible) for strikebreakers and so on.
And the last difference of possible interest to employers is that the political mode of the union is different in the three countries. In the U.S., the political practices of unions is still focused chiefly on lobbying. In Mexico, the largest union confederation is still fairly closely tied to the traditionally known political party. Canadian unions are sort of caught between these two models; frequently allied to a political party ultimately or not, but remaining fiercely independent when their party happens to come to power.
Now, my second question is this. Do these differences matter for multinational corporations? Do they care how unions are organized and how collective bargaining is regulated, strikes conducted and what kinds of political ties their unions might have?
I've argued that there are in fact two ways that these differences come into play. First, in some circumstances international differences in labor relations can have an impact on where multinationals choose to locate. Second, once a firm has operations up and running in two or three of the NAFTA countries, the differences between the countries may be difficult to pursue uniform labor relations across countries. Though, I'm going to also suggest that this might not necessarily be a fault from the point of view of the multinational corporation.
Let's look first at locations. One of the reasons that firms might wish to operate in one or both of the other countries is to simply put their grasp in that country's market. In an era of continental free trade, some products and services -- the hotel rooms we stayed in last night, for example, need to be produced at the point of sale. In other cases, it might be simply political expedient to locate in another country to gain access to contracts.
So, to penetrate a national market will also be the dynamic driving the expansion of multinationals. It's sometimes necessary to locate a facility in one or both of the other countries, either through a wholly-owned subsidiary, a joint venture, and so on. And in cases such as these, the industrial relations businesses that we will be talking about this morning simply don't come into play. They are instead -- and I'll go on to say in a few minutes -- the strength that has to be managed after the fact of the (off mike).
The second logic for operating in another country is to take advantage of the differences. And these differences again might have nothing to do with labor relations. It might be a question of transportation costs, natural resources, proximity to sources of supply and so on. But in some cases, it might very well be to take advantage of differences in labor relations and labor markets more generally.
The classic case, of course, is the Canadian company that moves an assembly operation to the United States or an American company that moves an assembly operation to Mexico. Another example might be the company that locates a research and development unit in a city rich in universities and high tech groups. For another kind of operation there are other kinds of human resources, as we hear in Canada, the number of call centers. Continental call centers have been located in various (inaudible) cities in Canada, obviously drawn to a particular (inaudible).
So, from the point of view of a multinational, labor relations differences between the three countries might sometimes just be a fact of life that has to be accepted or they might be crucial, good strategy. Even when the differences are incidental in labor relations, multinationals still have to cope obviously with the increased level of complexity and diversity that comes from international operations.
So let's turn to this question and ask how they do it.
Generally speaking, the research on multinationals shows that compared with other corporate functions -- accounting, finance, research and development, multinationals tend to decentralize the day-to-day management of their labor relations. They tend to use locals rather than expatriates to manage labor relations at the establishment level. They tend to accept and adapt to local laws and customs. They also tend to pay a wage premium compared to local competitors in the host country. And they try whenever possible to avoid unionization or, when that's impossible, strike a deal with the most compliant (inaudible).
Now, that's sort of general findings from the literature but it's also important to notice that there's a fair amount of variation in the way multinational labor relations strategies function.
For example, the country of origin of a firm has an affect on the way it operates in other countries. Research shows pretty consistently that American multinationals, for example, behave very differently than say Japanese or European multinationals. In particular, American multinationals tend to shape their foreign affiliates, or try to shape their foreign affiliates, in ways that conform to the U.S. model, whereas European companies are far more apt to take on the local coloration wherever they are operating.
A second reason why the strategies differ is the nature of the local regime they're operating in. For example, where there's a highly developed and broadly respected set of regulations in a country, multinationals will conform to them. But in countries where regulation is lighter or is not strictly enforced, they tend to use this marginal (inaudible) to import their own ways of doing things. So usually the same multinational's degree of uniformity in its labor relations policy and the actual content of its labor relations policy may very well vary from country to country.
A third source of variation in the way multinationals manage the variations across the three countries flows from the very reason why they establish relations abroad and the way they tie those operations together.
To begin with, a multinational pursues what's known as a stand-alone policy. It operates a number of more or less free-standing units in different countries, each one serving the local market. It's typically much more ready to adapt to local variation in labor relations. Control from the center in these cases is usually restricted to financial control.
A case in point here is the Canadian printing multinational (inaudible), which has extensive operations throughout Latin America, the States and Canada, which gives a (inaudible) amount of time to each of its local businesses because each one is serving a local market and (inaudible) in that environment.
On the other hand, the firm that operates in a more integrated strategy; that is, a production system that's linked horizontally across national borders as you find in the automobile industry, for example, it's much more likely to chafe the local peculiarities. And this obviously despite the paradox that the reason that they located different functional units in different countries is to take advantage of those very differences.
An example. Here's a firm that opens a subsidiary for the express purpose of reducing costs. A firm that runs an assembly operation or a network of subcontractors in a low wage area, like Canada's maritime provinces, for example. Sure. They've gone there to take advantage of say low labor costs or some other factor, but the very fact of the establishment in question is the link in a longer production chain pushes them to search for methods of forming and standardizing across borders.
So we have to be careful not to generalize too, too much, although we cited the fact that individual company industrial relations strategies are shaped by county of origin, the nature of the host regime where they operate and by their production standards.
Now, despite these variations it still remains true that labor relations in multinationals tends to be quite decentralized. They don't on average run roughshod over local (inaudible). But I would argue that this isn't necessarily because of any profound or abiding respect for local culture or norms, nor that it's the only option available. In fact, I'm going to conclude this party by suggesting that this strategy of decentralization actually works to their advantage in the field of labor relations or at the very least it's not a disadvantage.
To begin with, where standardization or policy uniformity isn't initiated to begin with in the stand-alone plants, for example, there is really no compelling need for standardized regulations and policies unless the particular corporate culture demands it or psychological need for tidiness overcomes common sense.
Second, there's a number of researchers in the human resources field have discovered and pointed diversity in the way local units are managed can be quite creative and beneficial in the sense that they can lead to local innovations that can spread be spread across the corporation and the creation of an internal learning process.
Third, a formally decentralized labor relations approach helps to avoid the possibility of a concerted challenge from employees and unions whose bargaining in a decentralized system is restricted to the establishment level and thus well away from strategic sites of power.
And lastly, a formally decentralized approach to labor-management relations reinforces divisions between workers and unions in the different countries in which the multinational operates and makes them more susceptible to the creation of a dynamic of competition within the corporation. A dynamic of competition, for example, for investment in new plant and equipment which can then lure them into a fairly vicious downward spiral of concessions.
So all of this suggests that the question of uniformity versus respect for local differences and uniquenesses might be somewhat misleading in the sense that the absence of uniformity doesn't necessarily mean an absence of coordination from the center, either direct or indirect coordination.
I'll give you one quick example of strategies to reorganization work. I've been studying the operations of a Swedish multinational -- ABB, as it's known. One of the things that we've found in this research is that the central headquarters of the corporation never tells the local plants how to manage their labor relations. There is not even someone in charge of labor relations at the international level. And so bargaining is entirely local, plant by plant. But ABB is pursuing a policy of technological standardization and rationalization, at least in the samples that we've been studying. And what is happening and the dynamic that is creating, is that that's forcing labor relations adjustments in all the different plants according to a central program -- or a coordinated approach, excuse me.
Production and job classifications loosely report (inaudible), reductions in job security and so on. It's a coordinated policy. Because it's not a labor relations policy, because labor relations continues to be handled on a local level, it appears as if a lot of autonomy has been retained when in actual fact autonomy is shrinking rather markedly.
Do I have time to speak two words about unions or --
MR. McKENNIREY: Tony promised that if I gave him a few more minutes in the morning -- he's going to be on a panel in the afternoon -- he'd be a little shorter in the afternoon. So I'll hold you to that, Tony.
MR. GILES: Okay.
So where does this leave unions? The easy answer and one that the union representatives on this panel this morning will have heard umpteen times before is international coordination. You need transnational organization and negotiation is really the only viable response to the multinational organization. Anything less is going to leave them open to be played off against each other, or worse, they can increasingly marginalize their plant.
I'm not saying it's the easy answer because I'm not -- but the very real obstacle is the lack of interest by employers and governments, the variance of language and culture, and not least -- and I think the fundamental problem is to go forge a genuine common set of interests around the issue across borders.
A couple of words about the mechanism that brought us here together today, the North American Agreement on Labor Cooperation. The people in this audience probably don't need to be told that the agreement doesn't provide any means for unions to organize, bargain or strike on a comparable basis. It wasn't its purpose.
On the other hand, it has stimulated a lot of contests between unions and other social groups in the three countries. And I don't think it's an accident that most of the complaints that have been launched under its provisions concern multinational companies, which is our topic today. So in a sense, it's planted seeds which just might produce the fruit of more collaboration.
I have one sort of more pessimistic reading of the situation. And that is that the entire process is complaint based, which tends to focus on extreme cases rather than on the norm.
By way of conclusion, I think obviously the unions have a long way to go before they can deal effectively with multinationals. Not necessarily (inaudible). But at a higher level.
I'd like to finish up just by quoting one of the people who's sitting in the audience this morning, Professor Harry Arthur, who near the end of an article on a related subject wrote the following passage.
He writes: "Attempts to regulate labor conditions and practices on a transnational basis, however desirable, are problematic both conceptually and in practical terms. Transnational labor standards will obviously be attacked as intruding upon national sovereignty, as a form of disguised protectionism designed to preserve jobs in the advanced countries. Even in the attempt to force labor standards down to a lower transnational norm in those countries in which we've seen it, in practical terms, given the difficulty of setting up and enforcing labor standards in the domestic context, it's hard to imagine regulation could be transnational.
"Nevertheless", -- and this I think is the spirit of this morning's session, -- "we can probably look forward to spirited debated over whether and how to establish transnational labor standards and a good deal of experimentation with actual law and with international market institutions."
That could be one of the themes of our later discussion.
MR. McKENNIREY: Thank you very much for taking us in that direction. And I think it complements very well Professor Estreicher's legal review of the United States, Canada and Mexico.
Now we're turn to Yvonne Stinson.
MS. STINSON: (translated from Spanish) Good Morning. I'll be speaking in Spanish. It is a pleasure for me to be with you today. [inaudible] We will be talking about relations between unions and companies. I will begin with the Mexican companies, and end with the multinational companies.
In the case of Mexico, with the change in its economic course that occurred early in the 1980s, relationships between unions and companies began to experience a major change. Before this change in course, as in fact one of my fellow panelists has said, there was a single powerful union ... [inaudible] ... the official union, which is allied to the party that used to dominate in this country and that now, as a result, lost ... [inaudible] ... control of the country, lost with the new political changes resulting from changes in Mexico's policies have also changed the power of these ... [inaudible]. Economic changes have had an impact on labor relations in Mexico and, in fact, a union like CTM which began in 1951 (?) and which occupied the leadership of the union, where more than 50 percent of Mexican workers were affiliated with this union, and all the bargaining was done, as one of the panelists has said, was similar to Europe with the collective bargaining contracts, but this has changed, and this probably lasted up until the 1980s, the previous decade. There has been a slight change in that a leader who lasted close to sixty years leading this union about the past ten years. Shortly before that, Mexico's presidents, who serve a six-year term, have always tried to wield their powers ...
In 1988, the forces began to change and a pact was signed with the private sector, the unions, and the government. This pact ended the ... [inaudible] ... but under this pact we are determining, through the study by a government committee, what is the wage level that could be increased and making some economic study that has to do with the country's economic policy with respect to wage increases. That is why this change of forces between the unions and the companies, previously and now. It was the president prior to the present one who succeeded in changing these labor relations with the private sector ... [inaudible] ... any other. This had to do with the desire that people in my country be able to find out ... [inaudible] ... and the desire to make production processes efficient and give both Mexican and multinational companies a degree of security. Because as you know--and I won't discuss this at further length--our labor laws, which are very strict, require an enormous number of things that are not required of the other NAFTA countries, that makes it ... [inaudible] ... and makes it anti-Mexican ... [inaudible]. That even prevents our domestic companies from expanding, or trying to participate internationally. And so, if we make a list of this policy ... [inaudible] ... to try to make the domestic companies in foreign ... [inaudible] ... competition ... [inaudible] ... What do I mean by this change that is occurring? I am referring to the fact everything used to be negotiated at the level of ... [inaudible] ... but now, increasingly in recent years, the workers ... [inaudible] ... by themselves before the Conciliation and Arbitration Board, with the individual contracts they have with the companies. In other words, we are still in the process, and so many unions are trying to find a way to redefine themselves.
Now, there are a lot of unions in Mexico, and most of them are termed official. There are few independent and strong unions and a couple of years ago people said that there would be a redefinition of the unions in Mexico, with more independence to ... [inaudible] ... but because there are many people involved, this has not yet been achieved and we are still in the process. Mexico's challenge is precisely to get directly involved in globalization and economic modernization on a par with its trading partners, and to be efficient enough to be able to compete on the markets, both the domestic and export markets. The 1996 crisis also dealt a very heavy blow to all the plans for redefining the labor relationship between the unions and the companies, since the fact that many workers were laid off ... [inaudible] ... an economic crisis. This ... [inaudible] ... a lot because it creates a sense of insecurity in workers who are associated with these organizations, and these organizations have certain wage and salary requirements and certain contributions, but the mere fact that a person thinks there is a danger of losing his or her job has even made them curb some of their demands. Speaking of the transnational companies in Mexico and their labor relations, some of them, especially in the automotive industry -- Chrysler, Ford, Volkswagen -- who had problems a few years ago, especially with this federation ... [inaudible] ... The relations between the unions and the multinationals are much better now and demonstrate that there are very few problems that really are at the union level, at least as far as I could see when I visited a few plants, Volkswagen ... [inaudible] ... Chrysler said that this relationship of forces has been changing as time goes on and the Mexican workers, with the presence of these transnationals and the association of the unions at these transnationals, receive very good options if we compare them with the companies of Mexico and the unions that the Mexican companies have. Because it is important, and here I differ somewhat with my fellow panelists, we cannot try to standardize this type of situations throughout the NAFTA of which we are members. Experience is what has made us join associations, we are different, I speak differently, I am different, I see things differently. It is a cultural thing, it is a different way of looking at the world. We can become closer to each other, we can improve, but the difference persists. I believe that this difference is welcome; because of it we can exchange things, goods, experiences. But to begin to make laws uniform, to start comparing the United States, Mexico, Canada, to see who is better in this, seems to me not to be the right approach. One would have to compare the version [sic] between the unions of one country ... [inaudible] ... dependent unions, official unions, or unions at multinational or domestic companies, since it would be hard to compare apples with pears or oranges. It is worthwhile in terms of the exchange of goods because ... [inaudible] ... but in this type of thing that involves a culture and a way of doing things, I believe that you would have to do it within a given country, exchanging ideas in order to improve it.
MR. McKENNIREY: Thank you, Yvonne.
You can understand why Yvonne writes regularly for the newspapers in Mexico City. We have a good appraisal of the fact that all of these concerns take place within a social, political and economic context rather than simply multinational business dealings.
But with that, we'll take a break and come back in about 15 minutes.
(Whereupon, a recess was taken.)
MR. McKENNIREY: Beloved members of the audience, I think we'd better get into our discussions so that we don't eat up any more of our time.
It was a really marvelous coffee break. I certainly hated to bring it to an end myself.
Now, what we'll do at this point is simply go across our panel of roundtable participants and ask each of them to give us their observations on what they've heard this morning or any other relevant observations they want to make for about five minutes. And at that point then we'll open it up to the floor and ask you to use the microphones to make comments and address questions or comments to the whole panel or anybody on the panel.
For the sake of the people up at this desk, these gray mikes are for the recording of the session and we're told not to touch them. We'd better not fiddle around with these.
Okay. Our first commentator will be David Grant, who's a partner in the Baker and Hostetler law firm, a management side law firm, if I could say that here in Washington, D. C. and throughout the United States.
MR. GRANT: Thanks.
First, I want to extend greetings from Betty Murphy who was slated to be on the panel this morning. Betty was unavoidably unable to be here. She has done a paper which I will make sure is left with the organizers today, but asked me to give you her greetings and profound regrets that she couldn't be here.
I think in the couple of minutes I have this morning, I want to take Professor Estreicher's very thoughtful framework, his seven dimensions and factors, and just kind of comment on those briefly.
I've kind of been doing this for 20 years as kind of an in-the-trench labor lawyer, and I think Professor Estreicher's comments give us a framework to kind of proceed off on a discussion of the issue of multinationals.
With respect to the level of formalization, the transparency of the system, I find that particularly for multinationals doing business in the United States there is a very high degree of formalization. And Professor Estreicher noted some of the particular laws and statutes, such as the Fair Labor Standards Act, the Occupational Safety and Health Act, Title VII of the Civil Rights Act of 1964 that apply. But particularly for multinationals, for example, who wind up doing business with the government, there's even a whole overlay of other obligations and laws, such as Executive Order 11246, which requires affirmative action and other laws, such as the Service Contract Act, which regulate not just minimum wages but regulate prevailing wages in the workplace on government contracts.
And so there is a very high degree of formality which inevitably leads to a formalization of the process which, for example, will lead to the use of lawyers all over the place, even in things like labor arbitrations and all their alternative dispute resolution and in other areas where otherwise the parties themselves might be left to kind of deal with each other.
I think there has been a trend in the last five or 10 years towards trying to minimize some of that formalization through the use of things like arbitration procedures in the non-union context. But all that's done has again, create even a greater degree of complexity by what relationships may or may not exist between -- or more precisely, what level of deference should be given to those decisions when they're dealing about statutory claims, such as claims under the Civil Rights Act, et cetera, that plaintiffs and others would have the right to go to court on.
So, I think Professor Estreicher was exactly right on that point.
With respect to public policy support, I think there has been a trend certainly in the last few years through the National Labor Relations Board which administers and enforces the basic collective bargaining process in the United States, to try and speed up some of the representation procedures which enable unions to organize. There are more timetables and limits and more restrictions being put on employers who may be trying to resist unionization. And so I think there is an increasing public policy support that does tend to shift somewhat depending on what party may be in power, but I think we have found in the last few years that it is becoming a little bit more difficult for employers to do some of the things that they might otherwise do to resist unionization.
Professor Estreicher talked about the fact that the government really doesn't regulate the terms of a labor contract but regulates the process. And I think we have found practically when multinationals come in, they sometimes are interested in -- because they want to take advantage of tax or other economic advantages, they're thinking about setting up a number of different and other subsidiaries.
And, of course, one of the things to bear in mind is although the government doesn't regulate terms of the labor contract, the Supreme Court has so stated to the extent that employers try and utilize corporate structures to avoid labor contractual obligations, the labor laws, such doctrines as the Alter Ego doctrine, the Single Employer doctrine and the like, will look askance at abilities of employers to avoid labor law obligations if there is common ownership, common control of labor relations, common management and interrelation of operations, among other things.
And in certain situations, labor contracts will very specifically be applicable to affiliated or separate subsidiary companies.
The scope of bargaining in the United States is one of those issues that practically I think most issues wind up being discussed at the bargaining table. But as I was listening to Professor Estreicher talk about these issues, things like subcontracting issues and others tend to create and blur distinction between what is a mandatory or necessary subject of bargaining and what is a permissive or the kind of subject that, as we talked about, you can't insist to impasse on. And those issues are not always terribly clear.
But again, it's through issues like that and through ways like that that there does tend to be at least indirect regulation of the substance of labor agreements. Because inevitably the regulation of process does lead to the regulation of substance. And for multinationals coming into the United States, that is a lesson that they have to learn.
There was a comment about firing costs as a dimension. And I think the one thing that I've noticed is that although the United States certainly is a job creation machine, there is no question that the panoply of laws that employers have to comply with have created significant expenditures, both in terms of internal bureaucracies to make sure that things like terminations of employment are done correct. But I think practically I can tell you from clients, multinationals or otherwise who deal with United States laws, they would say that there are clearly attendant economic costs to terminations of employment.
Professor Giles commented on the decentralization of labor relations in the way multinationals deal with the issues, and I have found that to be the case. I think that companies either going into the United States who are based elsewhere or United States companies doing business in Canada and elsewhere have a healthy appreciation for the fact that laws, custom and practice, et cetera, have to be dealt with on a local basis. And I think that's led in part to the kind of decentralization to which Professor Giles referred.
There certainly are exceptions to that, but I think that has been the trend. And I don't really see that as something that's going to change.
One trend that we were talking a little bit about that I do see coming down the pike despite some of the difficulties that may exist. Because of economic and trade dependency, I do think that multinationals are going inevitably to deal and have to deal with transnational union cooperation and alliances. That may create some issues concerning labor solidarity, what that means, what that may mean in terms of self-help in which unions engage across borders to assist each other. And I think those are some of the issues as we head into the next millennium that multinationals are going to have to deal with.
So, John, I think I'll stop with that.
MR. McKENNIREY: Thank you very much, David, for your excellent point by point commentary and also for self-regulation.
Let me turn to someone in the United States, from the labor side, Steve Beckman, who's an international economist with the UAW.
MR. BECKMAN: Thank you, John.
Well, you've now heard about the problems of companies operating in the over-regulated U.S. labor market. Certainly, it was a surprise to me and not quite the description of the U.S. system that I would have made myself.
And like the others on this panel, not having known what was going to be presented, it's been a challenge trying to figure out which of the 15 or 20 sort of listed questions in the agenda to even think about commenting on.
But one issue that does arise of necessity is the impact of the increased integration in the three markets and the way that affects production organization and the way workers interact with management.
In terms of the U.S. experience, I'd simply remind people that since 1977 the American labor movement has been trying to reform U.S. labor law to make it neutral and we've been unsuccessful in achieving that objective.
So in terms of the environment in which American unions operate, the imbalance is one that we're constantly reminded of in organizing and bargaining. Even more so in organizing. And the ability to perform the most basic functions of representing workers, organizing workers to represent them, is a very difficult struggle in the United States, a situation that's quite different from what prevails in Canada and Mexico.
I think Tony pointed out a sort of useful way of distinguishing the situations that are going on in NAFTA. And the one that I think is most relevant to this seminar is where companies are in fact integrating production. Having separate production sites or local production is a very old phenomenon. It does have a very decentralized structure. And that's not really where the action is right now and it's not what the opponents of NAFTA like to think it changes.
So let me just comment briefly on that integration process and how it affects workers.
I think there's no doubt that employers are constantly thinking about ways in which they're going to take advantage of the differences in the systems in the three countries in ways that make their lives simpler or more profitable, make their companies more profitable. And that's been our experience and I think it's been the experience of workers in the region as companies introduce not uniform but similar production systems in all three countries and organize work in similar fashion, and thereby achieve productivity levels that are fairly comparable among the three countries. Not identical by any means, but comparable.
They are trying to achieve efficiencies in their own operations through purchases of supplies, purchases of machinery, organization of production, that makes for a smoother flow of the goods that are traveling internationally within the region. By the same token, they are not trying to standardize wage levels. They are not trying to standardize health and safety protections for workers. They are not trying to standardize the benefits that they pay throughout the region. But they are trying to arbitrage what kinds of provisions they have to make to different workers.
And one of the things, one of the issues that you see raised throughout the world, and particularly in Mexico in the last 10 years -- Ms. Stinson referred to this -- is the goal of increasing efficiency and the way it's described by the company, flexibility. Increasing flexibility for the way they interact with workers.
And that flexibility is really a shorthand term for more control over the employment relationship, less government intervention in that process, less union intervention in that process, and the ability to treat workers individually, set their terms of work, have them follow a set of rules that the company produces with nobody else intervening in trying to help set those rules.
And you see the results of this all the time. In Mexico, in many of the big multinationals companies -- and Ford and Volkswagen have been raised. In Ford, in 1987, I believe, the entire workforce was fired at one plant and rehired under new conditions and new wage levels.
At Volkswagen in 1992, I believe, the same thing happened; 17,500, 15,000 workers fired and rehired the next day or a few days after a rather lengthy strike, a few uncertain moments. But rehired under very different labor conditions which were much more advantageous to the company's control over the operation of the plant and a reduction in the influence of the union in that process.
We've experienced this in the United States very dramatically as companies have tried to gain greater control over the workplace and their organization of it. And they have used the increasing efficiencies that are taking place in Mexico and in Canada, where appropriate, to put pressure on American workers to lower wages, to accept fewer benefits, to diminish labor costs.
And that is the strategy, as we see it, of the integration process and the production integration process for the big multinationals that operate in this region. They are very much interested in standardization but, as has been raised, in standardization at lower levels of protection for workers and greater levels of control of the workplace for the company. And, of course, less government intervention in that process, as well.
And you see that happening in the countries where there has been traditionally greater government and union control, and you see a variety of barriers put in front of workers in the United States who are trying to improve our ability to influence the way the process takes place.
So I think these are the realities that we see. Certainly the issue of transnational union relationships, union alliances to try to combat this, the companies playing us off against each other, is something that, again, like the decentralized structure of international operations of companies, is not a new thing. International solidarity is a very old union process and yet the current environment creates a set of new conditions that require greater intensity of these relationships and the breadth in which they affect union organizations.
But as Tony pointed out, it is not a simple process. I was telling my brother from the CAW and I remind people of this all the time. There was a time when the Canadian auto workers and the UAW were one union, represented together in one union, and now they are two union who represent workers in Canada and the United States. And this is a situation where the cultures are very similar, where the economic conditions are relatively similar, and yet the differences, the national differences, are quite important.
Trying to bridge that divide between more dissimilar countries with different labor histories, different labor situations, different traditions, is that much greater. And while there have been a lot of contacts that have been established and that will continue to grow, there is a relatively long road to go before we can talk about multinationals bargaining in any serious way, although it is certainly an interesting and desirable issue to discuss.
MR. McKENNIREY: Thanks you very much, Steve.
Turning to Canada, I'll ask John Coleman, a partner in the Ogilvy Renault law firm in Canada, to give us some comments from his perspective.
MR. COLEMAN: Thank you.
Let me first point out for the record that as a management-labor lawyer, it's quite surprising for me. It's the first time I'm to the left of Mr. Chernecki.
I'm picking up on Professor Giles' comments with regard to decentralization and giving you perhaps a bit of a Canadian perspective.
I'd like to start with a common parable about four private school students in an international school who were each asked to write an essay about the elephant. And the British student writes, of course, -- the topic of his essay, is "The Elephant And Its Habitat." The French student writes about the love life of the elephant. The American student writes -- the title of his essay is "Towards a Newer and More Improved Elephant." And the Canadian essay is "The Elephant: Is it Provincial or Federal Jurisdiction."
I start off this way because Canadian companies are quite used to having to adapt where they have multi locations to numerous different labor jurisdictions, just operating in different locations within Canada. And I think it's important from the perspective of an attorney who receives requests for opinions from U.S. companies seeking to do business in Canada that it be understood that in Canada, provincial labor relations is the rule. So it's provincial jurisdiction in the matter of labor relations which sets up 10 -- in some cases more -- provincial labor codes.
In addition, you have a federal labor code governing the companies that come within federal jurisdiction, and those are companies such as transportation companies, banks, et cetera, who have a completely distinct set of rules as a federal undertaking.
Now, that means a different labor code for labor relations purposes. It means a different labor standards act for labor standards issues which are quite important in each province. It means different human rights acts in each province, as well as for the federal. And all of these acts create different standards, different processes that have to be taken into account by any multinationals setting up in Canada. And indeed, in determining where that multinational will set up in Canada, and in which province.
The other element, of course, is Quebec. (translated from French) You know that in Quebec we are a separate jurisdiction -- although the word is often controversial -- a separate society. (return to English) And there will be additional issues in Quebec, such as the linguistic regulations which do apply, as well as in a more peripheral basis but nonetheless important, immigration issues, which do normally fall within the exclusive federal jurisdiction, but there are some interconnected issues and jurisdictions for the Quebec government.
That being said, as I want -- as I set up to note, Canadian companies have had to deal with the different dynamics in each jurisdiction and they can be quite different. And the most frequently asked questions that we get deal with such issues as, as was already pointed out earlier, certifications.
Certifications are, with the exception of one recent exception, generally determined without a vote. This is often an anathema to Americans. American counsel will call us and say, "What do you mean, there's no vote?" Ontario has recently enacted certain changes which we may hear about later in terms of mandatory votes.
Not only do you see this different provincial standard, but the standards seem to change quite rapidly from one government to another. And we have the example of B.C., with which each change of government, you'll find almost the implementation of a complete new labor code. More recently in Ontario, that has occurred over the last two changes of government, as well. And depending on what happens in this next Quebec election, there may be a completely new set of regulations, as well.
So, coming back to the American concerns that we hear about when they're establishing here -- and you talked about labor standards in terms of employment costs, termination costs were talked about earlier. Well, Nova Scotia, Quebec and the federal government, federal employees, have access to a mandatory arbitration where the other jurisdictions do not. With respect to such issues as a strike, considerable differences. And perhaps best illustrated by recent cases that I've been involved in, a lot of American companies are, of course, requiring their affiliates in Canada to have the same drug and alcohol testing policies. And here you'll get a completely different cultural approach.
In Canada, drug testing, notwithstanding attempts and disputes that we're having currently with the CAW over the issue, drug testing is simply -- it's almost considered to be a crime. And even in the transportation sector it is very limited.
So you'll have the cross border issues, as there is a deregulation which has occurred in Canada over the last 10 years in the transportation sector. You'll have these issues where the American companies will set up requirements that anyone driving a truck or a train in the U.S. must be subject to a mandatory random drug testing policy and you have Canadian drivers who go down there but, under the Canadian Human Rights Act, there are serious concerns and indeed disputes about the legality.
So, that's just one of the issues which I think, while Canadian companies are very much used to having to adapt within Canada to each jurisdiction, my sense is -- and I guess perhaps I could be corrected -- American companies are much less -- I'm sorry. I'm not familiar with too many Mexican companies coming into Canada. But from an American point of view, it's almost a shock as to the degree of differences, which of course, advantages the legal profession in each province. But shocked as to the degree of differences there are in terms of the number of different rules and regulations that will apply depending on where you are, but also in terms of the -- I think some fundamental differences in terms of human rights cases, as well.
Those are my comments.
MR. McKENNIREY: Thanks very much.
John, I'm going to resist the comment no the elephant.
And we'll go straight to our labor perspective from Canada from Bob Chernecki, who's Assistant to the President of the Canadian Auto Workers.
MR. CHERNECKI: Thanks, John.
It is a pleasure for us to be here this morning. My good friend to my left, the only thing I can say, who owns the only Chrysler in we think the world that has no left signal.
I do want to start by saying a little bit about who we are. The Canadian Auto Workers Union is composed today of 215,000 members in virtually every economy that one can identify.
For today's purposes, I think I want to try and stick to the auto industry as the best identified for people in this room and for the discussion, multinationals. And the subject of the day is how we deal with them.
Well, most days the code word is "very carefully." But in terms of the labor relations, we have -- and when you go back in our history, Steve touched on it in terms of us belonging some years ago to the international union.
The corporations today, Ford and Chrysler, as we all know, are multinational corporations and have been for a lot of years. Before the buzzword "mobilization" and all that was around in our dictionaries, the Big Three, as they're commonly called, were researching every market they could get their hands on.
We dealt with the -- first, we tried on an international scale working with, of course, the UAW at that time, trying to, at every set of bargaining, make progress on behalf of the workers. But they still, I think, played a role in our separation in terms of their approach to bargaining in both countries.
Chrysler, for example, which I know best -- I come out of it -- labor relations was always extremely difficult. The history of that is that you could count on every three years having a strike. For a lot of reasons, I think on both sides of the border, I guess right after the concessionary strikes in the early '80s, for some reason the labor relations changed.
Why did it change? Did it change because the unions changed? No. I think they recognized that in order for them to have the kind of quality and productivity that would lead them to other markets, I think they had to have a relationship with the workers. And you can have two relationships with workers. You can have it so that you try and control the agenda, of course, or you can try and have it where you have a relationship that's based upon mutual respect with the trade union and its top leadership. And I think Chrysler chose the right path. Ford is similar. GM -- we all know general motors.
Anyway, the issue for us as a union, and I know the subject matter is standard, but some people here in this room -- Canada at one point used to stand up as a model for standards of labor relations. And that, quite frankly, is going to hell in a handbasket. And it's largely driven -- and John touched on this. Largely driven by the force put on us by -- some people who are calling it the Americanization of Canada, the globalization of Canada, whereby our standards are being attacked on a daily basis, on a government by government basis.
Today the only provinces that has anti-scab are two; B.C. and Quebec. And John's right. At some point we're going to be under attack there. But the only provinces, two provinces left that have that capability. And the exponentiation of the federal labor code, a new one, which touches on anti-scab, doesn't get us there.
So my point in all this is that there's always a drive, and we're calling it a race to the bottom. And that means the standards that we have enjoyed as labor over many, many years are constantly under attack. And the recent changes in the Harris government has left Ontario with one of the worst labor relations records in the past 50 years of experience.
I can tell you today in our union, and everybody I think knows in Canada anyway, how we have demonstrated on the streets against what we see as the most anti-union government in the history of the country.
So with that kind of role in terms of how we deal with multinationals, certainly, yes. Recently, you may have heard -- I'm sure you've heard about the Mobil situation in which a plant of 36 years, good quality, good productivity, decent working conditions and pay -- and a corporation that has a good reputation worldwide for good labor relations. Well, the long and short of the story in Halifax, quite frankly, was that the local was not prepared to even give us a standard that workers would enjoy in Sweden had the same circumstances occurred.
So although there is this recognition that standards are important across the system, corporations are not, quite frankly, living up to the total standards even in their own countries.
So, I know I'm a little bit over here, and I'm going to stop. But I do want to end on a positive note.
Quebec, we think, probably has led the country in many of its labor laws and we really are certainly going to make sure in our country that Quebec stays in the federation. We are a union of choice for those people who choose to leave. And we'll have an international union again -- an international cooperation, I mean.
Thank you very much.
MR. McKENNIREY: Thanks very much, Bob.
I don't know what to say on that point. I'm somewhat speechless. But we'll hope they stay.
Let me turn to our participant from Mexico, Gilberto Gonzalez Treviño, who's the Director of Human Resources for a major steel company in Mexico, Siderurgica Lazaro Cardenas las Truchas.
Senior Treviño, por favor.
MR. GONZALEZ TREVIÑO: (translated from Spanish) Good morning. Thank you very much for inviting me. I have just three comments to share. The first concerns the relationship between the Mexican Government and the Confederation of Mexican Workers [CTM]. The second refers to how employee benefits relate to wages. And my third comment is about a success story for labor in Mexico ... to reduce ... [voice of English interpreter heard above the speaker] ... Las Truchas ... [voice of English interpreter heard above speaker] ... which have been in existence for 24 years. Though it's true that in the days when corporatism prevailed in Mexican politics, there was indeed a close relationship between the government and the CTM, it's also true that when our political system began to change, and move towards a completely open democracy, corporatism started fading from the picture, and with it, the effects of the CTM-government relationship. During the decades when corporatism prevailed in Mexican politics, we saw that the government, in order to preserve the political power and dominance of its party, the Institutional Revolutionary Party, used the Confederation's supposed powers of control to ensure that its candidates won at election time. We also saw that the CTM was granted favors in political and labor matters, and received too much protection for its actions, whether or not they adhered to Mexican law. With a more open democracy, which made it possible for new political parties to form and ensured that the electoral victories of non-PRI candidates would be recognized, coupled with the death of CTM's leader, Fidel Velásquez Sánchez, whom Yvonne mentioned, corporatism was supplanted in the Mexican political system, and the union's strength and control waned. Thus, the protection and concessions accorded to the CTM have tended to disappear. This has enabled workers to choose freely the union they join and means that they are treated differently, and has also made it possible to try to improve contract-based employee benefits, in keeping with the parameters of Mexico's current economic crisis.
My second point concerns the relationship between wages and employee benefits, which, as I mentioned, is very important. As we know, there are two types of employee benefits in Mexico. The first are legislatively-mandated benefits written into the labor code, and these must be included in individual labor contracts for rendering personal services. The second type is the contract-based benefit, found in collective labor contracts that govern the employee-employer relationship at specific companies. Contract-based benefits tend to exceed the minimum benefits specified in the labor code, and thus help employees. Wages, as a key element of the individual contract or the labor relationship, are classified much as other employee economic benefits, i.e., there is the so-called minimum wage set by the National Minimum Wage Commission, which is divided into the legal minimum and the professional minimum, applied in the various economic zones into which the relevant Mexican entities are divided. There is also the so-called "contract-based wage" which is governed by the wage index for collective labor contracts. It should be pointed out that the most common type of wage in Mexico is the daily wage, which covers personal services rendered by employees in a legal work day, and paid on a weekly basis for workers or biweekly for supervisory employees.
One important thing to keep in mind is that because of Mexico's economic crisis, caused by various international economic crises, the government has established unlimited controls on wage increases, both on law-based and contract-based minimums. At the start of each year, it sets an official guideline that is used mainly to review the indices for wages governed by collective labor contracts. The purpose of this measure is to prevent any increase in wages freely negotiated in collective labor contracts from triggering an inflationary spiral in wages and prices for basic consumer items, which would aggravate Mexico's economic crisis. Mexico is regarded around the world as a cheap labor country, in view of the level of wages its workers are paid. The situation we discussed earlier results, in our view, from the basic circumstances of its prevailing economic system, which currently prevents it from competing with the so-called First World countries, where economic stability and growth prevail. The United States and Canada, both First World capitalist countries, with robust economies and steady growth, stand in stark contrast to Mexico in terms of employee benefits. The evolving situation explains why Mexico is regarded around the world as a cheap labor country, particularly because of its low wage levels. Nevertheless, this reputation has drawn a large number of varied companies to Mexico, and has thus generated jobs and employment for those who live in the border regions. This, in turn, has provided an honest livelihood, and enough income to fulfill their families' basic needs, thus lowering the crime rate.
Finally, I would like to offer the following observation. In late 1991, the Lázaro Cárdenas Las Truchas steel company, a government-controlled enterprise, was privatized. We knew that that the human resources had to be preserved and protected. In order to make sure that this happened, we outlined a program to steadily enhance quality of life, designed to resolve all the internal problems we had with our workers. In order to accomplish this, the first challenge we set for ourselves was to maintain a productive plant, while at the same time enabling workers to keep their jobs. A modernization program, coupled with our collective labor contract with the national miners' union, enabled us to build several plants, such as, for example [unintelligible], an oxygen plant, a desulfuration unit, etc. With the full cooperation of the union that signed our collective labor contract, those workers left over from other plants (SICASA has 10) were relocated to the new plants. Worker response was enthusiastic, since they appreciated our organization's effort to maintain plant productivity, and, most importantly, because they were able to keep their jobs. Their wages were reviewed, and they were given a better benefits package, based on work done by the technical engineering unit. What I really want you to know about the privatization of Siderúrgica Lázaro Cárdenas Las Truchas is that it has truly been a success. Thank you very much.
MR. McKENNIREY: Gracias, Senior Gonzalez Treviño.
Now we're at the point of opening our panel for comments and observations from the floor and we have about 35 minutes before lunch, so we have some time. And we'll have some more time this afternoon.
The floor is open.
Could you identify yourself, please?
MR. MORRISON: You had mentioned for the most part there are a few trade unions that were independent but for the most part they were official, whatever that means. I'm not quite sure. And as a trade unionist I have a very strong belief that in order to have the ability to represent workers and to make sure that they have decent conditions for themselves and their families, you have to have strong independent trade unions.
Having said that, within Canada there are no barriers whatsoever. The professor and you all can correct me on this if I'm wrong, but absolutely not in terms of the ability to create a trade union.
Now, I don't know what kind of barriers are present in Mexico or in the United States that prevent that from happening. As it sits right now in Canada, we have at least 25 and probably lower than that number, unions that are internationally based.
I'm with the Electrical Workers Union and I know we've got many members in Canada that are members of American affiliates.
And the question I have is are there laws that prevent or try to bar now the ability of another union to open up an office in Mexico or to charter a local union so they can start representing workers in that country? And I would address that to both the U.S. group as well as the Mexican group.
There are laws in the U.S. now that would prevent something like the CAW from opening up an office in the United States to start organizing workers? Is there a law in Mexico that prevents the IBEW or the Teamsters from opening up an office down there to start organizing workers?
MR. ESTREICHER: I'll take the U.S. I don't think there are any restrictions in the United States. The more competition, the better.
MS. STINSON: About Mexico -- (translated from Spanish) There are no restrictions on independent unions in Mexico. What I was trying to say earlier is that the CTM dates back to the early 20th Century, after the Mexican Revolution, naturally for the purpose of defending workers' rights. Nevertheless, as time went by, and Mexico began to organize, the official party we now know as the PRI, which is still in power, began to grow. The PRI tried to protect the CTM by giving it political leeway. In some ways, I would say it was extremely pro-government, but it did represent the workers. I will say that the CTM wasn't ordered to act that way for 60 years -- it just evolved that way as part of our culture. But then, with the new economic model we started trying out in the early 1980s, and the way the CTM was organized, it failed to modernize as much as industry and the companies needed in order to compete. This made it more necessary to have independent unions, which had always existed in Mexico, not as strong as now, but they had always existed. And I think that in recent years there has been more of this than ever before. So there are no barriers -- there can be unions associated with the government or any party. In this case, the CTM teamed up directly with the governing party, the PRI, because it had political leeway. But any independent union, any union at all, can exist in Mexico. There are no legal barriers.
MR. McKENNIREY: If I understood the question, Yvonne, it was also whether or not there was any restriction on the organization of a union in Mexico that might be affiliated with a union in another country.
MS. STINSON: (translated from Spanish) No, I don't think there's any problem.
MR. McKENNIREY: Steve Beckman?
MR. BECKMAN: I don't claim to be an expert on Mexican labor law in all its great details but I have had about 10 years of experience dealing with independent unions in Mexico and the difficulties that they have had in becoming registered.
Many of the petitions that have been filed to the USNAO regarding violations of the NAALC have revolved around freedom of association and the ability of independent unions to organize and gain registration in Mexico.
So if you ask the question are there legal barriers, the answer is no. Are there functional barriers to the independent unions registering to unions from other countries registering, the answer is decidedly yes. And there is very much experience to demonstrate this.
MR. ESTREICHER: What are those barriers?
MR. BECKMAN: In order to become a registered union, you have to be certified by the Conciliation and Arbitration Board, generally locally, but there is also a national system, as well. And the representatives on that board are tripartite; labor, management and government.
Well, guess where the government represent comes from. Comes from a PRI functionary of some sort. The management representative is interested in having the most meek and ineffective union possible. And the labor representative, because of the relationship between the PRI and the CTM, almost exclusively on the CTM.
Now, if there is a group of workers who is trying to change its affiliation from the CTM to a new independent union, let's think about the votes on that conciliation and arbitration board and how they're going to treat such a request. The CTM delegate is unlikely to be terribly sympathetic. The employer representative is unlikely to be terribly sympathetic. And the government representative is unlikely to be terribly sympathetic.
So an independent union doesn't have exactly what we would call and what they would call a fair hearing under a system that is objectively tripartite, fair and open and which has specific rules which apply.
Now, again, the way in which the independent unions are denied registration can be very instructive from case to case. You need to sign this in triplicate or duplicate; this number of signatures from the workers; identify your name and your jurisdiction accurately. There's an unlimited number of procedural barriers that can be placed in the way of independent union organization, and they are utilized.
I would say though, just one other point. The two cases I mentioned of situations where the workers were fired and rehired, one was a CTM union situation and one was an independent union situation. The economic realities apply to all the workers in Mexico, and in fact, all the workers in the United States and Canada. We're laboring under the same pressures.
Independent unions in Mexico are not exempt from that. They are not able in all instances to more effectively represent the economic interests of their members because they're independent. There are real serious economic pressures that prevent them from winning wage increases comparable to the productivity gains that have been accomplished in the same way that the CTM union, or the official party affiliated unions have not fought, we would say, as effectively as they might to obtain those kinds of improvements for wages in Mexico. And in fact, their wages have declined substantially.
But obviously it's a day-long discussion.
Irasema is smiling. She's been through many days' discussion about these issues. It is very complicated and not transparent.
MR. CHERNECKI: We're going to have to have a debate in the labor movement of how many unions we have in countries to date. I want to throw it out. It's an important piece we have today in the railway industry. Too many unions. And how corporations deal with that is pretty difficult and how we deal with it as deal with it as a union.
MR. COLEMAN: Well, John, I'll tell you. I won't say that the CAW is very difficult.
MR. CHERNECKI: That's how we won the vote. I just want to make that point. There's barriers, without question, in every country. I think the labor movement has to stop and look at itself inside, too, and say is there too many unions in the country.
MR. COLEMAN: If I could just add one point from what I just heard in terms of restrictions on unions.
There is something in Canada. I don't know if it exists in the States. But certainly on an organization campaign there are no restrictions with respect to Canadian unions. However, if a group of employees which to change trade unions there are also functional barriers in terms of non-raiding pacts between unions that are members of -- and I believe most are -- of the Canadian Labor Conference. So it's not quite as clean as Mike suggested.
MR. ESTREICHER: I just want to clarify. The same thing is true in the United States. We don't have a certification requirement. Anyone can become a labor organization as long as you're not employer supported or dominated. And so we have no notion of established labor unions but there are rules on decertification and that sort of thing.
Plus, the AFL-CIO in its Article 20 has a no-raiding pact. I actually commend them. More competition is a good thing. Maybe it's gone too far in railroads but there is a problem with kind of a one union federation.
Everyone needs competition to keep them honest and keep them vigilant, but the AFL-CIO isn't in the business of preventing that competition within the labor federation.
MR. GILES: Can I just very, very quickly --
MR. McKENNIREY: You'd better be careful of your questions. A warning to the audience.
MR. GILES: It is quite true that in Canada and the United States as well there are restrictions on certifications. There are time frames that you can do it within. But by and large employers have been very, very vocal in support of that. Because what that does is that creates stability. And that's been the driving force behind those provisions. It's not been even a disguised attempt to protect particular kinds of unions.
MR. McKENNIREY: A second question?
Could you give us your name and your organization, please?
MR. RUGGIERI: Yes. Peter Ruggieri. I'm with the Maryknoll Fathers. We're a Catholic religious organization and we work in Mexico and Yucatan.
I just want to know why isn't there a representative of Mexican labor here.
MR. ARANDA VOLLMER: I'll answer.
MR. McKENNIREY: Oh, there is an answer?
MR. ARANDA VOLLMER: (translated from Spanish) The Mexican labor representative was unable to attend. First, there were problems getting the United States to issue a visa, and then there were personal problems. When something like that happens, it's hard to find a suitable replacement. I want to answer your question. I want to take this opportunity, it makes ... [inaudible] ... Sometimes you hear people say things, there are translations about Mexico, very general knowledge, very limited, and one of them, one that really stunned me, was a reference to the relationship between the PRI, the PRI's representatives, and the representatives of the boards and ... [inaudible] ... public ... that we have, the 9702 for companies, in [Baja] California Norte, a government ... [inaudible] ... a CTM representative and we are making ... [inaudible] ... there is no reason to support a union associated with the PRI, and I'd say you should be much more careful about making generalizations like that. There's a lot more behind it, ... [inaudible] ... rural ... at the labor level ....
MR. McKENNIREY: For the record, that was Rafael Aranda from the Mexican NAO.
MR. BECKMAN: John, just 15 seconds?
MR. McKENNIREY: Fifteen seconds on this question.
MR. BECKMAN: I'm sorry. I would just point out that the PAN is a party that is associated more closely with the business community in Mexico. It's not exactly a labor party. So I'd just point that out.
MR. NERON: (translated from French) I am Jean-Pierre Neron, President of the Quebec Confederation of Labor. The other day I bought a can of tuna. On the can there was a little picture with a sign that said, "Save the dolphins." I liked the idea, looked into it, and learned that there was a campaign to protect dolphins. In fact, dolphins can die if they are caught in fishing nets. So, hurray for the dolphins.
Now, I represent a federation of men and women workers, and we want to be protected, too. So now we ask, how can a worker, up against multinational corporations, be protected. I agree with Ms. Stinson, who says that standardization is not what we want. One of the methods that we do have, that we are trying to promote, is codes of conduct. We want to get the companies to adopt codes of conduct, like the company that had a code of conduct to protect dolphins. We simply want them to adopt a code of conduct to protect workers, i.e., to see that fundamental rights are respected in each country. This is precisely the goal of the NAALC, but in [off mike].
The other day I was reading a little news item where the writer had pointed out that it is a bit odd that when you buy a product, you can know what percentage of fat, sugar, water, etc. it contains. I do not know under what conditions that same product was produced. There ought to be a label that would say " Yes, this shirt was made by a worker who gets a decent salary, who has decent health and safety conditions, who is not sexually harassed, who has a pension fund, etc. That's what we want. Or else I could say, or you could [inaudible] what could be said about this code of conduct. But in the end that's what we want how can we get these codes of conduct?
I know, of course, that some of our union brothers see that as being a little like protectionism, but up against the multinationals, if we want to move ahead along those lines, that will be the price. Thank you.
MR. McKENNIREY: Any panel reaction to the question? Codes of conduct and statements attacking information about work conditions.
MR. BECKMAN: I think there are a couple of points.
One, the principles of the NAALC, as they're written in the document, would lead you to believe that the three governments hold that as an objective. That you would want people to know about the improvements or the benefits of respect for workers' interests that they profess. And, of course, each of the three governments does profess to uphold high standards for the treatment of workers and whatever.
And the reality is quite different. The NAALC's nice words about this have not contributed to a standardization or a recognition among the three governments that they will play some role in ensuring that conditions for workers do meet the nice words that are included in the document and that the governments are more than happy to expound on when given the opportunity, domestically and internationally.
The issue of codes is that they are voluntary in general. There have been some that have been negotiated directly with companies by unions. And those in which a union is in a position to enforce that code obviously are more effective and have a greater effect than those that are entirely voluntary and rely on the companies' own process of review.
There are a number of organizations around the world that are presenting themselves as available to review company policies and make pronouncements on whether they are following their commitments or not. Unions have mixed experiences with such organizations, particularly when they don't include union or worker representatives but are non-governmental, non-affiliated organizations.
There are a variety of ways in which companies can manipulate such reviews. One of which is by allowing inspections of their plants but having the company notified in advance that an inspection is going to take place. That is not an adequate oversight of a code of conduct.
So I think these have to be negotiated. And where it's possible to negotiate them, it means that the workers have some kind of serious leverage. Well, if the workers have some kind of serious leverage they can usually adopt the kind of conditions that you're describing through collective bargaining or through some other process, not through a code. And so the code is a less effective means of achieving this objective than doing it through collective bargaining, which means that the union isn't necessarily in the same kind of position to impose the oversight necessary in order to make sure that it's working well.
But obviously workers share the interest in having consumers understand the conditions under which products are made. That's why we are pushing for and have been pushing for standards in international trade agreements that make demands on employers and on governments to improve conditions for workers. And we will continue to do that.
MR. McKENNIREY: We'll have a second comment on this point from Bob Chernecki.
MR. CHERNECKI: Free trade and NAFTA has not been a good experience for labor. That's fairly well known. Our views are out there.
How we dealt with it, I guess, in terms of dealing with multinationals, I think we've drawn our strength now more and more from the international organizations, the ILO, International Metalworkers Federation and the International Transportation Federation.
And what free trade and what NAFTA has done is forced us to deal more closely with those organizations to try and build a multinational code of conduct.
MR. McKENNIREY: Yvonne Stinson?
MS. STINSON: (translated from Spanish) Yes, I agree with your question and your comment. It is very important that the unions protect the rights of the workers, and give them the highest standards possible. In our country, in Mexico, that's what we're looking for, and part of all the change my country has gone through over the past 10 years is just that, the complete transformation of some unions, which, as the workers themselves say, don't really, didn't really defend their rights and improve their members' lots. That is why these organizations we've been talking about, the Mexicans today, have lost power, don't have the power today that they once had. It was indeed the workers ... [inaudible] ... who are not fighting for their rights and to enjoy a higher standard, since they are looking for ways to organize. As for what Steve says, it's true that the CTM used to be a formidable power, which really weakened the independent unions. But Mexico has truly changed what they're able to do now. As for the barriers they were talking about, many unions do mention that 10 or 20 years ago we had these problems. But now these procedures have become easier, with the incredible changes that have taken place in Mexico, making everything more efficient.
MR. McKENNIREY: Thank you, Yvonne.
MR. MELANCON: (translated from French) I am Claude Melancon of the Canadian Association ... [inaudible]. I would like to make a few comments on two of the remarks -- one of the points raised by our sister from abroad, to be considered in the evolution of the relationship between the multinationals and the unions represented here, namely, if you will, what you might call the support of government authorities, for example, for attacks on the right of association, or the right of negotiation, on union organizations ... [inaudible] ... in collective bargaining. I think that we have to put things in context if we want to talk about relations between the multinationals and the union movement. So let's see where we stand -- and I don't know what it is like in Mexico -- but in Canada there is a fairly high rate of unionization, of union presence, at least relatively speaking for the NAFTA countries. In Canada we talk about a rate of about 35 percent. In Quebec, until recently, there was a rate of union presence of up to 50 percent. Here, I am talking about the years before the signing of the free trade agreement between the three countries. It dropped to 40 percent, a striking difference in percentage terms ... [inaudible]. In Canada, in Quebec, we talk now about a rate of unionization in the private sector of about 22 percent, and if we were to talk only about multinationals, the rate would be less than 22 percent for the entire country. If you take the United States, a neighboring country ... [inaudible] ... with a rate of unionization considered to be about 14 percent ... [inaudible] ... considerably less than in the past. I do not know if the downward trend is over, but it is likely that this rate is no longer ... [inaudible].
As for Mexico, the situation is harder to describe -- I will defer to my Mexican brother to give you some idea of what is happening there -- but I have my own way of analyzing this State support for attacks against unionization ... [inaudible] ... in recent years we have seen a considerable drop.
In Quebec, in Canada, we are seeing -- and I imagine that Canada must be similar to the United States -- that union presence is declining just as rapidly, not only because of globalization and reorganization of markets, but also because labor is being totally reorganized. In Quebec, for example, the intense effort to increase subcontracting, the use of self-employed, or independent workers, makes it difficult to have access to unions, so, more and more, we are moving toward an ever-lower official number of unionized workers to negotiate with the multinationals.
Recently, a problem that has come up in the cooperation among our three countries, one of the texts intended to protect each country's legislation, to avoid systematic violations, is that we really don't have any way, you'll see, to really improve the situation. There is a commitment to promote principles, including the right of association and collective bargaining, but all the same there is not very much recourse, except certain public documents that tend to come supported by figures. Now, I think that you are right, that we are discussing something else here, that without reopening the question of the future of collective bargaining, we still must have access in the future to collective agreements. One of the ways to manage the text proposed for your consideration is that, despite the opinion of NAFTA held in the North, NAFTA is not the only means of economic integration in the Western Hemisphere. Oddly, the European unions (EUSO) are envious of the NAALC because it contains certain forms of recourse. They had, however, one advantage--that of being represented in the discussions leading to the economic integration agreement.
A model that I would like, perhaps, to suggest for your consideration...[inaudible]. I would like there to be union presence from the start ... [inaudible] ... so that we can also discuss the objectives of cooperation agreements and of improving union relations. We are talking here about economic achievements to improve the quality of life in each of the countries concerned.
I am willing to admit that there is little likelihood of our moving toward the European model, given the importance of the State, of sovereignty, in most countries of the Americas and given the image that the United States of America has of itself, of things international, and its capacity to submit to international regulation. But I think that there are ideas that we can take from this type of approach, that certainly go well beyond regulations. I am thinking of how far multinationals and labor unions could go by discussing together the achievement of economic goals while improving living conditions at the same time.
MR. McKENNIREY: John?
MR. BECKMAN: You'll have to shut me up.
The American labor movement proposed having a multinational set of standards harmonized upward over time as part of NAFTA. That was our proposal. The governments weren't interested. Businesses weren't interested. And so, it didn't happen. What we got was the NAALC, which is that everybody will enforce their own labor laws and let the chips fall where they may, and what really matters is economic growth and integration and living standards will follow, we assume.
I think that assumption has been demonstrated to be inaccurate. Whether it's wishful thinking or misleading in intent, you can have your own views. I have my own. But we don't have that and we don't have it for a reason. And I don't see those political forces, economic forces, being different today than they were when NAFTA was negotiated in 1992-93.
MR. McKENNIREY: Harry?
MR. ARTHUR: (Off mike.)
MR. McKENNIREY: I'm conscious of the time. I think find this is a to stop because it is such a provocative thought to carry over and begin with in the afternoon.
I know those comments were partly response to Bob, and we'll get those when we come back. I'm sorry.
Thank you all for your participation this morning and I have an announcement to make. It will take one second.
The Canadian delegation has been asked to meet in this little room up here right now, just before lunch.
(Whereupon, the luncheon recess was taken at 12:30 p.m.)
MR. McKENNIREY: We have about two hours or two hours and 15 minutes before our closing comments.
At 5:00 we're to break. At about 5:15 there's buses outside to take you back to your hotel or to the main hotel. So we really have an outside limit.
We'll try to arrange the participation of our panel in the first hour. Again, we have a similar format to the last one; three experts, one from each country, will give an overview of the topic from that national perspective, and then we have a number of roundtable participants that will give some brief observations on these opening remarks. And if we are able to do this by 3:30, we could have a very, very brief break for about five minutes and still allow ourselves an hour or so for discussion from the floor, which this morning proved to be so fascinating and useful.
So, let's try to keep to a schedule somewhat like that.
I'm not going to try to summarize this morning's discussion even though I have some key points of my own that I've jotted down. But I think we want to get right into this afternoon's discussion since we're short of time.
This afternoon basically, having looked at the issue of labor relations in multinationals from a sort of broad structural point of view and ending up on a higher viewpoint of globalization of the mind, to quote Harry Arthur, we're now going to go into the shop or onto the ground floor and see from the perspective of the sort of microeconomics or the workplace how do these different pressures and forces express themselves in terms of negotiated terms and conditions of employment and on the ground differences between the three countries, or similarities, in how multinationals interact with their unions or with their employees in different national contexts.
To speak today, let me introduce our panel of experts.
From Mexico, we have Francisco Luis Saenz Garcia, who is the Director of Legal Contracts for the Mexican Ministry of Labor and Social Welfare. From Canada, Tony Giles, again, is doubling up. And from the United States, Professor Marley Weiss, who's a professor of law at the University of Maryland's School of Law.
Let me begin by asking Mr. Luis Saenz to open us up with comments from a Mexican perspective.
MR. LUIS SAENZ GARCIA: (translated from Spanish) Before beginning my talk on the subject that was assigned to me, I want to make the following comments. First, special congratulations to the members of all the delegations, since the success of these forums unquestionably brings us an extraordinary experience that we can put into practice directly in our countries. I would like to echo John's words to the effect that, in principle, I am not an expert. Second, in responding to questions let's try to be as frank and adherent to reality as possible. Furthermore, before going on to my subject, given our experience in the areas of collective bargaining and contracting, I can tell you that there are no barriers at all, in terms of labor law, to the organization and establishment of a union. One need only satisfy the requirements in the labor law itself in order to be awarded a registration immediately. As we all know, in Mexico, the organization of a union proceeds according to a legal system that is very different from the one that prevails in the United States and Canada. Unions in Mexico require a public government act executed before an appropriate authority, known as a registration, while in the United States and Canada a union must be certified in order to create a legal duty for the employer to begin negotiations with it. Also, I want to mention that the number of workers who are unionized in independent organizations has grown considerably. I don't want to give you figures, because they could be wrong, but I can assure you that we are well above the United States and close to the figure for Canada. As you have noticed, I seem to be using up my time, but the topic I am going to address is about collective bargaining. I am going to be very brief. I will give a short introduction, then deal with the collective bargaining processes, the preparations for same, and the negotiation methods being used in our countries.
In our country, as in all the rest of them, collective bargaining has acquired key importance within the development of each of country. In Mexico specifically, this mode is recent, since workers' movements--and, therefore, the body of labor regulations and the labor-related legal institutions--started to take shape at the end of the 19th century. Labor movements and the body of rules have changed the behavior and the attitudes of the principal actors in the legal relationship between workers and employers. Within this change in behavior and attitudes collective bargaining assumes an important role as the most expeditious way to resolve the labor-related issues that arise out of the legal relationship at work. That means that strikes, boycotts, work stoppages, unjustified suspensions, and lockouts are not the most effective means of resolving disputes and differences among the factors of production. Well now, collective bargaining also demands the intervention of the State which, in its roles as intermediary, assistant, conciliator, or arbiter participates, directly or indirectly, in the negotiations among the parties. A role that, of course, is not perfectly defined in the case of Mexico. Collective bargaining is the best way to make labor relations fair and balanced since, in it, both parties are attempting to achieve their own objectives, i.e., it is important to provide for satisfaction of the needs of the parties, since they develop within the same environment. I believe I must comment, although briefly, as to what the collective bargaining process consists of, the preparation for it, and the various negotiating methods that can be employed during the conventional arrangements.
The collective bargaining process can be considered as a series of attitudes that the negotiators must observe after they have gathered all the available information and established the validity of the position that they want to defend. When the talks begin, the negotiators try to establish the attitude that they wish to maintain during the proceedings. However, it can happen that the tactic employed by the opposite party necessarily makes them change their positions. This happens when a similar negotiating strategy has not been suggested by the parties, a strategy that would in fact seek to achieve mutual benefits. Negotiators must always take into account, at least during the talks, that they are acting in representation of interests that, just like the petitions by the union, represent the interest of the workers and are presented as the need for more fringe benefits and wages that help their members enjoy a higher standard of living. The positions that represent the interests of the company are grounded in higher volumes of production, implementation of quality/productivity programs, cost reduction, etc. And it is precisely toward that end that the negotiations must focus. Negotiations must be aimed at solving problems that affect the interests of the parties, not the positions adopted by the negotiators. Unions and companies must, in holding their talks, be aware that they are there to solve a problem and that they are not contenders looking for victories, since this would leave the losing side with the bitter taste of defeat and would inspire revenge at the first opportunity that presents itself.
Many collective bargaining efforts have failed when some of the parties take a hard line on the problem to be negotiated and with the person with whom they are negotiating. This almost always results from the intolerance with which, many times, people try to manage the talks. But it has been nearly impossible to set up a uniform bargaining process that would suit all cases. In reality, people must be alert to the problems that can arise during collective bargaining, so they can solve them as they go along. Since if the experience and information needed to achieve the objectives of the parties are not available, the bargaining process may fail. A good bargaining effort is one in which both parties satisfy their needs.
Preparation for collective bargaining begins in similar ways for the two parties. The union begins the process well before it presents its list of demands that contains the petition to the boss for revision of the collective bargaining agreement. It includes all the studies needed to determine the economic and social demand that the union hopes to present. It includes an analysis of collective agreements reached at other companies in the same production sector; a comparative study of wages and working conditions, also at similar companies; it analyzes the relationship of wages to the cost of living and company productivity in order to find the fair middle ground between what the union can demand for its workers and what the company is in a position to grant. An analysis is made of the benefits, privileges, and bonuses that form part of total worker remuneration, in order to compare them with others awarded to workers in other industries, and the clauses of the collective agreement that are not being observed are identified. Those who prepare the negotiations for the company must (like the union), make certain that the data and information they are gathering is accurate, since they will daily be embarking on experiments derived from the application of the new clauses in the agreement. They must also review other agreements within the jurisdiction and sector of the company or union, in order to get a more complete view of the petitions that may be formulated. They should make wage surveys in the geographic area and the business sector, since that will enable them to know whether the demands are at the average or above it, and, therefore, what actions they must take. They must inform themselves about everything that may affect their economics, such as cost of living, inflation, etc. One very important point for a company is to know the actual cost of each economic clause, as well as the cost of the entire group of them.
Thorough planning for collective bargaining will give the two sides the strength they need to reach an appropriate compromise. This is what is known in labor relations as "bargaining power." Each side's representatives, whom we call "negotiators," must be people with a very special set of characteristics. They must be the kind of people who never lose their calm sense of fairness no matter how heated the negotiations may get; they must also understand human nature, and be able to analyze problems and listen to the other side's arguments patiently. They must act in good faith, and must be firmly committed to finding a basis of agreement between the two organizations, whose initial positions, in most cases, seem incompatible from every angle. The negotiators must be very knowledgeable about the economic problems of the industry, the company, and the workers themselves. They must also have a broad understanding of the factors that hinder good relations between the company and its employees.
The union sends its executive committee to participate in the negotiations. It also sends commissioners who, usually, are delegates from the company who are fully familiar with the problems to be discussed. Both the company and the union customarily distribute the duties of each of the people serving on the negotiating committee. And so it is determined who will be the primary spokesman during the talks, who is in charge of keeping the necessary minutes, who will handle the disclosure of information to third parties. Legal advisors of each party must serve on the commissions, since they are the ones who will give the negotiated clauses the appropriate wording. The negotiation systems, the proper preparation of the collective bargaining process, to be carried out by capable individuals who have the kind of background we mentioned as negotiators, should have good negotiations as a consequence. The parties' skill in bargaining efficiently and constructively determines the degree of harmony and efficiency with which the industrial plant functions. Whether these achievements will be attained depends on the attitude exhibited by each of the parties during the negotiations. There are some who say that the system to be used during the negotiations must be a pleasant one, since companies and workers are negotiating as friends. This, which could be considered positive, is not the case, in reality, on many occasions, if we think about the purposes of the company, since under this system the parties will search for an agreement as a goal, and they do not mind making concessions in order to cultivate the relationship, and that makes it easier to change positions. In this system, both the person and the problem are treated pleasantly, and they work to see that the final solution is one that the worker would accept. And so it is possible to maintain, always, a magnificent relationship between the company and the workers. But it is also possible to endanger the source of the employment if the boss accedes to all his workers' desires. This system is similar to the paternalism that has existed at private companies for many years.
If, on the contrary, the negotiation system employed is a tough one, it can radicalize the bargaining process since, from the outset, the company and the union will become adversaries whose primary goal is achieving a victory over the other party, causing certain concessions to be demanded as requisites of a relationship. Treatment during the negotiations will be tough as regards both the individuals and the problem, and will proceed under a cloud of mistrust and threats, which constantly causes the negotiations to stumble since it is being argued that the solution to the problem is the one proposed by the negotiator that uses this system, that this will be the only one that can be accepted. Under this bargaining system, we are actually talking about achieving a meeting of the minds.
There is a third bargaining method, one that establishes a negotiating policy that we would recommend. This system, which is based on previously-established systems, considers the company and the union as problem-solvers whose goal in the negotiations is a prudent result arrived at efficiently and cordially. People are separated from the problem. People are dealt with politely, but the approach to the problem is tough. The parties proceed regardless of the trust aspect, and the greatest attention is paid to interests, never to positions. Under this system, the parties are always exploring, and try not to reach a non-negotiable point. They will always use different alternatives without trying to treat them as being the final solution. Their negotiations are based on the use of criteria and objectives.
In conclusion, I can say that collective bargaining emerged at the end of the 19th century in the face of the major challenges facing Mexican society, especially the workers and bosses. It is the viable alternative that permits analyzing and debating the special issues of collective labor relations within an atmosphere of harmony and dialogue, with the intent to reconcile interests and reach agreements or arrangements. The kind of collective bargaining is the same for both multinational and domestic companies. The treatment given is the same. The negotiation strategy is established by the parties. In both cases the general working conditions are reviewed in terms of wages and benefits. The wage levels at multinationals varies according to technical skills, labor expertise, or professional qualification. Nevertheless, experience has shown us that at multinationals, where the technology is more advanced, the manpower employed is, logically, high quality and therefore finds itself at the best wage and salary brackets. Yet this does not constitute an imposition or an unequal treatment of domestic firms.
In the case of domestic companies, small and medium-sized industrial companies usually are suppliers to the major transnationals and, therefore, the working conditions in terms of wage level are sometimes less. But usually those supplier companies have similar wage policies, although without attaining the level of the transnationals, given their economic capacity.
MR. McKENNIREY: Thank you very much.
MR. GILES: Here I am again, like a bad dream coming back to haunt you.
Let me start by saying that even if I did have a thorough knowledge of negotiated employment conditions in the three countries, it would be utterly impossible to even begin to scratch the surface in just 10 minutes. So, with my apologies to the organizers, I'm not even going to try.
MR. McKENNIREY: You're going to try to scratch the surface or you're not going to try.
MR. GILES: I'll do it in nine, John. I promise.
Instead, I'm going to take for granted that employment conditions vary among the three countries for a whole range of legitimate, perfectly understandable reasons. I'm going to focus instead on a broader dynamic of change that I think is evident across all three countries, a dynamic that's being lead by multinationals and to which unions and the workers they represent are obviously having to respond.
In a sense, I was quite happy to hear Harry Arthur's intervention or question right at the end of this morning's session, because his raising of the issue of convergence as a sort of counter force to what we have been discussing this morning about decentralization is in fact the theme of what I want to talk about.
But I'm also, in addition to raising this question of an emergent general model, I'm going to consider how the differences between the three countries -- how they affect the implementation of this model in different national contexts.
So, a useful way to explore the subject, I think, is to make a distinction between four types of negotiated conditions of employment.
My implicit model here is for ethnocentric reasons a typical Canadian collective agreement. I think it applies fairly closely to the United States. Whether or not it applies to Mexico in anything other than the formal categories is a question I'll leave to others on the panel to address.
So, the four categories of negotiated conditions.
First, I'd suggest that there are a set of conditions that spell out the terms of the wage effort bargain, the basic exchange that lies at the heart of the employment relationship. One the one side, wages and benefits paid by the employer. On the other side, the hours of work and the use to which those hours are put.
A second set of negotiated conditions concerns the rules and procedures that govern the functioning of the internal labor market in a firm and the organization of work. Here I'm thinking about rules respecting hiring, promotion, job classification, transfers, layoffs, adjustment to technological change, rules about subcontracting and so on.
A third category of employment conditions that we need to think about are those that regulate work behavior and the work environment. Here I'm thinking about rules regarding discipline and more general behavior on and off the job in those cases where there's an attempt to control employees' behavior off the job; rules regarding monitoring, various type of surveillance; rules regarding health and safety and the other physical conditions in the workplace.
And then the last set of negotiated conditions are those negotiated between the parties that establish the actual contours of the relationship: how employees are represented in the workplace; what rights unions have to information or to facilities; how grievances are resolved between the two parties; what forms of labor-management cooperation are instituted, and so on.
Now, there are all kinds of reasons obviously why these conditions vary, and not just between countries but between industries and plants and so on. And I'll return to these in a few minutes.
But over and above the detailed differences, I think we can discern the outlines of a broadly consistent trend in all three countries toward a particular model of employment conditions that is challenging traditional models everywhere.
So let's go back over the four categories that I just laid out and see what's happening, in obviously a very crude and schematic way.
I would suggest at the heart of the change that's going on now in employment conditions is the way the internal labor market and the organization of work is regulated. And here the two key words have got to be one that was raised by Steve this morning, "flexibility," and the other one that has been raised a number of times, and that's "involvement."
One kind of flexibility is numerical, the capacity of a firm to adjust the size of its labor force to product market and technological changes. Now, to achieve this kind of flexibility in all three countries there has been efforts made, a drive, to reduce job security, to make use of a variety of non-standard forms of employment with which the audience here will undoubtedly be familiar, to expand subcontracting, and so on.
The second kind of flexibility is found at the level of work organization where again there's a broad trend -- I'd argue across all three countries -- toward a reduction in the number of job classifications, a loosening of the rules that restrict the movement of workers between jobs, drive to promote multi-skilling, greater use of teamwork, and so on.
As far as our second word, "involvement," there's a general attempt which it must be said contradicts in some case the drive for flexibility, a general attempt to get employees to see themselves as partners in the firm, to make them more responsible for things like product quality, for maintenance, for planning their own work schedules, and so on.
So these are some of the central elements of what is going on in that category of employment conditions.
In terms of the wage/effort bargain, employment conditions are also being rewritten. Not only are wages generally being held below productivity gains, at least in manufacturing, there's also an effort to make compensation systems more flexible, tied to individual or group performance or sometimes firm performance through bonus systems of various kinds, or again through various forms of profit sharing.
As for the third category of negotiated employment conditions, the work environment. Surveys that were published just last week, for example, indicate that workplace surveillance in various forms is expanding rapidly, that work related stress disorders are on the rise, but that on the other hand, in large companies at least -- I won't make this any more general than that -- there seems to be more pronounced respect for rights of minorities and better protection against various forms of harassment.
Lastly, the negotiated contours of the union-management relationship are changing with unions being asked to abandon their adversarial posture to adopt a more cooperative, collaborative role, to view themselves as partners in the drive for survival and competitiveness.
Now, I'm not for a minute suggesting that what we're seeing is a simple unilateral trend towards a convergence in negotiated conditions of employment across the continent. That would be foolishly general. And besides, I don't want to contradict what I said this morning about decentralized approaches.
So, instead, the question is this. If there is a general model emerging, a general strategy emerging, how did the differences between our three countries, not to mention between industries and particular multinationals, affect the way that these general principles are being put into practice, especially by multinationals.
Here, on one level it's obviously, I suppose, but there's a range of institutional, cultural and legal differences that come into play and I'm just going to give you one example of each to illustrate the diversifying effects of the national differences.
On the institutional level, I think one of the key differences is unions, their strategies and their capacity to mobilize bargaining power. Here I'll go out on a limb and suggest for purposes of discussion, possibly, that Canadian unions have had somewhat more success than unions in the other two countries in shaping the way in which these principles are translated into concrete terms and conditions of employment.
I'm thinking here particularly of, for example, how the Canadian auto workers have sought to tie work reorganization issues to issues of job security and employment or how a number of unions in the Province of Quebec have used management's search for flexibility and involvement to establish a toehold in decisionmaking processes over the reorganization of work.
So institutional differences can have an impact.
The level of cultural differences. There's obviously a fair amount of adaptation that has to go on to make any general model fit in any particular natural context.
One of my students has actually be researching work organization in the Mexican plant of a Canadian telecommunications multinational, Nortel. And one of the things Nortel has tried to do right across the world, not just in North America, is institute a simplified salary system of just seven salary categories for everyone in the company.
And one of the problems that they encountered in the plant in Monterrey in Mexico was that the employees -- and I'm not talking here necessarily just about shop floor, but right through the hierarchy -- rose up against this system, which surprised the Canadian and American inventors or concoctors of this system, because they had very carefully, in a kind of Canadian-American way, said, well, if there's going to be a problem it will be because people see a loss in salary when we put the new system in. So let's make sure that no one looses a cent and as many people as possible actually go up a little bit. That kind of thinking.
The difficulty is that in the Monterrey plant, the money was less important than the fact that the new system suddenly eradicated a whole series of classifications that people felt very strongly about in terms of their symbolic importance for status differences and money was not really the issue at all.
As a result, it triggered off a process of revising this to make it adaptive to the particular context in question.
Anyway, that's one brief quick example of a cultural difference.
I'll also use Mexico I think for a legal difference.
One of the things I did preparing for this conference was I read a whole lot of the articles that are written for Canadian and American companies or managers thinking about opening a plant in Mexico. You know, the kind of 10 steps to success in Mexico article that's addressed to those kind of people.
And one of the things that is almost always brought up about the Mexican labor relations system is -- and this is on the negative side. There's obviously a lot of positives brought up as well -- is that the restrictions, legal restrictions on termination and requirements for severance pay limit management's flexibility in terms of numerical flexibility. In great contrast to, for example, the United States, whereas we heard this morning there are relatively few legal restrictions.
So, there can be legal differences that affect how the model is implemented as well.
And lastly, we shouldn't lose sight of the fact that the particular strategy adopted and the corporate culture of particular multinationals will also play a role. Research in car plants in Canada, all of which are multinationals obviously, has demonstrated that although all the car companies are trying to reorganize work, and although they're all following many of the same principles that I've talked about this morning, there's a considerable variation in how they're achieving this.
And one example that leaps to mind because of some chuckling about GM this morning was that GM's lean production model, which is its version of the new workplace, is actually oriented far more toward managerial control and increasing workloads and less to devolving responsibility to semi-autonomous teams than you than you find in the other car companies.
So even within one industry in one small geographical area you can find various forms of this new model.
And hence, it's unlikely that we'll see a convergence on one single model of production or a corresponding single package of negotiated conditions of employment. But what I think we're seeing and what we're going to continue to see is an effort to rewrite the negotiated conditions of employment in all three countries.
The exact terms are going to vary from country to country, industry to industry, plant to plant. But the general trend, and particularly the general trend among multinationals and other large firms seems to me to be unambiguous.
Thank you very much.
MR. McKENNIREY: Thanks, again, Tony, for an excellent organization of information. It makes we convinced we ought to keep a few departments of industrial relation around somewhere in the world, not just employers.
However, over to you, Marley, a lawyer.
With a wonderfully generous introduction like that --
MS. WEISS: Yes.
On the one hand when I thought about what I was going to say, like everybody else, I thought, well, how am I going to develop a coherent presentation in relation to the themes, which are so broad and so general. And on the other it did occur to me that of the academic presentations, I was going last. And indeed, many thoughts that had occurred to me or that I wish had occurred to me have already been stated by my colleagues who spoke either this morning or now.
I want to try and start by responding a little bit to Tony's last couple of remarks because my initial idea about what we were doing in the morning and what we were doing in the afternoon didn't exactly fit the script as stated. And the way I've thinking about these things didn't quite fit the script as stated.
It seemed to me that the issue that we were trying to look at, at least in part, was the relationship between the super national level; that is, either multinationals or the economic forces moving toward regionalization or the legal convergent forces coming from the NAALC and from NAFTA.
We haven't even mentioned NAFTA here, as opposed to the NAALC, but obviously there are forces stemming from the main agreement, as well.
And to think about how those are interacting with very localized forces, both in terms of law, in terms of institutions, in terms of trade union structures and organizations, in terms of political parties and in terms of the actual terms and conditions in employment on the shop floor.
And so one way of asking that is what are the influences from the top down. And another way of looking at that is to ask what are the influences from the bottom up. And I sort of thought we were going to say in the morning, top down, and in the afternoon, bottom up.
Now, of course, these are in fact interactive and iterative and they go back and forth, so they don't neatly categorize in those kinds of ways. And in fact, I think that our discussion has followed that pattern, as well, in defying neat categorization.
I want to take a few minutes to try and give a different description of how I think the North American -- let me rephrase that -- the United States and Canada largely shared model of collective bargaining and relations is structured. And I want to say a few words preliminarily that go back to Tony's four categories. Because I think that they will highlight why I think that our set of assumptions are problematic. And they're particularly problematic whether we think about new models or whether we think about different models. And I think in particular that Mexico comes from a very different starting model about labor relations.
It is probably true in every country that has collective bargaining that the wage/effort bargain, as Tony puts it, is at the heart of collective bargaining. Nevertheless, one would also have to acknowledge that in a lot of countries, to varying degrees, the wage/effort bargain is constrained by wage setting or other standard setting legislation regarding compensation which may have more or less influence on the wage bargain either collectively or individually set, to the extent that we in Canada and the United States have traditionally used collective bargaining to take wages out of competition or at least limit the extent to which wages are in competition.
One can also do that in different ways through the legislative and regulatory process. And there are countries that do. My sense is that to some extent this has been done in Mexico. I'm not at all clear how much is being done today.
If you set a minimum wage that is the equivalent of 10 cents an hour in the United States or Canada, at least, that will not constrain anybody. So you can set the minimum wage but it won't affect anybody. But on the other hand, when you set that wage at $8.00 an hour, it's going to in fact have an impact relative to bargaining.
Rules and procedures regarding the internal labor market are the kinds of things that we're used to bargaining about in North America because of our model of labor relations, but that in some countries are set at least in part by law, and in other countries are set heavily by traditional approaches that aren't bargained over explicitly at all.
And I'm not sure the extent to which these kinds of things are bargained in Mexican facilities. I do know that there are a lot of countries where priority and reductions in force isn't set at all by collective bargaining.
So again, I want to suggest that we've got to think what we're lumping under one rubric here in terms of how these things are set.
Similarly, issues about discipline, issues about monitoring, issues about health and safety, some of these are traditionally left to employer unilateral control, frequently restrained by legal norms as to, for example, what are appropriate grounds for discipline or discharge and what are not appropriate grounds for discipline or discharge.
And finally, the issue about bargaining about the contours of the union-employer relationship -- again, we've set up our systems in Canada and the United States so that a lot of that is done, but it is not necessarily so. One can fix the relative rules of the parties to a much greater extent by law.
That brings me to something else that I want to through into contention here, which is the assumptions we're making about divisions between the notion of rights and the notion of interests. Where is the line between collective bargaining and implementation of the agreement and also the division between governmental action or the role of governmental action and the role of the private parties through collective bargaining.
Neither Canada nor the United States has a big history of tripartism or other forms of corporatism that create a different structure for regulation of terms and conditions of employment that bring actors, social actors of labor and management into some sort of joint action with government, whether it's to establish terms and conditions or whether it's to in effect adjudicate disputes over terms and conditions that may be collective or that may be individual.
My sense is that in Mexico that is how a lot of things are structured. That is the essence of what the CAB's are.
They may have problems involved in how their membership is selected, but they are quintessentially in this sort of different area that's really neither private nor public or at least it is a different sort of area that involves elements from both.
And so I think that we have to think a little bit harder about these models and how they are currently working before we think about how they're changing.
Now, if I were going to characterize the quintessential United States model -- and I think this is largely true of Canada, as well -- traditionally, and I'm not talking about various newfangled transformative models that may become dominant or they may not depending on whose surveys you believe. But if I were going to look at collective bargaining by tradition in the United States, and I think Canada, I would think of job controlled unionism.
I would think of unionism and of bargaining that is oriented to take a certain portion of what would otherwise be unilateral employer control and to restrain it through rules that are put into the collective bargaining agreement.
Part of the reason that we do this so much in the United States, and I think this may be less true of Canada but I think it is much, much less true of Mexico which may account for some differences there, is that we have so little labor regulation in the United States, notwithstanding the management representative comment this morning about the plight of poor employers in the United States who have so much relation when you've had the grand total of minimum labor standards legislation that we have.
Being generous, we have a minimum wage and overtime law. We have a Family and Medical Leave Act. We have certain aspects of ERISA, the pension reform law and we have the Occupational Safety and Health Act.
Compared to a great many other countries, including Mexico, as well as most of Europe, we have minimal government regulation. And what we don't have set by statute, we don't set by regulation very much either. So this is really and truly left to be addressed in collective bargaining and the collective bargaining agreements look like the labor codes in Mexico and in most European countries.
All the same stuff that's regulated in detail about terms and conditions of employment legislatively in other countries, we have historically done by collective bargaining.
We also do this because it's largely assumed that in mid-term the employer acts and the union reacts. The employer is going to either be bound by this private legislation in the collective bargaining agreement or they're going to be relatively free to act. And I'm oversimplifying but that's an oversimplified version of the legal regime.
We don't have a model that calls for an explicit participatory role in determining terms and conditions of employment at the micro level and on an ongoing basis.
A lot of the, quote, flexibilization, a lot of the new labor-management cooperation models that are alternative models and so on, question those assumptions, question those aspects of our model, though they do it without changes in the external legal institutional support structure. And therefore, they have to do it based on the good faith of the parties because they don't have anything else to make it so.
That's very different than the Mexican situation on paper. And if the Mexican situation had the degree of transparency and actualization that we see as to the Canadian system -- and I want to hold out some reservations about the American system -- then one would indeed have a system in Mexico that looks sort of like a lot of Western European systems.
It would have some different institutional structures but it would have a lot of regulation of terms and conditions of employment but not through collective bargaining.
And one certainly would not expect to see collective bargaining address these kind of things when a lot of them are addressed through legal regulation and then are handled enforcement wise not through private arbitration but through the quasi-adjudicatory, quasi-regulatory CAB system that is much like an administrative tribunal, and actually not all that different from the Railway Labor Act kind of system that we have in the United States where we have these somewhat governmentally chartered labor-management bodies that deal with these kinds of quasi-adjudicatory problems.
So, having laid this all out, I would like to see us spend a little bit of time, because I think I'm running out of my allotted time focusing on the question of whether these structures and whether these institutional arrangements are being changed and eroded by the tendency to move toward uniformity to the extent that it exists in multinational employment practices, or whether they are indeed, as we heard some suggestion this morning, constraining multinationals into diversity, or whether perhaps, as Steve Beckman suggested, what the multinationals are doing is cherry picking where they want to have uniformity because it advantages them in their operations and their profitability, putting great pressure in favor of uniformity either in practice or in changing legal systems, and on the other hand where they prefer the diversity in wages and terms and conditions of employment, picking and choosing to honor the diverse social institutions of the countries at hand.
I think that that's probably an oversimplification, notwithstanding its superficial appeal at least to some of us in the room as a description of what's happening. I think there are other factors that also push multinationals toward accepting local practices, not the least of them things that will in practice and on the ground because they fit various social and cultural norms, encourage employees to be more productive, behave more appropriately, fit more easily into new patterns of work behavior or work organization or whatever it is that the multinational is trying to accomplish.
But I do think that this is the kind of thing we ought to be exploring here.
MR. McKENNIREY: Well, if that's an oversimplification, I don't want to see the more sophisticated version, Marley. That was very helpful. Thank you.
Well, I think we heard there three separate -- and one could go into each one of those a lot more, but three separate and clear presentations on the different models that are there in our three countries and some interesting points of differentiation between them. Models of what's going on in the negotiated relationship or within the relationship of the labor-management relationship and how it's structured.
And I think that Marley has given us a very good taking off point to go to our commentators now and hear from them about how they see these models in action.
So without having time for a break or anything else, we'll just dive into our roundtable participants.
It's 20 after 3:00. I don't want to be overly conscious of time, but I would ask our participants to try to confine themselves as much as they can so that we have a chance for our participants in the audience to have some input.
Let me begin then with Steve Beckman, again, from the UAW.
MR. BECKMAN: Well, just to demonstrate what Marley was saying about U.S. contracts looking like the labor code of countries, this is the UAW contact with Ford. Each of the Big Three contracts is about this size.
This covers the basic -- and this is the national agreement. There's a local agreement at every plant that would be a supplement, an addition, to this voluminous amount of paper.
This cover the basic economic conditions of work. It covers benefits. It covers understandings about how decisionmaking takes place in the company, programs to guarantee income under a variety of circumstances. And precisely as Marley said, it would be a lot shorter if the United States did have a variety of protections for workers in statute. But we have to negotiate these individually.
This size document is what in many countries would be a contract.
This is the summary that we give our members before they vote on the contract. And it's got a lot of -- I mean, it's not all pictures and diagrams. There's real words in here about what has been negotiated on their behalf.
And as I say, this is the national agreement. All of the issues related to staffing, job classifications, a whole host of work organization issues would be covered by the local agreement and would vary from plant to plant. And let me give you just one example of that.
There are two plants in the United States that assemble Ford Tauruses. One's in Atlanta. One's in Chicago. The plant in Chicago has a very modern work organization arrangement. They work in teams. They have very few job classifications. They have adopted a variety of the flexible practices that are advocated by employers broadly.
And we've negotiated this. This is something that the local plant committee has been involved in and the arrangements have been made to their satisfaction.
The plant in Atlanta has I don't know how many job classifications, 100 or so. Has a very traditional grievance procedure. Has a very traditional work organization system. The productivity levels at the two plants are virtually identical. The quality levels at the two plants are virtually identical.
So this goes back to something that was mentioned earlier. If each party believes that it's dealing with another that is sincere, relatively open about what their concerns are and objectives are and is willing to come to reasonable solutions, you can have any variety of organization in the specific plant and accomplish desirable objectives. And I think that the bargaining experience in the UAW demonstrates that you can have these varieties of work organization, varieties of job classifications and skill arrangements and come up with good results.
By the same token, the opposite is true. Either system and all of those in between can come up with terrible results in terms of productivity and quality and workers' satisfaction and acceptance of the way the system is organized and the way it's run.
You can have a very modern flexible plant where the workers feel like they're being forced into higher productivity without adequate compensation, without adequate concern about their needs for manageable stress and a reasonable work pace. You can have the same kind of problems in a plant that has very sharply defined work tasks and a very traditional organization.
And of course, our experience here and the ones we're talking about in this room today in general are union experiences. And the experiences for the vast majority of American workers who don't have the benefit of union representation are quite different. And in those cases, as Marley says, these are unilateral decisions on the part of management. There is no legal backdrop that sets minimum conditions, minimum standards. These are unilateral management decisions, and if you don't like it, you're gone.
And that is the set of conditions under which we bargain.
And the distribution, the sort of industry level negotiations in the United States -- obviously, bargaining takes place for the most part on a plant by plant basis where even in the situation where there are multi-plant employers, in most cases each individual plant negotiates its contract separately. In those instances where there are national agreements -- and there are a relatively limited number of them left in the United States -- there is company wide bargaining to a certain extent, and there is no industry wide bargaining in the United States, per se.
In the auto industry, in the steel industry and a few others -- and the rubber industry, you almost, almost have the equivalent of industry wide bargaining because the rates of unionization are relatively high. On the assembly side in the auto industry that's true. In the integrated steel segment, that's relatively true. And so the conditions that apply for Ford, GM and Chrysler, because there's one union, the UAW that represents the vast bulk of those workers, you can create an industry standard.
And again, as Marley said, through collective bargaining you can try to take wages out of competition and a variety of other compensation issues out of competition in an industry, although our ability to do so that is certainly not enhanced by the expansion of non-union production in the parts industry and the lack of unionization at a number of the new foreign investors in the United States in the auto industry.
So the globalization process or the increased international investment plays a role in preventing us from accomplishing the objective of establishing standard conditions throughout the industry.
And I think it's true that the integration of the three countries, the three systems in the United States, Canada and Mexico, that -- and I'll say the word "NAFTA." Somebody said it hadn't been said before. -- NAFTA produced and that the NAALC is an attempt to modify in some respect. That system of increasing the interaction between these systems.
It's not clear exactly what kind of model that leads us to. And I think the issue that Marley posed of trying to figure out the ways in which the different systems operate and which directions they're moving would be a very interesting one.
And I just want to comment briefly -- I don't want to take too long -- that I agree almost entirely that the way the Mexican system is established is very similar to the way most European bargaining systems work; in the role of the government, in the role of legislation. And we understand that. And I think the issue with respect to the way the Mexican system is changing is that the role of the government has changed fundamentally and its role as a -- with a particular set of interests for the -- I don't know. A time for me, from the Depression until the debt crisis in 1982, the Mexican government played a fairly consistent role in economic development, paying a role between labor and management.
The Mexican government has decided to change that role. And many of the difficulties in the tripartite institutions and the institutional arrangements in general, the corporatist model in Mexico that we see and we experience as undermining union power and undermining workers' ability to pursue their economic interests, is related specifically to the role of the government in that process and how it's changed.
So I'll just throw that in for good measure.
MR. McKENNIREY: Just so as to avoid controversy, let me turn to Jim Nichols, who was formerly the Vice President of Industrial Relations for Joseph Seagram and Sons and now consulting here lately.
MR. NICHOLS: Thank you, John.
In the context of spending most of my life in an industry that has been fully organized since 1934, that organization and that first agreement started on a handshake and has been fully organized ever since and is so around the world.
And understanding that I run the risk of at least now but not for six years of my life, Tony, becoming the extinct individual that, although I was asked to centralize -- is the trend decentralization in many respects? Yes. And I'll come back to that. But I hope I'm not the elephant that was discussed this morning coming out of Canada.
I want to talk about a few things and then tell some stories to try to put this on the ground.
I've spent all of my life at the bargaining table and/or running through industrial relations strategies, tactics, whatever, for my employers around the world. But understanding that talking about NAFTA, common labor relations principles and practices, is in some ways like trying to manage fog, let us take a crack at what is it like to be there on the ground.
In many ways from this one standpoint, multinational enterprises, particularly American based multinational enterprises, don't want uniformity. We don't want everything to look the same. Not because it's a great strategy. Just because it makes good sense.
Remembering that our businesses are market driven to a large degree the train has already left the station. To a large degree, global business is so far ahead of the procedural issues under discussion that it occurs to me that we need to think about that. Because while sitting here in my 30 seconds, global businesses change like that (snapping fingers).
So to a large extent, many of the things that we are trying to proceduralize or at least get our hands around have already gone and they will change tomorrow faster than that. So understanding that stuff.
We -- I, in my role as trying to bring some sense of strategy and consistency, if you will. I didn't want uniformity. Whenever I went to a country, I wanted to honor the national law and practice of that country and the customs and traditions in that country. I was fortunate, as many of my counterparts have been, to have worked for organizations that believed that when you do business, you do it at the highest end of the spectrum with the people that work with you.
And if it meant -- and Steve, I apologize, but I use the word flexibility in all of the best contexts. All right?
If, when establishing an operation, getting the kinds of operational flexibility that you needed to run an effective business meant going above and beyond the norm of the wages and working condition, then you did that. You do that because you want a successful operation.
So if there were maybe four or five things that I carried around in my head, and maybe some of my counterparts do as they bounce around the world, move to flexibility within the national law and practice of wherever you happen to be doing business. And yes, those of you who have read it, I stole that from the EU Directive on Works Council: National Law and Practice. But believe me, when you're there setting up an operation, you have to remember that and you have to work to that and attempt at consistency, where possible.
Now, I will admit that from this one perspective using basically the American labor relations model, but only to the point where it makes sense for who you were with.
For example, if I may, let me turn to Europe just for a moment and we'll come back to Mexico. Traditionally in Scotland, bargaining happens annually. As you know, labor contracts in the UK are not codified in law, so the procedural agreement, if you will, which is very skinny, Steve, is a thing that is discussed all year long and then you're back at the table again.
Was it not possible to have, using the RPI, which is our version of the CPI, which is a semi-governmentally imposed guideline, was it not possible to have a more stable relationship with the TGWU, the GMB, the IWEU. A more stable relationship using what was really an American model of a longer-term agreement, something geared toward their RPI and something that backstops them if the RPI goes beyond what we know as the CPI. In other words, inflation control.
It took two cycles, but we got it done because we worked with the people in the factories to see if they wanted that done; the degree of relationship stability that was good for them and for that business.
Was it an imposed model? No. We cherry picked a few things that we'd grown up with and we put them in to see if maybe they would like them. They liked them. It worked. But, another story.
In 1994 when we decided to make Tequila -- well, in order to do that, you know, you need agave. And in order to get agave, you go to Atotonilco. So, we went to Atotonilco and we were going to build a plant.
But remember when the capital budget comes around, the operations people drive the capital budget. And once they have that, you see, they're going to go to the new country and they're going to do their thing.
At that time in Mexico -- and, my friends, please educate me -- you didn't just go down to Mexico, put a shovel in the ground, build a plant and say, aha, I have a new plant. Now I'm going to hire a workforce. No. That's not how that works.
So, the industrial relations individual who was responsible for some degree of consistency, if you will, at that time said to the operations people, literally, no. We're going to get on a plane and we're going to go into Mexico City and we're going to talk to our friends who already are in business there. We're going to retain competent counsel, whether it be legal counsel or practical advice and counsel from the business community, and we're going to find out how you do this. Only to learn that at that point in time in Mexico, you had your discussions with the union representatives first. And when those discussions were concluded, then you put the shovel in the ground and then you build your plant.
I tell the story only to illustrate that again, in one person's experience but having shared stories with other people that do this, many multinational enterprises, employers, are very, very sensitive or try desperately to be sensitive to where they go and how they go there.
About the fourth principle I carry around in my head is -- as far as Canada, the United States and Mexico is concerned, to the degree we have the operations and now flowing into Brazil and Argentina -- don't try to make your three countries look the same, or your three regions look the same. Don't do that.
If it evolves that way at some point in time, fine. But don't walk around with a set of rules in your hand that says you're supposed to do things this way because it just isn't going to happen. And as I said before, get competent local advice.
But I think one more story might -- two more stories and I'll get off of here, John.
A client in the United States with a factory in North Carolina and a factory in Phoenix. Both the same size, 1700 employees, both organized.
Work rules in the Phoenix plant are completely different than they are in the North Carolina. For example, this thing called paid time off, traditionally it's a big thing for American employers at bargaining, and I guess it is for Canadian employers, too. No more paid time off. But when there's a crisis at home with one of our Spanish-speaking or Mexican employees in the Phoenix factory, she goes home. It's managed very differently than it is in North Carolina with a typical American employee, if you will. It's a completely different issue culturally.
Another example where here in the United States we desperately try to get women to bid on traditionally male jobs. You all know of this. That doesn't happen in Phoenix. Because culturally, the women will not bid on traditionally men's jobs. And we push them, we cajole them, we counsel them. But even in that place inside this country, culturally they won't do it. And I find that fascinating and very difficult to manage.
So, I will shut up so we can get to the audience, John.
MR. McKENNIREY: Thank you very much, Jim.
I heard in your remarks both decentralization and convergence and I was interested to see that. I'm beginning to think that those two things have to be thought of at the same time.
Our next participant is Bob Chernecki who we heard from this morning from the Canadian Auto Workers.
MR. CHERNECKI: Thanks, John.
There's certainly a lot to chew on and to comment on, but I want to try and restrict it to two or three things.
Firstly, I can understand why Frank Stronic (phonetic) doesn't like Mexico that much. If he's got to walk in and talk to the union, I can appreciate why he's not there very often.
The issue I guess for us in labor -- and I want to describe it in a fair way. We've seen where legislatively you can set conditions and terms to guide you through the collective bargaining process. It gives you the rules to follow. We've also seen the opposite happen where laws have taken our right to collective bargaining away. And I reach back into the six and five in the Trudeau years where you were set at a limit and couldn't go by it.
We had a lot of debate of that in the labor movement and a lot of fights but that basically was the law.
And then there's the inter-provincial piece of this where recently in Ontario -- that would take us back to -- not recently. I guess '96 bargaining with the Big Three -- we had to reach in the collective bargaining process, which made it difficult. Difficult enough without trying to reach in and try and protect a law that's already there.
And what I'm talking about is there was a lot of noise about the Harris government changing the hours of work, eliminating the right to refuse under the Industrial Safety Act. A whole host of issues that we had to complicate the Big Three bargaining with, put in the collective agreement in order to protect it, because the law was going to change.
So although there's a way of setting standards in law, to go back to Murray's comments, the reverse is true. So we have consistently relied on the collective bargaining process to ensure those rights are in still.
The other one, I guess, is competitiveness and competition and all the rules around outsourcing, the issues surrounding and the paper talks about a bit about classifications, production teams, labor-management teams. We in Canada, in our union, have resisted strongly this team approach. I mean, there is a good bargaining relationship with most of our employers. We have some 1300 collective agreements in our union -- 1400.
We resisted this strongly back in the '80s, early '80s, the mid '80s, this attitude that you had to have these teams in place in order to improve productivity, in order to improve the bottom line. Employers were convinced that the Japanese model, the Kai-San -- I know we're talking about Mexico and the U.S. here and I'll get to that. The Canadian contingent of our union certainly resisted that strongly. And part of the reason was because we really felt that there was an obligation on the employer to deal with the bargaining agent when you're doing these kind of programs, not with the people on the shop floor.
Now, that may sound a little antiquated or a little strange, but these programs did not strengthen, in our view, the relationship between us and the employer, did not strengthen the union, which is the primary reason for existing, and did not strengthen our strategies in collective bargaining.
At the same time, we had to understand that this seemed to be a major issue with the employers across the Big Three and other employers, but mainly the Big Three. You had to have these teams in place or your investment may not come your way. You may not see jobs in the future.
Well, I think the examples now we see in Canada in terms of our quality, we've got -- and this is a study released by the federal government that I think most of you are aware of in this room. We've got the highest productivity, the best quality and the lowest cost producer in the world. And why shouldn't we get work.
That wasn't done because of some teams we organized on the shop floor. It was done because we've worked at it. Employers put good money into investment. We trained our workers well. They put the product in and had good engineering and good market strategies.
So although with people's mindset back in the mid '80s where you had to have these teams and you had to have total involvement that was your success or your failure, I think our example proves them all wrong.
The other issue that I think I'll finish with is outsourcing.
Now, when you look at what's happening with the free trade agreement, NAFTA, next on the line is NAFTA on steroids, we call it, is MAI, is protecting the investors. But what protection is there for workers? And we were absolutely convinced in the '96 bargaining that we had to protect ourselves from these kind of legislative changes.
And part of that was work ownership. You may have heard a lot about the strike of General Motors in 1996. And the majority of that was their arrogance and refusal to accept a pattern bargaining that's worked well in Canada over a lot of years.
If you look at the level of strikes with Chrysler in the past years and with Ford and with General Motors, pattern bargainings worked fairly well. They're all basically equal in pay. They're basically equal in rules and regulations within the collective agreement. And there's no reason why they couldn't be equally in terms of the pay package and benefit package.
So, we've been convinced and remain convinced that pattern bargaining across the Big Three is the way to go. You select your target and away you go. And there's no different in the United States in the Big Three.
But the major issue for us was -- and I'm going to take us back -- was whether or not we would have jobs. After all this reorganization was done, after all this productivity was improved, after all this effort we went through to do this, did we have job security at the end of it?
And the answer to that question is no. There's no commitment from employers today to give you security if you give them productivity. And CM is a recent example of that. We were part of ensuring that that corporation enjoyed a 49 percent jump in productivity in less than 18 months and profits soured. CEOs' pay package went through the roof. And we participated in that. And what we ended with here is 3,000 layoffs.
So what did we do in the Big Three? Steve showed you earlier the packet of Ford's collective agreement. It's not ours. No. We have a similar number of books.
And what this is is the language on outsourcing that Chrysler signed, GM struck us on, and that Ford ended up accepting as the model.
But let me read you this, and I'll end with this.
"Over the years, the company and union have regularly addressed worker concerns over income and job security. Recognizing that employment levels will fluctuate with changes in the marketplace -- which was Jim's point -- the parties have negotiated programs to provide workers and their families with a measure of income security unparalleled in the Canadian industry." We wrote those words, not them.
"Further, recognizing that longer-term employment levels will be affected by in plant changes and technology and the in plant organization of work, the parties have negotiated a program to encourage attrition and thereby prevent or limit potential layoffs."
And how did we do that? Basically, what this document says there will be no outsourcing during the life of the current collective agreement. That gives us job security. That gives workers a measure of security.
Now, can you do this with multinational corporations that span Mexico, the U.S. and Canada? You can do it in isolation in each of the three countries but you certainly can't do it together because we're all in competition. That's the facts.
If you look today in Mexico, with great respect to the Mexican workers and what they're trying to achieve, and Mexican employers, we've lost -- during free trade and NAFTA, we lost 40,000 members in our union, 40,000. Some 104 operations, plants.
Did they all go to Mexico? No, they didn't. They certainly did not. But a good piece of them did. And we're at the bargaining table trying to bargain and employers are telling us you must try and compete with Mexico.
Well, we're never going to do that. We're never going to do that in wages or benefits. We're never going to do that in terms of our culture, and neither will they, as Mexicans.
So, my point in ending is that although the subject matter talks about the differences in the basic negotiated terms and conditions, I don't know how you could possibly compare any of the three. You have to adapt to the culture, to what you face in the real world. And that's what we've done.
Thank you very much.
MR. McKENNIREY: Thank you very much, Bob.
Turning to the management side from Canada, we have Normand Bedard, who is the Vice President of Human Resources for Cambior, Incorporated, which is a gold mining company.
MR. BEDARD: Thank you, John.
Good afternoon. (translated from French) Thank you for the invitation. (return to English)
I guess I'll switch to English to make it easy on a lot of people.
We're a Quebec based mining company with operations in Canada and in South America. We had operations in the States. We have offices in many countries and many mining projects which are not at the mining stage right now.
So, our approach in mining -- and I'll try to stick to mining because that's the area I know best -- is quite different. We do not choose a country according to the labor relations situation or anything to that effect. We basically look to find ore bodies. And once they're located, we deal with that.
We rarely exclude countries in the north-south axis except maybe Columbia. I think maybe security is the most important thing that we have to look at, much more than the labor relations situation.
We have a decentralized approach in our approach to developing projects. Basically, without trying to offend anyone, I've never met an employer who liked unions but we certainly are part of the people who will work with unions when unions are what our employees decide that they need.
Our approach is basically to create a climate where we are in respect to culture. That brings the employees to feel that they do not need union protection. Now, that works most of the time. It doesn't work all the time. And if that's what people decide, we work with that.
Our approach also is to use a lot of local advisors. And they will inform us on the sensitivities of different cultures. Some of them we can respect. Some of them we have to consider a little more harshly. But some basic factors are their health and safety, fair salaries and benefits, reasonable grievance procedures, we try to minimize the use of outside contractors. We have a fair amount -- I'd say a high amount of communications. Our employees are continually kept informed of what goes on with the company.
Although we do, on the other hand, require some flexibility. When you're a mining operation sometimes located in the jungle, you have to adapt to work schedules. And this is not always part of the culture. And we've worked with that.
We try to incorporate profit sharing in our operations, and that has worked out quite well for us.
We have projects in Mexico right now that we're looking at and we've found that Mexico has a good workforce. And we have a few problems with some of the social measures, one of them being the 10 percent bonus, which is a little tricky to work around. And in all honesty, many of our workers hesitate purely on the aspect of security. There is some concern there and that's something that we have to work with.
Mining is special. It's different from many, many companies or enterprises that will analyze a country and decide whether there is money to be made. Mining looks at it from another angle. Where are the ore bodies and what can we do with these ore bodies?
The labor situation is part of the cost. It's factored in. The greater the ore bodies looked at, and finally we come down to a bottom line. If there's money to be made, basically we'll open up operations and adapting to the labor situation has never been a problem. And we've seen some very different situations in various countries.
For example, Surinam, which is a Dutch speaking country in South America. They have very constraining labor codes. Every time we find a consultant to give us advice, they'll say it doesn't matter. You don't have to respect that. It makes it very difficult for us.
This comes back to what was said about Mexico. Although the laws seem to be fairly strict, there's ways to work around them. What we often prefer is that the labor situation and labor codes and labor regulations and rules be clear because mining is cyclical. It's high cost. It's high risk and it's a long-term investment. And these factors are very important for us.
So from an employer on the floor point of view, I have a lot of problem with certain employers that will look at these issues and they'll be deal breakers. I think that it's possible to deal with any nation if certain aspects such as security and those things are settled, and to turn a profit.
I won't take any more time. I think we haven't got much time.
I guess I'll leave it at that.
MR. McKENNIREY: Thank you very much.
There's nothing like some gold in the ground to solve a few problems. It makes things fall into perspective.
And finally, again from Mexico, we're fortunate to have with us Gilberto A. Gonzalez Treviño.
MR. GONZALEZ TREVIÑO: (translated from Spanish) Thank you very much. Good afternoon. First, I would like to congratulate you on the mission adopted by this event, since it is obvious that the mission, or the objective, is being more than fully achieved. I think that to achieve the temporal public good, both of the unions and the companies, we need alliances and cooperation, alliances and cooperation among the three countries in which by intertwining the criteria of flexibility and transparency--whether on wage issues, or benefits, training, hygiene and safety, or health--with good will we can all work together to achieve satisfactory results for the factors of production, both capital and labor.
Thank you very much.
MR. McKENNIREY: Thank you for your generosity. I appreciate it and we'll benefit from it.
Well, we're -- I'm looking at a watch that is on the table. It's five to 4:00. What's your view? Do we want to take a break for five minutes or do we want to --
Okay. Let's take a break for five minutes, if we could.
(Whereupon, a recess was taken.)
MR. McKENNIREY: All right. Well, the floor is open for anyone with comments or questions for the panel on this afternoon's discussion or who wants to simply give us a three minute resume of the day. That's also open for anyone.
MR. GILES: Before the great rush gets here, can I fill in a space?
MR. McKENNIREY: Please. We don't like dead time on the airwaves.
MR. GILES: Okay.
One of the issues that came up before the break that I think is worth pursuing or thinking about is something that Marley's very illuminating presentation raised some questions. And she's actually quite right that we have a tendency to look at the model that is closest to us and treat it as if it was universal categories applicable everywhere. I'm thinking here in terms of collective bargaining.
And in her comments she raised the very important role that the state plays in a number of different countries as an alternative mechanism for setting or establishing the terms and conditions of employment. And particularly in Europe, if we can grossly generalize and say that there's a European model.
And there's two things I wanted to add to that. One is that in addition to the sort of distinction between collective bargaining on the one hand and the state on the other hand as two ways of establishing terms and conditions of employment, not to mention unilateral employer establishment, that in many European and other countries in the world there's another type. And that's various forms of usually state imposed forms of participation; workers councils, whatever. Worker-management councils, whatever.
I'm thinking particularly in Germany and so on.
And so between those two extremes of collective bargaining, particularly at the plant level on the one hand and the state setting and directing the terms and conditions on the other hand, I think we can add other options. It's not as closed as that.
The other comment that I wanted to make is that if you look at a number of countries where particularly since the second World War the state did play a large role in setting terms and conditions of employment, in France, for example, or in Germany or Sweden, what has happened over the last 10 or 15 years is a withdrawal of that role, a weakening of that role.
So that although there are still very many regulations, the gap between the reality and the regulations is beginning to resemble in some ways -- and I don't want to over exaggerate here, but in some ways the North American model where the state basically sets the very basic minimum and then you bargain on top of that.
There has, conjoined with that, been a decentralization of bargaining in many of those countries that has fostered that kind of diversity and movement away from state regulation.
So although I accept the general category and the importance of looking at those other mechanisms, I think we also have to look at how they're evolving, too, in the current context of globalization and all the pressures that it's bringing.
MR. McKENNIREY: Wow. A very brain dead looking audience at the moment.
MS. WEISS: I think we should each make five outrageous statements. That will trigger instant debate and further response, or at least getting people roused out of their late afternoon low blood sugar.
Ah. Steve wants to contribute to this effort.
MR. BECKMAN: I may have already made five. I don't know.
I just want to -- since there seems to be some time here, follow up on what Tony just said, because I think the ways in which these institutions are changing is obviously very interesting. And because the European model is relevant to the Mexican institutional arrangement, I think there's a relevance here because of the state role.
As the state withdraws from standard setting and rulemaking and leaves labor and management more on their own to make these decisions, the history and structure of the unions have become very important in how they are able to effectively represent the interests of their members.
In Europe and certainly in Germany, we have a lot of experience with the German Metalworkers Union. They have a very close relationship with the Social Democratic Party and they're, of course, ecstatic about the results of the last election. But they've existed for the last 16 years with a hostile government and it didn't destroy their bargaining capacity. It didn't -- it changed the way they had to operate and it put additional pressures on their ability to win new benefits but they did negotiate a 35 hour week during that time.
Their ability to function was not undermined fundamentally by the withdrawal of the state. They had an independent life of their own which they actually could call on to inspire their efforts in this new environment.
And I think the situation in Mexico is challenging in that respect. In looking at the way the official unions have responded to the pullback of the government from assisting is part of the tension, an important part of the tension that exists in the way Americans look at the labor relations system in Mexico and how we analyze what's going on.
The negotiated pacts where they sort of compromised in the mid 1980s from an active government role in support of union negotiating and contract setting were a very weak institutional response in our view because there wasn't the ability on the part of the unions to go out and fight harder at the local level, sort of represent their membership directly at the local levels company by company, which is what the government wanted them to do.
The government said, you know, you're on your own with the company. You go and negotiate with them. Don't come to us.
And they didn't do that. They continued to go to the government to negotiate overall conditions, knowing that the government wasn't really that interested in helping them out and that the negotiations were therefore going to produce relatively weak results for the unions. And in the past 10 years, real wages for Mexican workers have declined substantially during the course of these negotiated pacts between the labor movement and the government at the national level.
And so that's -- I mean, we're fully cognizant of the way these institutional arrangements affect the results in collective bargaining and for workers and we understand the complexity of the systems. And I think the way -- I mean, we could have really interesting discussions about that and how workers in different countries can respond and how they can support each other in dealing with these kinds of circumstances. Maybe that's the next one.
MR. McKENNIREY: I'd like to pose a question if I could to keep going, which you can save to later. Which, after you've heard the whole discussion today, do you feel that multinationals are driving the process, whatever the process may be, the process or the trends today, or not? Or is there a process or a set of trends going on in which all of us are wrapped up, including the multinational corporation, and that is driving itself and that we need to understand better or something along those lines. Or have governments ceased driving a process?
This is the question I'm curious to hear people's reactions to.
Let's hear another question.
MR. WHEELER: Yes. Perhaps a token question from the field.
I'm Jeff Wheeler from the National Labor Relations Board.
I think what was interesting is the theme in the discussion about the importance of adjusting to local conditions and to dealing with local issues in a way that's appropriate to that particular region or country.
And I think that's very important and it's very true. But at the same time, I don't think that precludes establishing an international system of some basic, very basic, labor rights. Things like addressing child labor, forced labor, or respect to right to form unions and to collectively bargain.
So it's very possible and I think it's very important to have both. And while it's useful and it's interesting to have corporate codes of conduct, and while it's important to have collective bargaining agreements and relationships between unions and employers that help establish and promote those rights, it's really not sufficient. In part, because of the international competitive pressures both on businesses and on countries that seek to encourage new investment to come in.
And I've had this discussion with representatives from African countries. And they say, yes, we'd like to adhere to labor rights but we can't be undercut. We're so interested in attracting foreign investment that we don't want any labor rights if nobody else is going to have those labor rights, too.
So, I toss that out for any response.
MR. BECKMAN: One of the things that's frustrating is that the countries that do actually afford workers those rights are reluctant to come forward in the international negotiations and say they support that idea because they're afraid that the companies will then discriminate against them for taking that position in terms of investments.
So even if they are already providing those rights -- and it's not a competitive problem for them, they're still intimidated by the investment demands or the demands of companies regarding investment to not state the obvious, which is, we don't have a problem with this. This would not adversely affect us. So if the international minimum standards were adopted, it wouldn't affect us at all.
They won't say that because they're afraid of the impact of the companies.
And partly to answer John's question which is related. Yes. I think it absolutely is the multinationals that are driving this process because specifically they want to limit the ability of governments to set rules on them. Because then that makes them the primary rule setter. That is their objective.
And some of them have relatively benign motives in wanting to set those rules. And as Jim was describing, for a unionized company internationally, not that many companies are unionized internationally these days, and therefore they don't have to put up with or accept any partner in that rulemaking process. And governments stand in their way of doing business the way they want to.
And I do believe that they are very much the promoters of this effort to get governments to pull back and to limit the variety of ways in which their unilateral ability to set employment conditions is constrained.
MR. NERON: (translated from French) Along the same lines as what Mr. Beckman was saying, it is generally true that few multinational corporations are unionized at the same level in all countries. There are exceptions, like the one we saw earlier, but generally speaking, not only are they not unionized on a worldwide scale, but often -- if they are unionized at all -- it is not with the same union organizations. Should we not be thinking about the fact that there has been a call for the development of some union solidarity among the various organizations. I am little sorry that Gerry Barr, among others who should have been come, is not here. He could perhaps have talked to us, for example, about the situation in a mining state where there was collective bargaining between Canadian unions from the western part of the country and Chilean unions that had the same multinational employer, and could have told us about the contacts between the two union organizations, which were not affiliated in the same place, did not have the same structures, but at least it was possible to establish minimum recognition of rights that are ordinarily recognized, such as, for example, the right to a grievance procedure, or to arbitration, the right to a health and safety committee at the company level. It was much more difficult for the multinational not to adjust. Often the problem is that we talk a lot about the intentions of the multinationals, but often they do not have to subject themselves to collective bargaining. They have already done their part by putting pressure on governments to deregulate the labor laws, for example, or weaken the process of bargaining or unionization. I do not know whether Mr. Beckman is at all aware of these cases.
MR. BECKMAN: Well, Bob can talk about this as well. There are several experiments like this going on.
Currently the merger of Daimler and Chrysler presents a similar situation where the workers are generally unionized but in different unions.
I think one thing to point out, as Bob Chernecki did I think this morning. Most unions in an industry belong to an international union federation. We belong to the International Metalworkers Federation, as do the steelworkers. There's an international chemical, energy and mining federation. There's an international food and allied workers federation. There are a variety of them. Bob mentioned the transportation federation this morning.
That's one mechanism for coordinating the contacts and relationships that are necessary in dealing with a multinational between unions in a number of different countries and those mechanisms exist and are used.
I think that there have been varying degrees of success over the years in establishing minimum conditions for a company's operations internationally through union cooperation and support. But it's still very difficult and there's still a significant amount of suspicion between countries, between unions in different countries, about motives.
With mining, as was pointed out, the companies are looking for the ore and they're not going to decide whether to mine ore -- whether to produce in one country or another based on -- their primary conditions has got to be where the ore is. They can't operate where they don't have the resource.
That's not true for most companies. And so in many instances workers in one country are wondering whether the interest they are receiving from workers in another country has to do with helping them out or preventing them from obtaining investments and jobs. And this is, of course, a natural response and one which, over time, can be dealt with and overcome. But it is not a simple process by any means.
Companies don't suffer that problem. When a company comes in and buys another company, they own it. They can do whatever they want with it because they own it.
We can't go to another union that represents workers in the same company and say, well, we have more experience dealing with this company so here's what you should do. We can't do that. We're democratic institutions and we have to function that way.
It's one of the reasons why we believe in international rules establishing minimum conditions because it's more democratic in defining the way competition takes place. But it makes life more difficult for the worker side than it is for the companies.
MR. CHERNECKI: I guess, John, to try and answer your question about who is driving this. Yes, certainly the multinationals are. Always have and always will. But we used to be able to rely on governments to protect the interests of our members in basic standards.
Those are disappearing very quickly. And when I point out one that's near and dear to our heart -- and Steve's too -- is the auto pact in which we see a wholesale attack by multinationals I think driving this thing on those standards.
They are. No question. Some corporations think it's a job killer and it drives down productivity. There's no evidence of that anywhere.
The auto pact, since 1965, has been around where both companies have good well paid jobs. they both have good high quality. They've both enjoyed profit that's unprecedented. The stocks are unprecedented.
So everything around that animal called the auto pact is working very well, but yet we see an attack by two multinationals on that institution. It's now gone to the WTO. Is our government -- governments, U.S. and Canada, both going to defend or are they going to succumb? A lot of jobs count on them doing that. We don't have much faith in that, quite frankly.
MR. NICHOLS: Okay, Marley. Let me fall on the other side of the coin of that issue.
I could be way off base but I believe to a certain degree the forces that are pushing economic expansion, international business, monetary trading -- and I'm not an authority in these things so I'll use words that are probably wrong. But I believe to some degree, whether intentional or not, those things are moving faster than institutional procedures can keep up with.
One example comes to mind. It is a contentious example but it's real. The largest employer in the United States is a temporary agency. Think about that.
The trend in the United States and to some degree, if you believe in the theory of melding, melding meaning that despite the fact there are many governmental regulations regarding the employment relationship in Europe, they are in fact slowly but surely deteriorating to a, quote -- big quotes -- Western model, through privatization, through multinational business expansion, through cross border marketing. All of those factors.
And to the degree this thing -- what I call I am no longer my brother's keeper syndrome, to the degree that the syndrome expands -- and I'll give you some examples -- a severe decline in defined benefit pension plans in the United States, the severe increase to what are commonly called in the international scene cash balance plans or those that you generate through your own savings and investment, sometimes matched, sometimes not.
The individualization of choice of medical care. Now, I'm not concerned with whether it's good or bad. I'm concerned with the issue of choice, the individual.
To the degree that the principles of shifting to the individual increase, once the emphasis is on the individual, institutions are deemphasized by human nature.
If I am responsible for me, I don't need an organization, any organization.
So think about that for the moment. That is not only a severe organizational and political and philosophical issue for governments and employers but it is also a severe issue for organized labor as an institution.
So, long-windedly, Marley, I'm sorry, but there it is. To some degree. Maybe to a larger degree than we want to admit.
The huge expansion of global economic growth is going on despite what we say and what we attempt to do to control that and the way it grows. It just grows.
MR. McKENNIREY: I think eventually, Marley, you're going to have to answer.
MR. ARTHUR: I think, in fact, I'd like to just pick up from where Mr. Nichols left off.
It would be very nice if one could say that TNCs are driving the agenda, and undoubtedly they are extremely probably the prime actors driving the agenda. But in a sense the question is also why are they having their way? And I think one has to say that the people who might be resisting -- let me say sort of small "sd" social democrats who were driving the agenda or appeared to be more or less for 40, 50, 60 years, appear somewhat to have run out of steam.
And whether it's just one of those cyclical things or whether they have been kneecapped by the very same transnational companies or whatever. I mean, one cannot ignore the fact that they have lost the confidence of their electors and their members. And that as much as you can blame the NLRB for the decline of the American labor movement, you have to put some responsibility on the members of American trade unions.
And while you can say that the rightward shift in the Democratic Party is the result of all the things we can name, to some extent one has to say people rightly or wrongly reached the conclusion that a lot of the experiments which it tried or ought to have tried ceased to attract people. And one would have to say some of them actually failed.
I mean, a lot of the high hopes that were placed in the interventionist state were not in fact successful. That is, the experiments were not in fact successful. And you can rhyme them all off. There's no need to do that.
So, I think we're at a moment, but it's only a moment. It's a long story. But a moment in this long story where it seems to me that what assists, what facilitates the ability of the TNCs to have their way in the industrial relations system is a general erosion of confidence in the state which up to now we have looked to in order to balance power and redress the fallout of unbridled corporate action and so on.
And that lack of confidence is felt very strongly by a lot of people that you would not expect to feel it, including both intellectuals on one side and working people on the other side. And there's a whole new intellectual discussion that has to be opened up which is enormously complicated because the vehicle which we got used to using, the state, now of course has been subverted by technology and international finance and all the other things that we could name.
But we are at a moment where the other side, as it were, the side that wouldn't describe itself as social democratic but would describe itself as individualistic, that side is making the running in terms of the intellectual argument, the intellectual energy.
I mean, this is a moment in history. It will change over time and people will reconsider. But I think one has to accept that the phenomenon is not restricted to industrial relations and I think Mr. Nichols started to open our eyes to that. And it's not strictly a matter of who owns the media and who has the power in terms of industrial relations and so forth.
MS. WEISS: All right. I guess I'm supposed to say something now; right?
MR. McKENNIREY: Only if you want to.
MS. WEISS: Okay. I'll put out a couple of thoughts.
The first is that I don't believe in the invisible hand, whether the invisible hand is God or the deus ex machina of the market. All of these things are products of human social creation.
We construct the legal, institutional and social regimes. Now, we don't always design and get what we want. On the contrary, things often come together and work in different ways that we plan. But that doesn't mean on the other hand that there's this great ball rolling down hill and we'd better get out of the way because by it, virtue of the force of gravity, got to keep rolling.
And I do think that one of the great successful propaganda devices of our generation is this idea that globalization and the rapidity and increase in mobility of information and capital and technology and transportation is just going to sweep everything before it in this new improved bigger and expanded market and everything follows of necessity.
Markets work because they have legal, social and institutional regimes to support them. That's true of labor markets. That's true of product markets. That's true of service markets. If you don't have courts to go to to enforce your contract, you might as well not have commerce at all. In the end, the thing breaks down.
So what's really happening here is that we are in the midst of a transition and muddling through in all kinds of ways. We have a transnational or super national set of developments in terms of mobility of some factors of production. We have relatively immobile labor factors of production. And we have human organization that by culture, convention and design is largely organized at the national level with the nation state being, as Harry was suggesting, a concept that we've all bought into that carries a lot of load.
One way to think about it, I think, is to say the nation state has been our collective bargainer for us collectively in a broader defined collectivity in various international regimes until now. In multilateral bargaining, obviously, as opposed to individual bargaining. And what we have is a situation where we don't have a bargaining law.
We don't have rules that really govern this. We're beginning to develop some rules that will create a methodology as to trade. And by virtue of doing that we privilege trade and we de-privilege all of the nation state level of regulations that operate across different purposes or in different directions.
And because we're shifting upward partially to a different level but not shifting upward the rest of our regulatory regime because of the lack of any kind of worldwide democratic input, we're creating a very severe internal conflict.
That's sort of the broader debate. That this is a very important but localized both geographically and in the sense of labor, as opposed to other factors, discussion that we're having here. And I think that it's very hard to talk intellectually about a solution that's really going to work in terms of a labor relations regime without talking about a solution to the overall broader problem of which this is a part.
And there is a lot of intellectual debate going on about that. I don't pretend to have any great answers. I just am ready to say that I think that's how one has to start thinking about the problem.
MR. CHERNECKI: This is very complex as has been pointed out. But simplistically, never before in all three countries has there been more wealth by corporations. Never before has there been more personal wealth by CEOs. Never before have international money flowed. Never before have Canadians -- I'll speak for Canadians -- felt so much insecurity.
Now, there's something wrong with that picture. There's an absolute obligation on employers in our minds, not just the social mind or what democratic party you're from. The history of government has been that if there's a father up there or a mother up there -- probably a mother -- who is protecting some basic principles of social democracy.
Should we have today deteriorating health care in Canada? Should we have today antiquated labor laws in Canada? Should we have today this debate about our future as Canadians? Should we have this debate about social programs that are being cut to the bone? Welfare and every promise being cut?
These are questions that we ask ourselves in Canada and we can't share a lot of what's said in the board room, but we know what's stated in the union halls and in the restaurants and in the hospitals by our members, that there is an extreme insecurity. And whose obligation is it to ensure there is some, given the wealth of this country.
MR. McKENNIREY: I think I'm going to have to close discussion if we could, and turn our conference back over to our organizers.
Let me just say thank you to everybody who's participated. To our panelists this morning and this afternoon, and to all of you who brought forward points from the audience. I think we had a superb level of discussion.
I know at least we can go away convinced that we were talking about a topic of extreme importance and that the days of considering these issues within the confines of national borders are most definitely over and that the international scene or framework for talking about these issues is the right framework for talking about them.
Thank you very much for your participation.
MS. GARZA: I'd also like to say thank you on behalf of myself and the U.S. delegation to everyone that's participated in this conference. I hope you agree with me that this was a very interesting discussion. And I think that this represents another important step towards enhancing labor relations and management relations in North America.
Before we go, I'd like to thank my counterparts from the National Administrative Office of Canada, May Morpaw, and from Mexico, Rafael Aranda and their staff for the commitment to coordinate activities and their hard work to make this conference a collaborative reality.
I extend my sincere to all the speakers here today, roundtable members and our moderator, John McKennirey, for sharing their knowledge and experiences.
Finally, I want to thank my staff, who's worked very hard. And in particular, there's a very new member of my staff, Keely O'Callaghan, who almost singlehandedly put this conference together, with some help from Sonia, who's standing up there. So I want to thank them very much for all their hard work.
And I want to thank the interpreters who I think also deserve a --
My staff has asked me to make sure to ask you to complete the evaluation form that's enclosed in your conference folder. It's a pink paper that looks like this.
When you're finished, you can return it to the registration desk or send it to our office at the address listed on the form.
Again, thank you all for attending and I look forward to seeing you at our next cooperative this upcoming December in Toronto, Canada.
(Whereupon, the proceedings were concluded at 5:00 p.m.)