Start Reforms with Quebec's Labour Laws

A group of influential Quebecers, led by former Premier Lucien Bouchard, has called on the province to modernize its economy and overcome the inertia of the status quo. The group has recommended tax relief, better education, and a more market-based approach to economic development. In addition to these suggestions, Quebec must also undertake fundamental reform of labour market regulation if it is to achieve meaningful and lasting progress.

Labour market reform is not an end in itself. Reforms aimed at achieving more flexibility for both workers and employers to utilize resources to their highest end use results in better outcomes, such as higher rates of job creation, lower unemployment, and higher productivity and wages.

Such improvements are badly needed in Quebec. Data for 2004, the most recent annual data available indicates that Quebec has the highest unemployment rate (8.5%) in Canada outside of Atlantic Canada. In addition, Quebec has the highest rate of long-term unemployment (27 weeks or more) of any province at 19.1%. Quebec’s job creation record is also less than stellar. Over the last ten years, Quebec has consistently underperformed compared to the national average: 1.8% versus 2.0%.

Research indicates that labour market flexibility, for both workers and employers, is the key to improved labour market outcomes. Unfortunately for Quebecers, the regulations governing the province’s workers are the antithesis of flexibility. An examination of labour relations laws highlights how extreme and anachronistic Quebec labour laws are compared to other North American jurisdictions. For example, a 2004 study examining labour relations laws in Canada and the US found that Quebec maintained the most biased labour relations laws of all 60 jurisdictions.

A specific example of the types of biases and prescriptive rules present in Quebec labour relations laws is the process through which unions gain and lose the right to represent workers. Quebec is one of only 4 jurisdictions in North America to have a lower threshold to trigger a certification vote for unionization (35%) than it does to apply to decertify a union (50%+1). In other words, it’s easier to initiative a vote to introduce unions than it is to initiate a vote to remove them.

In addition, Quebec is one of the few jurisdictions to permit the certification of a union without a secret ballot vote. Requiring secret ballot voting has been shown to reduce unionization success rates. When workers have the opportunity to democratically choose unionization, they choose it less. Tellingly, Quebec does require secret ballot voting to decertify (remove) a union.

The rigidity of the Quebec labour laws does not end with the introduction of a union. The province has a number of laws that govern the relationship between employers and unions once a firm is organized. For example, Quebec is one of 5 jurisdictions in North America to require employers to provide advance notification to unions if they intend to invest in machinery, equipment, or new technologies. Worse still, these jurisdictions allow unions to grieve such investments and possibly prevent them. Unions in these provinces have an ability to prevent investments that make their members more productive and thus increase their wages in a sustainable manner.

Quebec is also an exception in prohibiting temporary replacement workers during strikes and lock-outs and allowing third-party picketing. There are numerous other examples of the province’s counterproductive labour laws (one of the highest effective minimum wages in North America) but the main point is that in area after area of labour regulation Quebec is an outlier in North America.

One of the results of these biased laws, not surprisingly, is much higher unionization rates. In fact, at 40.0% of total employment, Quebec maintains the dubious distinction of having the highest unionization rate in North America.

Union dominance reigns in both the private and public sectors. Quebec’s unionization rate in the public sector stood at 82.0% in 2004, the highest in North America. Similarly, Quebec’s 26.7% private sector unionization was also the highest in North America.

Equally as disturbing as the rigidity of the province’s labour laws is the lack of transparency and accountability at Quebec’s Labour Relations Board (Commission des relations du travail), which administers the province’s labour relations laws. In a recent analysis evaluating the transparency of Canadian and US labour relations boards, Quebec ranked 9th out of the 12 labour relations boards in Canada and the United States for its transparency.

The result of Quebec’s lack of labour market flexibility is poorer labour market outcomes such as lower job creation, higher unemployment, and lower wages based on lower productivity. One of the reforms needed to modernize Quebec’s economy is a better functioning labour market based on balance and flexibility. Achieving such will require confronting vested and powerful interests but the benefits will be large and long lasting.