Federal politicians of all stripes protect union workers at expense of other workers

The Trudeau government recently passed legislation to ban replacement workers during strikes and lockouts in federally regulated workplaces such as Crown corporations, railways and television broadcasters. Labour Minister Seamus O’Regan said the unanimous passage of the legislation shows workers “they are valued and that parliamentarians have heard them.” But in fact, the legislation shows only that politicians value certain privileged unionized workers. They do not value other members of the labour force who are more disadvantaged, less privileged and have less political power. Instead, politicians use employment regulation to further disadvantage those workers.

“It cannot be stressed enough,” F.A. Hayek wrote in his 1960 book The Constitution of Liberty, “that the coercion which unions have been permitted to exercise contrary to all principles of freedom under the law is primarily the coercion of fellow workers.” Canada’s replacement worker ban illustrates this point. Unions, by lobbying the federal government, coerce their fellow members of the labour force—who are far less advantaged—out of jobs by preventing them, through a legislative ban, from competing for jobs when the union refuses to work.

Similarly to Hayek, Milton and Rose Friedman explained in their 1980 book Free to Choose that the basic source of union power is the union’s “ability to keep down the number of jobs available, or equivalently, to keep down the number of persons available for a class of jobs.” Again, that’s exactly what unions have done in Canada today. They keep down the number of people available for unionized jobs at Crown corporations, railways and all other federally regulated workplaces through their successful efforts to lobby Ottawa for a ban on other workers who might compete with them.

It was predictable that the Liberals and NDP, who traditionally favour interventionist economic policies and rely on unions for political support, supported the replacement worker ban. But the Conservatives also voted for it. Conservative Leader Pierre Poilievre’s said “working people have the right to bargain and fight for wage increases that they need in order to keep up with the galloping inflation that has ripped them off.” But while working people have a right to bargain and fight for wage increases, that does not mean they should have the right to ban, through federal legislation, other people competing for jobs.

In addition to negatively affecting workers who will be shut out of certain job opportunities, the replacement worker ban will worsen Canada’s productivity crisis. Why? Because, as noted in 2017 study, affected employers will find it much more difficult to operate and serve customers during a work stoppage, and the ban will discourage entrepreneurs and investors from investing and doing business by increasing labour costs and lowering investment returns. Threats of strikes, powerful unions inflating costs, and labour relations regulations that disadvantage employers all discourage business investment.

Finally, while the replacement worker ban will benefit certain privileged unionized workers in the short run by protecting them from competition, the resulting reduction in productivity and discouragement of capital investment may make them worse off in the long run. A 2010 study found replacement worker bans reduce investment, wages and employment in the long run, and a 2014 study concluded such bans reduce annual wages.

The legislation banning replacement workers, contrary to the claims of federal politicians who unanimously passed it, does not value all workers and will not help them cope with inflation. It will only make things worse.