Labour Relations Laws in Canada and the United States: 2014 Edition

This study measures the extent to which labour relations laws bring flexibility to the labour market while balancing the interests of employers, employees, and unions. Labour market flexibility allows employees to change jobs (or industries) more easily in search of better compensation or working conditions and employers to change the mix of capital and labour to respond to market changes. Empirical evidence from around the world indicates that jurisdictions with flexible labour markets have more productive labour markets (higher job creation rates, lower unemployment, and higher incomes), which produce a higher standard of living.

Balanced labour laws are crucial in creating and maintaining an environment that encourages productive economic activity. Labour relations laws inhibit the proper functioning of a labour market and thus reduce its performance when they favour one group over another or impose resolutions to labour disputes rather than fostering negotiation among employers, employees, and unions.

Through the Index of Labour Relations Laws, this publication provides an empirical assessment of labour relations laws in the private sector for the 10 Canadian provinces, the Canadian federal jurisdiction, and the 50 US states. In all, 11 indicators grouped into three components make up the overall index. The three components are: (1) Organizing a Union; (2) Union Security, and; (3) Regulation of Unionized Firms.

The overall results suggest four groups of jurisdictions. First are the 24 US Right-to-Work (RTW) states, which have the most balanced and least prescriptive labour relations laws and receive a score of 8.5 out of 10.0. The remaining 26 US states, which are not RTW states, make up the second group, all scoring 6.8 out of 10.0. Alberta (5.3) scored well ahead of other Canadian jurisdictions. Alberta scores lower than US jurisdictions because of a number of provisions that are generally common within Canada, such as binding those who purchase a unionized firm to a collective contract that they did not negotiate (successor rights) and allowing mandatory union membership and dues (union security). The remaining nine Canadian provinces and the Canadian federal government score between 1.1 and 3.4. The federal government (1.1) and Manitoba (1.8) had the most rigid and biased labour relations laws. Ontario and Newfoundland & Labrador tied with the highest score in this group (3.4).
US states tend to have balanced labour relations laws focused on providing workers and employers with choice and flexibility while Canadian jurisdictions generally maintain much more biased and prescriptive labour relations laws.