Banning Replacement Workers

After decades of lobbying and advocacy by Canadian trade unions, the federal Parliament unanimously passed legislation to ban the use of replacement workers (or ‘scabs’) during strikes and lockouts in federally regulated industries (covering about 1 million workers in industries like including finance, interprovincial transportation, and telecommunications).

The legislation will take effect in June, 2025. It was supported by all parties in the House of Commons: Liberals, NDP, Greens, Bloc Québecois, and — surprisingly — Conservatives. The NDP negotiated support for this bill from the governing Liberals as part of their supply-and-confidence arrangement (which has kept the minority Liberals in power since the last election in 2012). While the Conservative party (like the Liberals) opposed this measure in the past, it decided to support the bill as part of its broader ‘makeover’ strategy to appear more anti-establishment and pro-worker.

The unanimous support for the bill is also testament to the public support which most Canadians currently express for unions and workers more generally. Unions were once scapegoated as self-serving, special interest groups, the cause of wage-price spirals, featherbedding, and lengthy strikes. In the wake of the pandemic, however, and the resulting cost-of-living crisis, more Canadians appreciate that workers have been victims (not the cause) of recent inflation, and are more sympathetic to workers’ efforts to win higher wages and protect living standards. Of course, there is still strong anti-union sentiment expressed by business groups and more ‘honest’ conservatives.

Of course, continued Conservative support for the new law cannot be taken for granted, if they win the next election. It is encouraging to note, however, that in the two provinces with long-standing anti-scab laws (Québec and B.C.) even right-wing parties did not dismantle the laws when they came into power. Perhaps the proven benefits of anti-scab rules in reducing the length of work stoppages and preventing picket line confrontations can be appreciated by a broader range of the political spectrum (but businesses will continue to push hard to win back the rich to hire scabs, understanding fully how this is a core part of their bargaining power). The federal law will also encourage other provinces to adopt similar laws: the new NDP government in Manitoba has pledged to implement anti-scab rules.

Winning all-party support for this historic measure is a very positive outcome, that reflects a conjuncture of advocacy and strategy:

• Years of advocacy and education by unions.
• Effective leverage applied by the NDP in minority government.
• Willingness by Liberals (led by Labour Minister Seamus O’Regan) to enthusiastically promote the measure, once they had been pushed by the NDP to do it.
• Strong coalition-building to broaden political support for the measure.
• Willingness by unions, demonstrated amply in the last two years, to use and defend their right to strike.

This new law marks a welcome and important step forward in Canada’s labour relations law and practice. Workers in many other countries can hardly imagine a world in which they cannot be replaced during a work stoppage. In Australia, for example (where I also work), it is illegal to even call a replacement worker a ‘scab’ as they cross a picket line (on far-fetched grounds that this constitutes unfair ‘intimidation’) — let alone to try to stop them from crossing. This is a historic victory for workers in Canada that unions and their allies can rightly celebrate, while we prepare to defend it in the future.

Posted below is my testimony on Bill C-58 presented to the Senate Social Affairs Science and Technology committee which studied the bill (and recommended its adoption with no changes).

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The amendments to the Canada Labour Code and CIRB Regulations contemplated by Bill C-58, which would prohibit the use of ‘replacement workers’ to perform work normally undertaken by workers engaged in a duly constituted labour dispute, are a welcome step forward in Canada’s industrial relations regime.

Replacement workers are used during work stoppages to allow enterprises to continue production and business, thus protecting the stream of revenue and profits flowing to the business in question. By so doing, the use of replacement workers negates the bargaining power that workers attempt to apply to their employer, in a collective effort to improve wages and conditions.

I start from the fundamental principle that collective bargaining is a good thing. It offsets the inherent imbalance of power in the employment relationship between employers and employees, that derives from the fact that employers initiate and control production. In general, employers do not need any individual worker to operate their enterprise, as much as that individual workers needs their job to support themselves and their family. This dependence of workers on their employer empowers employers to extract more effort for lower wages. Left to the terms of one-on-one negotiations, wages will tend to decline toward subsistence levels.

The exchange between an employer and individual workers is thus a fundamentally unequal exchange, not an exchange between equals. It has been recognized in Canadian law for many decades that collective bargaining is not just a right, but is a necessary counterbalance to the unequal power of employers. Unions and collective bargaining, in this understanding, play a fundamentally important and constructive role in the labour market, by permitting a more equal relationship between workers and employers, and allowing workers to negotiate a higher share of the economic pie they help bake. In economic history, collective bargaining has been essential to the attainment of inclusive prosperity: that is, an economy in which average working people can enjoy a comfortable and reasonably secure life. Economies without strong collective bargaining systems – even developed industrial economies – exhibit great inequality and poor living standards for employed people who lack unique skills or other foundations for bargaining power.

Despite these broad economic and social benefits of collective bargaining, many employers try to avoid or resist it – for the simple reason that it generally leads to higher labour costs and constrains the unilateral authority of employers in the workplace. There are many ways for employers to avoid collective bargaining: including interfering with or opposing unionization campaigns, relocating work to non-union facilities or countries, outsourcing work to non-union suppliers, or converting their employees into contractors, labour hire workers, or platform workers.

Using replacement workers during a work stoppage is another way for employers to try to defeat collective bargaining. If, in the event of a work stoppage, the employer can carry on business anyway thanks to the use of other non-union workers, then the balance of power in bargaining is tilted dramatically. The employer is empowered to ignore or resist union demands entirely, and carry on business as usual. In effect, the employer can use a work stoppage, potentially provoked deliberately, to step outside of the collective bargaining relationship entirely. Knowing that this can happen hardens employer attitudes, and constitutes a major impediment to genuine and constructive collective bargaining.

In addition to this negative effect on the bargaining relationship, the use of replacement workers has other painful outcomes: including prolonging labour disputes (and resulting lost income for workers involved), and increasing the risk of spillover disruption, confrontation, or even violence on picket lines. Of course, violence is not acceptable in any circumstance, but a labour relations regime which provides employers with the right to continue to operate despite a duly constituted work stoppage clearly enhances the risk of such an outcome – and there are too many instances in Canadian labour history of this occurring.

Some employers worry these reforms will unleash a wave of strikes that will disrupt the economy and weaken productivity. There is no empirical evidence to support this concern. Work stoppages in Canada have certainly been more common in the last two years, due to the disruption caused by the acceleration in inflation and the resulting decline in real wages. But in historical context, work stoppages are nevertheless still very rare.

Last year was the worst year for work stoppages in decades. Yet days lost in work stoppages still accounted for barely 0.1% of total days worked in the economy. And in the first four months of 2024, days lost in major work stoppages have fallen 63% from the same period in 2023. Over the last decade, the proportion of working days lost to work stoppages (including employer lockouts, which were very common in the mid-2010s) was about 0.04% – the lowest for any 10-year period since World War II. That is one tenth as frequent as was the case in the 1970s. In other words, the frequency of work stoppages has declined by 90% since the 1970s. This trend reflects the decline of union representation in the private sector of the economy (down to 16% according to most recent Statistics Canada data), and other law, regulatory, and economic factors which have weakened the bargaining position of workers and their unions.

There is a limited amount of scholarly research on the impact of prohibitions on replacement workers on the incidence and duration of work stoppages, based on experience in Quebec and B.C. (where these laws have been in place for some time). There is no evidence of a statistically significant and sustained impact of these measures on the overall incidence of days lost to work stoppages. Some evidence suggests that work stoppages are more frequent, but of shorter duration, when replacement workers are prohibited, with no net effect on days lost to work stoppages. Some evidence suggests that these measures are associated with higher private sector wages, which is consistent with the story I have told about the importance of effective collective bargaining in lifting wages.

In sum, this legislation is an important step forward in Canada’s industrial relations architecture. It will reinforce the integrity of collective bargaining, which plays a vital role in the attainment of a more inclusive and fair economy.