August 2005
Vol. 6, no. 8

Collective agreements are negotiated by unions and employers to establish the terms and conditions of work as well as the rights and obligations of the two parties. The terms of agreement, known as provisions, are the result of the bargaining process, and may be proposed by employers or unions. The final agreement takes into account the prevailing socio-economic climate, and balances employee demands against the employer's ability to satisfy them. Some provisions such as pay, leave, and medical, dental and pension coverage are integral to virtually all collective agreements. These perennial provisions are well-reported and have been extensively analyzed in past studies (Akyeampong 2002, 2003; Marshall 2003).¹

Other provisions are not as well-known, mainly because their relevance, and hence their inclusion in settlements, reflects socio-economic climate. A good example is the cost-of-living adjustment (COLA) clause. This allows for pay increases at specified intervals during the life of the contract, reflecting changes in the consumer price index. In the early 1980s, when inflation was in the double digits, COLA clauses were a common feature of most collective agreements. In recent years, with annual inflation hovering around 2%, demands for COLA clauses have taken a back seat to more pressing demands.

Using the Workplace and Employee Survey (WES), this article examines some recent popular but perhaps less publicized provisions (see Data source and definitions and Collective bargaining provisions in WES). Are certain provisions more common in some industries than in others, and if so, why? How many employees are affected by the various provisions? Does the presence of such provisions in a settlement significantly affect labour-management harmony?

Socio-political and economic context

The priorities of unions and employers and the outcomes of the bargaining process are determined by the socio-political and economic climate of the time as well as evolving business practices. Although this study looks at agreements signed in 1999 and 2001, the settlement provisions reflect events and priorities over a much longer period, both preceding and following the date of signing. And, because collective agreements usually last about three years (HRSDC 2004, 7), the 1999 and 2001 results cover a span of approximately five to six years.

Undoubtedly, the performance of the economy has a major influence on settlements. In this regard, economic indicators at the end of the 1990s and the start of the new century were generally favourable. Canada's GDP experienced sustained annual growth beginning in 1992, only to gather more steam (to over 5%) in both 1999 and 2000, partly because of the Y2K boom (Table 1). A minor bust followed in 2001, mostly as a result of the information technology meltdown. Labour market performance mirrored the GDP, with the unemployment rate recording continuous annual declines starting in 1994 (10.4%), bottoming out (at 6.8%) in 2000, and then climbing (to 7.2%) in 2001. The annual inflation rate as measured by the consumer price index remained under 2% for most of the 1990s, edging up to over 2.5% in 2000 and 2001. These rates pale in comparison with the 10% to 12% experienced in the early 1980s. All in all, the low inflation environment did not prompt demands for COLA clauses, allowing labour and management to pay closer attention to other issues.

Growing demands for fairness and equity, both in the workplace and elsewhere, have also been a driving factor in collective bargaining. The post World War II era saw a large influx of immigrants, the mass entry of women into the workforce, a rise in feminism, and greater calls for equality and human rights. These trends pushed the federal government to introduce The Human Rights Act (1976-77), the Employment Equity Act (1985), and Equal Wages Guidelines (1986). Over time, the provinces enacted similar laws. Although application of the Employment Equity Act may be limited to public and selected private entities, many private businesses adhere to its principles by including appropriate provisions in their collective agreements.

Another social issue driving settlement provisions in recent years has been occupational health and safety. In 1972, Saskatchewan pioneered occupational health and safety legislation in Canada. The Saskatchewan act made health and safety a joint responsibility by requiring worker—management committees to identify and resolve health and safety concerns. It also protected workers' rights to know about hazards in the workplace, to protect themselves against them, and to refuse unusually dangerous work. All jurisdictions have followed Saskatchewan in this regard. In line with technological advances and growing awareness of environmental hazards, concerns about occupational health and safety have grown over the years. The result has been a proliferation of workplace environmental awareness committees involving labour and management, and the entrenchment of health, safety and ergonomic provisions in many settlements.

Other important concerns affecting settlements in recent years can be traced to changes in business practices. Among the most notable are increased adoption of new technology, a rise in corporate mergers and takeovers, growth in contracting out or outsourcing practices, downsizing, restructuring, and ever-increasing demand for a better-educated and more skilled workforce. To cope with these challenges, employers and unions have been forced to devise approaches that are mutually beneficial. Usually, the solutions are spelled out in collective agreements.

Most common provisions in 2001

Based on the provision inclusion rate (see Data source and definitions), the two most likely of the 10 provisions in WES to appear in settlements signed in 2001 related to issues of occupational health and safety, and job security. Over 80% of the 72,000 settlements (representing roughly 10% of all workplaces) that year contained provisions addressing these two concerns (Chart A). The high rate for the former is not surprising, given growing public awareness of the need to minimize work-related diseases, injuries, stress and other hazards. The high rate for job security is also understandable, especially in light of the high-tech meltdown immediately following the Y2K boom, and the associated rise in the unemployment rate in 2001.

At the other end of the scale, issues dealing with employee participation in decision making, and cost-of-living adjustments had the lowest inclusion rates—less than 50% each. Employee participation in decision making is a relatively recent but growing practice; however, its use is not yet widespread. Inflation has not been an issue over the past decade or so, and COLA clauses not surprisingly ranked last. Inclusion rates for the remaining six provisions ranged from 57% for technological change to 68% for pay equity.

Firm size had no significant effect on any of these results.

The inclusion rate for every provision rose between 1999 and 2001 (Chart A). The biggest increases occurred on issues dealing with technological change (14 percentage points) and workplace reorganization (12 points)—probably reflecting the effects of the period's high-tech boom and bust. The smallest change was the cost-of-living adjustment (up 1 point).

The likelihood of a settlement containing all or most of the WES provisions was very high in 2001, suggesting that most of them commanded the attention of both labour and employers. In 2001, close to one-quarter (23%) of all settlements contained all 10 provisions (Chart B). A little over half (56%) of settlements contained 6 to 9 provisions, and another 15% included 3 to 5. Just 5% of settlements contained clauses dealing with only 1 or 2.

Industry differences

For all the major industry groups, the two most common issues were occupational health and safety, and job security (Table 2). COLA clauses featured least often in most industries.

But some notable differences were evident, driven mainly by varying unionization rates. The likelihood of any of the 10 provisions being included in settlements in education and health services, and transportation, communications and utilities—both heavily unionized—was generally much higher. At the other end of the scale, the likelihood was generally lowest in the construction industry.

Employment equity and pay equity provisions were more likely than average to appear in settlements reached in the heavily unionized transportation, communications and utilities industry group, as well as in education and health. Education and training provisions were also very common in education and health settlements, where retraining for new methods and procedures is essential.

As expected, provisions dealing with technological change, workplace re-organization, and contracting out appeared least often in construction industry settlements. The need for such provisions in this relatively labour-intensive industry appeared to be low compared with the capital-intensive transportation, communications and utilities industries.

Numbers affected by provisions varied

An estimated 11.6 million employees worked for the employers surveyed in WES in 2001. Slightly more than 72,000 (10%) of the employers indicated that the settlement with their largest bargaining unit that year contained at least one of the 10 WES provisions. If it is assumed that agreement provisions eventually trickle down to other workers at the same workplace (unionized or not), then the 72,000 settlements in reality affected, directly or indirectly, most or all of the 4.8 million workers in these workplaces. This amounts to roughly 41% of the employees (Chart C). Using the proportion of total employees affected by the inclusion of a given provision, one can say that job security had the greatest impact, affecting 4.4 million or 38% of all employees. This was closely followed by occupational health and safety, and education and training. At the other end of the scale, provisions dealing with cost of living, employee participation, and employment equity affected the fewest workers—about 20%. The remaining five provisions each affected roughly 30% of workers.

Labour-management relations

WES asked employers to rate how they perceived their labour-management relations—good, fair or poor. This question was asked only of employers with bargaining agents (unions) who also had some grievance or conflict resolution system in place, thus levelling the playing field for the 46,000 respondents.

Irrespective of the number of provisions contained in a settlement, approximately 80% of respondents rated their labour-management relations as good, 20% as fair, and virtually none as poor (Table 3). All things being equal, one would expect the number of provisions contained in a settlement and the state of labour-management relations to be positively related. In other words, the higher the number of provisions in an agreement, the higher the expectation of harmonious relations, and vice versa. However, the results were inconclusive.

As expected, employers whose settlements contained the least number (1 or 2) of provisions rated their labour-management relations as good less often: 73% compared with the overall 80% average. Thereafter, the results showed no discernable pattern. For example, contrary to expectation, 88% of employers who had only 3 to 5 provisions in their settlements rated labour-management relations as good, a ratio that exceeded even that for those whose settlements contained 6 to 9 provisions (77%) or all 10 provisions (83%). These results suggest that factors other than those listed in WES may be stronger determinants of labour-management harmony, such as supervisor-subordinate relationships or promotion prospects. In addition, it is possible that the more provisions in a bargaining settlement, the greater the strain in maintaining good labour-management relations.

Conclusion

As socio-economic climate and business practices change, so do the provisions of bargaining settlements. For example, COLA clauses have been much less popular in the low inflation climate of recent years than in the early 1980s when inflation was in the double digits. Similarly, growing demand for healthy, hazard-free workplaces as well as for equity and fairness has raised the profile of provisions dealing with such issues in bargaining settlements.

After consultations with employers, unions and labour-market practitioners, a list of 10 collective bargaining provisions was compiled by WES. The results show that along with job security, the most common provision (appearing in over 80% of settlements) is occupational health and safety. Other common provisions, appearing in more than 6 in 10 bargaining settlements, centred on pay and employment equity issues as well as education and training—the latter driven by rapidly evolving technology and heightened business competitiveness. In addition, changes in business practices appear to be increasing the popularity of provisions dealing with contracting out, workplace restructuring, and employee participation in decision making.

Note

1. The contents of many settlements are collected and published by the Workplace Directorate Branch of Human Resources and Skills Development Canada. The Workplace and Employee Survey, however, contains the most comprehensive and uniform list of settlement provisions. Several Statistics Canada surveys such as the Survey of Labour and Income Dynamics, and the Labour Force Survey also contain information on several well-known provisions.

References

• Akyeampong, Ernest B. 2002. "Unionization and fringe benefits." Perspectives on Labour and Income (Statistics Canada, catalogue 75-001-XIE). August 2002 online edition.

• Akyeampong, Ernest B. 2003. "Unionization and the grievance system." Perspectives on Labour and Income (Statistics Canada, catalogue 75-001-XIE). August 2003 online edition.

• Human Resources and Skills Development Canada (HRSDC). 2004. "Major wage settlements—second quarter 2004." Workplace Gazette 7 no. 3 (Fall): 7-18.

• Marshall, Katherine. 2003. "Benefits of the job." Perspectives on Labour and Income (Statistics Canada, catalogue 75-001-XIE). May 2003 online edition.

Full article in PDF

Author
Ernest B. Akyeampong is with the Labour and Household Suveys Analysis Division. He can be reached at (613) 951-4624 or perspectives@statcan.gc.ca.

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