Volume 63, Issue 3: May/June 2012

Labour Struggles in the New Age of Austerity

Photo by Michael K Donnelly

The first months of 2012 hardly represented a new beginning for the working class in Canada and internationally. From the riots and general strike in Greece to the lockout of Electro Motive Diesel in London, workers have found ourselves under severe attack.

This winter offensive by employers is a continuation of the same attacks that workers have faced since the meltdown of the global financial markets in 2008. When we hear that the European banks have a new bailout package for Greece, we have only to remember the massive aid packages the US government gave to Wall Street at the outbreak of the crisis to know that the rich will be bailed out while we get sold out.

Lockouts in Ontario and Québec

New Year’s Day was an ominous start for labour in Canada with 465 workers locked out of the Electro Motive Diesel (EMD) locomotive plant in London, and another 800 aluminum smelter workers in Alma, Québec, also locked out by Rio Tinto Alcan (RT A). In both cases the company had been recently sold to a giant international corporation, Caterpillar in EMD’s case and Rio Tinto in Alcan’s, with an anti-union reputation.

Another similarity was the companies’ demands that the workers accept massive wage cuts. In Caterpillar’s case they sought to directly slash by up to 50 percent the wages paid to hourly employees, while with RT A wages would be cut dramatically by the contracting out of work done by union members as they retire.

RTA received generous subsidies of public money in a secret agreement with the Québec government. A news story by Robert Dutrisac in Le Devoir, based on documents obtained by the Gazette, blew the lid off the deal, which was signed in December 2006 by Alcan and transferred to Rio Tinto when they bought Alcan in July 2007.

In the agreement, Hydro-Québec is obligated to purchase excess electricity at 4.5 times the cost estimated for RTA to produce it. In February Hydro-Québec paid RTA $15 million for electricity that the crown corporation doesn’t need, a 50 percent increase from what it paid in January. If the lockout continues, Hydro-Québec could be on the hook for an estimated $175 million a year. In addition to paying the company for excess electricity, the agreement also gave RT A additional “tax assistance” worth $112 million, and an interest free loan of $400 million repayable over 30 years in exchange for $2.1 billion in company investment. But the heart of the secret agreement is a clause called “force majeure.” Usually reserved for situations such as war, insurrections and earthquakes, it is extended for RTA to also include “labour disputes, strike, picket or lockout.” This clause would suspend RTA from its legal obligations to the province. However, in the case of a labour dispute the company does not have to prove it was diligent in correcting the effects of a force majeure, as the agreement says that in such cases the settlement is left at the discretion of the affected parties.

In essence this means that not only is Rio Tinto potentially off the hook for its obligations in a lockout, it can idle production at the smelter and sell the electricity produced by its power plants at a profit, at a guaranteed rate.

To top it off, this is a time where available aluminum for sale on the world market far exceeds the demand by manufacturers, and producers all over the world are cutting back on production and shutting down mines and smelters in an effort to deplete their stock and drive prices back up. Since the lockout started, prices for aluminum on the London Metals Exchange have jumped from US $300 to US $2,173 per tonne. According to Dutrisac, the Alma plant produces roughly 435,000 tons of aluminum a year and the price increase would rake in an extra $130 million, or more than $1 billion in profits for all of Rio Tinto’s smelters combined.

Days of Action

In response to this situation, the Syndicat des Métallos Local 9490 (United Steelworkers) called for a massive rally in Alma on March 31. This mirrors the “day of action” in London that the Ontario Federation of Labour (OFL) called on January 21, when thousands of trade unionists were bussed in from across Ontario to rally in the snow-covered Victoria Park in support of the locked out EMD workers.

In addition to the day of action organized by the OFL, the members of the Canadian Autoworkers (CAW) Local 27 also enjoyed energetic support from Occupy London (Ontario) and other members of the community. Occupy London was setting up tents on the picket lines in early January while temperatures dropped to below -20 Celsius and the cold wind cut right through winter clothes on the isolated industrial road.

Two months before, on November 9, CAW Local 27 and the OFL had joined Occupy London when the city moved to evict the group from Victoria Park. While that didn’t stop the eviction of Occupy London’s camp, it lay the basis for increased identification and solidarity with the labour movement as part of the “99 percent.”

Occupy Calls for Global Solidarity

Just a week into the lockout, Occupy London issued a press release for global solidarity actions against Caterpillar Inc., calling on Occupy activists to join the mass day of action and organize solidarity actions. Occupy London activist Anthony Verberckmoes was given a prime opportunity to speak from the stage at the day of action rally. He didn’t mince his words.

In addition to laying out the political and logistical support that CAW Local 27 had given Occupy London during their camp in the fall, Verberckmoes also said: “We think we also offer a bit of a lesson in occupying today. We used civil disobedience and we used direct action. We didn’t rely on the political institutions to get us what we want because we’ve lost faith in them. They’re not serving us anymore, they’re not giving us what we need, they’re selling us out. We think we need to take back our factories, we need to take back our schools, we need to take back our political institutions. We should be taking the streets, standing up, drawing a line in the sand and saying ‘no more!’”

Part of this militancy among the young activists of Occupy might be related to the fact that the unemployment rate for youths in Canada aged 15–24 reached 14.7 percent in February, with unemployment rising for the fifth consecutive month. That is equal to an additional 27,000 unemployed young workers in February alone. The national unemployment rate for all workers in Canada is 7.4 percent, according to Statistics Canada.

Like their brothers and sisters in Alma, the workers at EMD were facing a multinational company with immense wealth and resources. In 2011 Caterpillar’s total assets were a staggering $81.446 billion. When Caterpillar bought EMD in 2010 they paid $820 million to Greenbriar Berkshire, a US equity group, who had previously purchased the company from General Motors in 2005 for the bargain-basement price of $201 million.

However, at the same time that Caterpillar was taking ownership of EMD, their wholly owned subsidiary Progress Rail was busy building a new locomotive manufacturing plant in Muncie, Indiana.

There were two possible reasons for the opening of a new plant in Muncie. First, the “Buy American” policies of the US Department of Transportation; and second, the introduction of right-to-work legislation in Indiana that would remove the unions’ security clause that requires all workers at union shops to pay union dues. Opponents of the law point to lower wages and benefits in the 22 states with similar legislation. The anti-union bill was signed into law by Governor Mitch Daniels on February 1.

Two days later on February 3, less than two weeks after the London day of action, Caterpillar announced that it was closing the plant. There were rumblings of a possible plant occupation from CAW’s National President Ken Lewenza immediately after the announcement, but it was always framed as a last resort in the case that Caterpillar refused to negotiate a closure agreement with the union.

Hospital Occupied in Greece, General Strike in India

Canada is far from the only place in the world where occupations of workplaces have been not only discussed but also acted on. In Greece, where the economy has been in free-fall and youth unemployment is just over 50 percent, physicians and workers occupied the General Hospital in Kilkis on February 20 and started running it under workers’ control.

In response to the massive economic crisis, including the cutting of 11,000 hospital beds, the occupiers’ first statement said: “The workers at the General Hospital of Kilkis answer to this totalitarianism with democracy. We occupy the public hospital and put it under our direct and absolute control. The GH of Kilkis will henceforth be self-governed and the only legitimate means of administrative decision making will be the General Assembly of its workers.”

A follow-up statement issued on February 26 by Leta Zotaki, a member of the workers’ general assembly and president of ENIK (Union of the Doctors of Greek National Health Care System in Kilkis), was even more explicit about where the hospital workers were putting the blame:

“The debts are created by bankers who create money out of thin air and collect interest, just because our governments gave them the right to do so. And they keep saying that for those debts it is you and me and our children and grandchildren that will have to pay with our personal and national assets, with our lives. We do not owe them anything. On the contrary, they owe the people a great part of the fortunes they made thanks to the political corruption.”

Meanwhile, in India 100 million workers staged a massive general strike on February 28. Nine major union federations called the strike under the Coordination Committee of Central Trade Unions. The major demands of the strike were for the Indian government to contribute 50,000 more rupees (US $10 billion) to social security for informal workers, to establish a national minimum wage, to address the rising cost of living, to bring increases to pensions, and to stop privatizing public companies.

Unrest in China

China has also seen a recent upsurge of working-class unrest. Perhaps most dramatic was the Wukan Village uprising where in December 2011 local residents expelled Communist Party officials and took control of the village, near China’s industrial centre in Guangdong Province.

The spark for the December uprising was the death of village representative Xue Jinbo in police custody on December 11. Police claimed that Xue died from a cardiac arrest but relatives who identified his body claimed that there were signs of torture and visible bruising.

The origin of conflict was what villagers claimed was a land-grab in September. They accused party officials of selling land to real estate developers without proper compensation to the local residents.

Evictions and other displacements of people from the land in China was found to be a leading cause of the 180,000 reported “mass incidents” in 2010, which include protests and riots according to the Research Centre for Social Contradictions in Beijing.

Labour costs in China are on the rise. According to an article in the Economist headlined “The end of cheap China,” the investment bank Standard Chartered published a survey of 200 Hong Kong-based companies in the Pearl River Delta that showed wages rising by 10 percent in the past year. There may be heightened class conflict in the country as employers seek new ways to increase profits such as speed-ups and increased automation.

Tipping the Balance of Power

This truly is a time of international class struggle. The reality of pitting massive international companies against local trade unions clearly requires a new response by the labour movement. The slogan of “one day longer” simply doesn’t make sense when economic power is so strongly in the hands of the corporations. Instead it should be replaced with “The longer the picket line, the shorter the strike!”

There are encouraging signs of the Canadian labour movement catching up to the militancy and coordination of unions internationally. However, to truly challenge the power of companies like Caterpillar and Rio Tinto will require a lot more than busing in activists for a one-day rally to listen to speeches.

Ultimately it will require the ability of workers in Canada to emulate workers internationally and organize general strikes, workplace occupations, social unrest and international solidarity that is capable of tipping the balance of power back into the hands of the working class.

Mick Sweetman is a Toronto-based labour journalist.