Unifor and Big Three Bargaining

A Response to Gindin’s “Different Ways of Making History”

Photo by CCPA Monitor • Unifor President Jerry Dias at Social Forum rally outside Canadian War Museum.

In his essay of October 17, 2016, “Big Three Bargaining: Different Ways of Making History,” Sam Gindin provides an intriguing analysis of current negotiations between Unifor and the Detroit Three automakers. Beyond agreeing with his points about tough pressure on auto workers, there is not much room for agreement on his portrayal of the issues, the economic and industry context, or the outcomes of negotiations to-date. And there are serious factual concerns around his analysis of autoworkers’ earnings.

In the author’s effort to support a particular theoretical viewpoint about the appropriate role of unions in challenging the rights of corporations to unilaterally determine when, and where, to invest; Gindin has unfortunately side-stepped a number of major developments and events, and misstated workers’ earnings in order to portray a concessionary record of bargaining. Serious discussion and debate are essential for the trade union and other social movements, as is analysis and commentary on strategy and political orientation. In this case, however, I suggest that the analysis offered does not add up, and ultimately detracts from serious debate.

Specifically, I’ll offer a significantly different understanding in a number of areas, including the question of what is a two-tier system (and what isn’t); the origins and context for negotiating a wage progression; address misstatements about autoworkers’ earnings; discuss the role of unions in challenging corporations right to unilateral investment decisions; and finally, offer a few thoughts on what kind of history may indeed be made in our negotiations.

What is Two-Tier, and What Isn’t

Gindin’s analysis begins with a reference to two-tier systems as a “cancer.” On that point I wholeheartedly agree, but his portrayal of what is two-tier, and what isn’t, is sorely lacking, or perhaps purposefully misconstrued.

Organizing to overcome management’s ability to pit worker against worker, and to bring greater fairness into the workplace has taken many forms. Having two workers doing the same work, but with permanently different wages, goes against the most fundamental principles of trade unionism. The call for “equal pay for equal work” and fight against unequal treatment in the workplace date back to the earliest struggles of the labour movement. Overcoming competition among workers, and removing management’s power to play favourites, are among our most basic principles. A key mechanism through collective bargaining to counter management’s power has been to harmonize pay structures (equal pay for work of equal value), and enforcing the seniority system (neutral access to greater rights and benefits based on time in the workplace).

A real two-tier system is one in which both principles of equal pay and seniority are broken, where workers hired after a certain date receive permanently lower wages, with no mechanism or chance of ever moving up to full rates. These “bottom tier” workers will never have equal pay, and the principle of gaining rights and benefits with seniority is abandoned.

Two tier systems are well-known to divide the workforce and ruin the ability of unions to build solidarity. Gindin correctly points to the mid-1980s as a recent era of failed two-tier experiments that backfired on corporations and unions alike. Experience shows that the impact of divisions among workers, ongoing resentment, and dissatisfaction, take their toll on productivity, quality and profits. Major corporations that pushed two-tier agreements in the recessions of the early 1980s, and early 1990s, eventually saw their plans backfire and dropped them amid turmoil in the workplace (famously including American Airlines, Hughes Aircraft, General Dynamics, LTV Corporation and others).

At times history refuses to be learned. The origins of two-tier systems are in fact much earlier. The first known attempt to implement two-tier wages dates back to 218 A.D., when Roman Emperor Macrinus came up with what he thought was a clever solution to address steep cost overruns in his defence budget: he decided to pay new recruits a much lower rate than his experienced soldiers. The plan turned out to be a flop: the army revolted and Macrinus was beheaded.

Those same frustrations at being permanently on the bottom played out dramatically in the last round of UAW negotiations in 2015. At Fiat-Chrysler Automobiles (FCA), the lead company in U.S. negotiations, nearly half the membership was on the bottom tier with wages starting at $15.78 and rising to a maximum of $19.28 after four years and never go any further, while traditional members were making $29 per hour. The corrosive effective of the resentment and frustrations within the workforce were well commented upon in the media, and in other analyses, prior to negotiations – and were clearly at play in the rejection of the first tentative agreement at FCA, and in the extremely low ratifications at GM (55%) and Ford (51%).

To be clear, putting new workers on the bottom with no way to get to the top is a “two-tier” system. A wage progression, however, is not a two-tier system, not at all. And portraying it as such, as Gindin does when he suggests that “everyone clearly understands it to be” a two-tier structure, is a complete misunderstanding of common practice in Canadian industry, and across the trade union movement.

A wage progression means that workers do indeed start at lower rates of pay, and then move their way up. Accruing more pay on a wage progression is already standard practice across many industries, and in many unionized workplaces, including airlines, utilities, school boards, hospitals and whole parts of the municipal public sector. Extended wage progressions are not limited to white collar jobs, (the most widely known examples include teachers and nurses, where 10-plus year wage progressions are common), but also apply to several blue collar workers. A simple review of collective agreements reveals wage progressions for photocopy operators (6 years), dog kennel assistants (6 years), liquor store clerks (7 years), electrical utility workers (9 years), flight attendants (10 years), and more.

The essential concept that rights and benefits accrue with seniority is a direct challenge to management prerogative and power. Workplaces do indeed have differences, and some things are always better, or worse, in every workplace; but seniority means there is a neutral way to gain access to benefits and rights, including job posting to preferred positions, higher levels of job security in layoff and recall, and more vacation, all in recognition of a worker’s commitment to the job, knowledge and skills.

Arguing that any wage progression whatsoever is “two-tier” would mean by definition that half of the collective agreements in the country would be “two-tier.” By that logic, the concessionary tar brush should be applied to the whole of the labour movement, not just Unifor autoworkers. But that would not support an argument that aims to single out Unifor’s wage progression as a dramatic departure and destructive concession.

Additionally, unlike so many other wage progression systems, the one expanded in Unifor’s 2012 agreement, and improved in 2016, has wages that increase automatically based on seniority, not some combination of seniority and management approval, or management’s assessment of skill and effort. Under the 2016 agreement first negotiated at GM, new workers start at $20.92 (a rate that is equivalent to the average manufacturing wage in the country), and then workers’ pay moves up automatically each year by an average of 5% over the progression, to reach $34.15. One year after workers pass through the progression, they then catch up entirely to any other negotiated wage increases and cost-of-living allowance payments that have occurred in the interim.

Keep in mind that when it comes to pay, there are dozens of ways in which workplaces, unionized or not, have all kinds of unfair and unequal pay, such as lower rates of pay for part-time workers, or lower pay for certain jobs, or lower pay for jobs traditionally occupied by women (an obvious fact given the ongoing need to redress gender discrimination through pay-equity legislation). And many of these types of unequal pay were clearly in place within the auto industry decades ago, even well after unionization, including a long-standing practice of lower rates of pay for U.S. foundry workers who were overwhelmingly black, and lower pay for trim and upholstery workers who were overwhelmingly women. In auto, these divisions were eventually overcome by harmonizing pay, and enforcing the seniority system.

A seniority-based wage progression is entirely in keeping with these principles. Is a wage progression exactly how unions would prefer that workers were paid? Likely not. I believe most trade unionists would prefer that all jobs pay $34 per hour (or more), have excellent benefits and working conditions, and a strong democratic union. But the world is not how we simply imagine it to be, and we need to organize and exercise power through our negotiations, and politically, to challenge powerful interests on the other side. As Gindin knows well, where we land in negotiations is the result of contesting power, not by imagining there is no opposing force.

As the leading argument of Gindin’s essay, a portrayal of a wage progression as something that it’s not is clearly an effort to support a his overall position that challenging corporations’ unilateral rights to determine where, and when, to invest is not the terrain for trade unions.

As important as it is to know what is two-tier, and what isn’t, we also need to understand how we ended up negotiating a wage progression in the first place. Sadly, this analysis is missing from Gindin’s essay.

How Did We Get Here?

In his discussion of how we arrived at a wage progression, Gindin’s simple assertion that “in 2012 the roof caved in on the new hire structure” portrays the development as something that just happened (likely the result, in his view, of weak union leadership). While that may be a colourful turn of phrase, it by-passes the entire context, history and developments that gave rise to the negotiation of a wage progression.

Despite selective references to the UAW throughout his essay, the analysis presented on the evolution of the wage progression in Canada neatly skips over the essential developments south of the border. While it may be hopeful to imagine what happens there doesn’t matter here, in an industry as inter-twined as auto, developments in the U.S. matter very much.

At its heart, our negotiation of an extended wage progression in 2012 was a direct result of fighting two-tier, not of accepting it. Omitted from Gindin’s analysis are the developments that brought a permanent two-tier system to the U.S. in the first place, and how those events set the stage for our 2012 negotiations.

In 1999 GM spun-off its in-house auto parts operations to create Delphi Automotive, at the time the world’s largest parts maker. Delphi followed GM in its painful downward slide during the early years of the millennium, and not surprisingly approached the UAW for major concessions, demanding that new workers cut their pay in half to about $14 per hour. Delphi won that battle. Despite the UAW’s assertion to the contrary at the time, the same two-tier structure made its way to the Detroit Three automakers during the negotiations of 2007. In the 2011 UAW agreement with the automakers, the two-tier structure was modestly improved with rates climbing from $15.78 to reach $19.28 by 2015, but critically there was still no path to full wages.

As we entered 2012 negotiations in Canada there were rapidly expanding numbers of UAW members on the “bottom tier,” with only some vague potential that after a set proportion of the workforce was on the “bottom,” then they might move people to the “top” (but that never happened in the end). In 2012 each of the companies was incredibly aggressive before, and during, our negotiations in their assertion that Canada must follow the U.S. lead on this issue and implement a permanent two-tier wage system. Frustrated with the union’s stance, their inability to achieve this concession in 2008 bargaining; and having failed again during the government-mandated cost-cutting and restructuring, they saw 2012 as their opportunity to stamp out the union’s opposition to two-tier once and for all.

A review of media coverage and the union’s official statements, during the 2012 negotiations show absolute clarity in the union’s rejection of the UAW two-tier system, and the centrality of the issue. As former President Ken Lewenza often remarked to the union’s membership, more time was spent in the 2012 auto negotiations discussing workers who were not there yet, than anything else. The negotiation of a wage progression was not about a simple “roof caving in.”

On top of side-stepping the union’s opposition to the UAW’s permanent two-tier system, Gindin critically avoids providing any explanation of the economic context that we faced in 2012. The author simply asserts that the “crisis in auto sales abruptly ended” soon after we ratified our 2012 agreement, and quickly steps over the dramatic impact of the largest financial crisis and global recession since the 1930s, and the slow recovery that continued into 2012 along with widespread uncertainty.

With a Canadian dollar at par in 2012, and companies who could hire new workers in the U.S. at $15.28 per hour (and of course could hire workers in Mexico at less than $5 per hour), the automakers insisted that unless we followed the UAW two-tier system, we would absolutely not secure any new investment.

The assessment of the union’s leadership and bargaining committees was that this was no idle threat. Having watched increasing levels of investment head to both the U.S. and Mexico, and the recent loss of thousands of Canadian jobs, the union’s strategy was to ensure that our compensation remained broadly comparable to the UAW so that Canada stayed in the ballpark for investment.

While Gindin may disagree with that assessment and strategy, he offers no analysis of the economic conditions at the time of the 2012 negotiations, and little to support any alternate view. In addition to the challenges of the immediate economic circumstances, on the policy front it had been a dozen years since the Auto Pact had been overturned by the WTO, and a half dozen years of Harper and his hostile federal government, which had little appetite to meaningfully address the ongoing crisis in Canadian manufacturing.

While Gindin admits that there are “limits to simply being stubborn,” that tactic remains as the only alternative offered, and it’s unclear how simple stubbornness would have won anything other than the most temporary gain in 2012. Certainly, the author knows that autoworkers always have some power in the short term. But investment decisions are years in the making, and while we can always hurt the companies at any given moment, they are certainly more than capable of using their power in the long-term.

In the face of these economic and political conditions, and the clear demands of the automakers, how was the union to reject the UAW permanent two-tier wage system while ensuring Canada secured future investment? The answer was to extend the wage progression, which kept workers on the path to full wages. The record of investment that followed, $3.9-billion and more than 4,000 jobs, speaks for itself. Ultimately, the Canadian example provided the path for the UAW to adopt a wage progression in an effort to change course on the existing elements of their two-tier structure.

It appears obvious to this reader that Gindin’s inaccurate portrayal of a wage progression as “two tier,” followed by side-stepping the entire context for our 2012 negotiations, is clearly designed to support a long-run narrative that the union’s leadership is weak, strategically inept, and that investment is not the terrain for negotiations. Most egregiously, however is a deliberate misrepresentation of the earnings of autoworkers.

Are Autoworkers Really Taking a 20% Cut in Earnings?

As evidence of the purportedly deep concessions the union has made, Gindin suggests “that in inflation adjusted terms, their hourly pay in the fall of 2016 was about 16% below what it was in the summer of 2008.” And in his assessment of the most recent agreement concluded at GM and FCA, he suggests that “By the agreement’s end in 2020, the loss will approach 20%.”

As a seasoned negotiator the author certainly knows this is a misstatement. What Gindin conveniently excludes in this analysis is the value of $21,000 of lump sum payments made during the course of the 2012 agreement, and that have been secured ahead in the 2016 agreement. By referring only to the “hourly wage” portion of our members’ compensation, the author deliberately discounts their true earnings. Of course, we all know that a lump sum does not add to base wages and compound in the same way as a general increase. But to simply ignore those earnings in effort to portray the agreement as concessionary is dishonest.

In the period 2008-2012 did autoworkers lose ground to inflation? Certainly. Everyone lost ground in those years. Wall Street imploded in a festival of corruption and de-regulatory government collusion, resulting in the largest global recession since the 1930s, millions of lost jobs around the world, including 235,000 Canadian manufacturing jobs, with 35,000 auto workers, or 1 out of 4, among them.

The collapse of consumer spending in the U.S., the market for 90% of Canadian-made vehicles, meant that U.S. auto sales fell by half at the depth of the crisis, and two of three domestic automakers went bankrupt. Of particular note, in the lame-duck period of the George Bush Presidency (after the election of Obama, but before he assumed office), it was Bush who unilaterally made an offer of loans to GM and Chrysler in December 2008. But as a piece of pure political payback against the UAW for its support of Obama, Bush insisted that autoworkers make steep concessions as part of the deal. Governments around the world propped up automakers during that period, but it was only in the U.S. that the offer of support included targeting workers to ensure that their very economic survival became dependent on cutting compensation. Of course, in Canada, Stephen Harper only too gladly mirrored Bush’s position.

During the negotiations that ensued with direct government oversight as a condition of public support, Canadian autoworkers were directed to reduce costs to bring them to the same level as workers in non-union automakers. Of course, during the period from 2008 to 2012 autoworkers’ wages did not keep pace with inflation. Everyone lost in that period. Average annual wage increases for manufacturing workers, where there were any at all, were tiny, averaging just 0.9% from 2009 through 2012 among unionized Ontario manufacturing workers (who earn an average of $21 per hour, not $34 as do autoworkers).

What did the union do during this period? The union fought to ensure governments stepped up to keep a specified share of North American production in Canada, made sure that jobs were saved, maintained wage rates, and pushed to ensure public funds shored-up autoworkers’ pension plans. I think the union has nothing to apologize for in its actions during that period, and to condemn the union for failing to also ensure that wages paced inflation is disingenuous at best.

And since then? In reality, over the course of the 2012 agreement, our members’ earnings outpaced inflation, and they are set to do so again in the course of the 2016 agreement. While wages were indeed frozen in the 2012 agreement, the $9,000 in lump sum payments represented $1.08 per hour in straight time earnings over the four year term. Ongoing weakness in the economy ensured a period of low inflation, and in the 12-month periods corresponding to the 2012 agreement inflation rose just 0.9% in the first year, 1.6% in the second, 1.4% in the third and again 1.4% in the fourth.

Compared to earnings in the final year of the previous agreement, the value of the lump sum payments significantly outstripped inflation in years one and two, matched inflation in year three, and meant a minor loss in the fourth year. Most critically, however, over the term of the agreement average annual earnings of Canadian autoworkers were higher than inflation by about 1% per year. In fact, the lump sums were purposely constructed to address inflation, clearly identified as such, and fully accomplished their stated purpose.

Similarly, about the 2016 agreements Gindin suggests that the “losses will now grow to 20%,” again side-stepping the lump sums, now increased to $12,000. The average $3,000 in lump sums paid in each year represent $1.44 per hour in straight-time earnings; which, along with the two 2% general wage increases, and one cost-of-living payment, will definitely outpace projected 2% annual inflation over the next four years.

In those negotiations not subject to formal oversight by government, our member’s earnings have not fallen behind inflation. To deliberately side-step $21,000 in lump sum payments to suggest that autoworkers have been subject to major concessions and that earnings are down 20% is purposely misleading, and given the author’s intimate knowledge of bargaining and compensation practices, certainly disappointing.

Did the Union Simply “tinker” with the Wage Progression?

Concerning the improvements to the wage progression negotiated in 2016, Gindin suggests that the agreement “included some tinkering,” but that doesn’t matter since a wage progression is apparently really just a two-tier system after all. As the author undoubtedly knows, a multi-year agreement can pay more money sooner (front-end loaded), or delay payment until later (back-end loaded) with major consequences for overall earnings. The 2012 wage progression was certainly more highly back-end loaded, where wages were frozen for the first three years, followed by stronger increases in the final years of the progression.

The duration of the grid is only one element of its design. The structure of when the increases occur matters a lot. What about how much money workers actually get during the course of the next agreement? On that measure, by eliminating the period where wages were frozen, and accelerating the pace of movement up the grid, workers in the progression see significant wage increases in this agreement, far outpacing inflation or what traditional members receive.

Consider that a member with two years’ seniority saw their hourly wages rise from $20.49 to $22.80 immediately on ratification of the agreement, an 11% wage increase. The following year that members’ wages will grow to $24.59, another 8% increase; the next year wages will grow another 6%, then a further 5% in the final year. This member’s hourly earnings will increase by 33% over the course of the agreement.

Critically, these increases are not all about just climbing up the wage progression anyway. The steps of the wage progression were significantly increased, particularly in the earlier years. Compared to earnings under the previous wage progression, the pay rates that a member with two years’ seniority will have over the next four years were increased in the 2016 agreement by an average of 10% on each step. Those improvements alone will result in $21,050 more in straight-time pay during the agreement than they would have seen otherwise. And on top of these gains, this member will receive $12,000 in lump sum payments. Portraying these levels of pay increase as “concessionary” is well beyond credibility.

In what can only be an effort at humour, the author suggests that the union has effectively stolen $200,000 from new workers because conditions today are not the same as they were in 2008, and our negotiated improvements are akin to stealing their cars and giving them back a “fiver for coffee and bus fare.” The essential point missed is that that under the conditions in 2008 there were absolutely no new hires, not back then, and there would not be any now. To continue with the analogy, there simply would be no new members from which to steal cars and give them back a “fiver.”

Not surprisingly, what is missing from Gindin’s positive assessment of the UAW’s supposedly superior 8-year wage progression is an acknowledgement that UAW wages start $4 per hour lower, and end $5 per hour lower, than on Unifor’s wage progression. He also incorrectly suggests that the UAW moved “from a 10-year grow-in to an 8-year grow-in, “although they never had a 10-year grow-in in the UAW, rather until 2015 they had a permanent two-tier system. Even more importantly, the author ignores in his observations about the UAW agreement the fact that the companies have little intention of ever directly hiring onto their new progression, as they have dramatically expanded access to part-time workers who will continue to start at $15.78 per hour an reach a maximum of $19.28 after four years’ service with no path to full wages. Despite many important gains in their 2015 negotiations, clearly there is more work to do to fully eliminate the permanent two-tier system. The companies’ clear intention is that future new hires will spend a few years as temporary workers, and only then would they be considered for placement at the start of the wage progression, effectively making it a 10-year system, or longer.

Ultimately, in his criticism of the wage progression and overall wage negotiations, it would appear that the author would simply wish away NAFTA, the overturning of the Auto Pact, the global financial crisis and recession, the automotive bankruptcies, the government-mandated cost reductions, a decade of Stephen Harper, and the existence of the UAW’s true two-tier system. And by wishing these developments away, and offering miscalculations, only then can he suggest that the strong improvements in earnings negotiated for in-progression members were not improvements at all, but were really about “consolidating concessions.”

What About the Defined-Contribution Pension?

Gindin offers some room to acknowledge that the union “does raise some legitimate questions of whether private companies can in fact guarantee defined benefits in the future.” But then quickly dismisses the union’s adoption of a defined-contribution plan for new hires as a “betrayal.” Missing from his observations are the scale of the challenges faced by defined-benefit plans. In an era of incredibly low interest rates (fuelled by failing monetary policy supposedly designed to address structural failures of global capitalism), defined-benefit plans must put away dramatically more money now to pay for future benefits. In fact, the Detroit Three will put $1.3-billion per year into their Canadian plans during this agreement, far outstripping the investment commitments secured to-date.

The author does suggest that a radical transformation of universal public pensions is in order, and on that front I would agree. It is this understanding that lay behind the labour movements’ successful push for the expansion of the Canada Pension Plan. But to single out Unifor autoworkers as “betrayers” is a dramatic overstatement. We have, and will continue to, defend defined-benefit plans across our union, including the maintenance of the existing defined-benefit plans in auto. Criticism of the adoption of a defined-contribution plan for future hires in our 2016 bargaining is like attacking one of the last soldiers standing, and ignoring all the rest who have fled, or been forced, into a similar position earlier (including the UAW in the Detroit Three in back in 2007, and other major Canadian employers such as Vale Inco, U.S. Steel, Toyota and the Royal Bank, among many others).

Moving forward, new hires in the Detroit Three will have a solid defined contribution plan, where the employer will pay a minimum of 4% of earnings, and up to 6% if members elect to contribute 1% more. Given the timescale involved for future new hires, the enhanced CPP will be in force by the time they retire, and the union will certainly fight for further expansions of universal programs like the Old Age Security, and further strengthening of the CPP. The author acknowledges that the pension challenge is indeed larger than any one union, and one company, can fully address in all sectors in all occasions. However, when the author advances this acknowledgement it is presented as insightful analysis, when the union does so it is a “betrayal.”

The Investment Trap?

Beyond the selective history and miscalculations, the most troubling element of Gindin’s essay is the very reason to employ such artifices in the first place: to support his argument that workers should not even contemplate directly challenging capital’s right to unilaterally decide where, and when, to invest. As Gindin lamely suggests, insisting on investment “moves bargaining into the terrain where corporations call the shots.” Where don’t corporations call the shots? The clear assertion is that unions should know their rightful place, and not challenge that power.

It’s fine, in the author’s eyes, if unions join in a “political struggle” around investment, certainly to be guided by outside political experts. But to directly use the union’s own power to challenge corporations’ right to close factories and eliminate jobs apparently is heresy. In previous writing on our 2016 negotiations Gindin’s core argument means that the union should not have even tried to stop the closure of GM Oshawa, or fight for the future of workers at FCA Brampton or at Ford Windsor. Perhaps the union should have just stood back and hoped someone else would step forward to take care of it? Or perhaps, fatalistically, the union should have just let the workplaces close, somehow spurring workers into apparently deeper political action for greater long-term gain?

Certainly, much stronger state power mobilized in the interests of economic development and good jobs would be welcome. But absent that just yet, workers must do what is within their power: including making absolutely clear to the corporations that we do not accept their unilateral right to close productive workplaces and eliminate jobs.

In Gindin’s analysis, taking this stand and mobilizing members and communities behind the seemingly audacious demand, succeeding in reversing a planned closure and securing nearly $900-million in new investments to-date, while simultaneously delivering strong economic improvements to all members, cannot be truly a win for workers and the union. It must indeed be a trap. And in an effort to prove his theory, the author is willing to pull out all the stops to concoct concessions that don’t exist.

What Kind of History is Being Made?

Do corporations continue to have too much power in society? Absolutely. Have economic and political conditions of the last three decades weakened autoworkers, and indeed all workers in Canada? Yes again. Are many workers frustrated these days? No doubt. Is there need for stronger renewal of the labour movement and all progressive movements? Certainly. On all these questions I believe the author would agree. But to address Gindin’s core argument: Can unions directly challenge corporations’ right to unilaterally decide when and where to invest, and make gains for members at the same time? The answer from our 2016 negotiations is clearly yes.

Of course there are limits to union power, requiring the ongoing building toward wider political movements; and there are few, if any, complete victories; but those are indeed the great lessons of the labour and social movements. After bestowing his confirmation of the “end of the union’s leadership legacy within the labour and social movements,” Gindin wonders aloud about the kind of history being made in these negotiations. He suggests that only a rejection of the pattern agreement at Ford has the potential to set the union and the labour movement in the right direction.

There remains, however, the troubling fact of democracy to address, and about which Gindin remains silent. Underlying the author’s views, of course, is an inescapable assertion that workers are easily swayed and ultimately incapable of using their own intelligence and experience to analyse the situation, and make their own decisions. In particular, given his scathing condemnation of the recent agreements as entirely contrary to workers’ interests, the author can only believe that the 4,000 workers at GM, and nearly 10,000 at FCA, must be incapable of democratically electing their own bargaining committees who negotiated the agreement; incapable of intelligently understanding and endorsing their demands by democratic vote; incapable of democratically providing their committees with a strike mandate; and ultimately incapable of properly analysing the settlement and then overwhelmingly ratifying the agreements by secret ballot vote. Surely, in this view, these workers must be pawns in need of better leadership.

If there is history to be made in these negotiations, perhaps it is in these moments where we can relegate to history the kind of politics that argues up is down, and left is right, only to satisfy a theoretical argument that has been disproven by evident facts. Workers can use their power to directly challenge corporations to make investments, while at the same time make gains for all members and build the union: Unifor just did.

The militant demand that Unifor has advanced in these negotiations offers a challenge to the fundamental terrain of corporate power through mobilizing members to strike for investment, and should be applauded by progressives and seen for what it is: a victory for autoworkers and a basis for further mobilization. Ultimately, I remain convinced that workers know what they’re doing.

Bill Murnighan is Unifor’s Director of Research, and is currently participating as a member of the Master Bargaining Committee in his seventh round of Canadian auto negotiations.

This article originally appeared on SocialistProject.ca.

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Misreading the Historical Moment

A Response to Murnighan’s “Unifor and Big Three Bargaining”


SAM GINDIN

Deep economic crises, as opposed to the regular ups and downs of capitalism, have played a special role in the history of autoworkers. Since the auto industry emerged as a mass production industry about 100 years ago, there’ve been three such economic crises and each, in different ways, both threatened and tested workers. The first was the Great Depression. In spite of the economic conditions, autoworkers found the courage and creativity to confront the largest corporations in the world and gave birth to the United Auto Workers (UAW). The second crisis occurred in the 1970s and was followed by a concerted assault by governments and corporations on the gains made by the working class since the 1930s. That attack, dubbed ‘neoliberalism’, had a devastating impact on unions. Yet in auto, the refusal of the Canadians to accept the concessionary pattern coming from its U.S. parent led to a break and the formation of a newly energized and confident Canadian union, the Canadian Auto Workers (CAW).

The latest economic crisis pushed GM and Chrysler into bankruptcy. The companies were only saved by massive bailouts from the U.S. and Canadian governments and they used the crisis to further a radical restructuring of pay and pensions. In Canada, wages have been frozen for a near decade, cost-of-living clauses suspended, the union accepted a two-tier wage structure that defied its most basic principles, and a process was started of gradually (immediately for some) phasing out the union’s long standing defined benefit pension plan.

Big Three Bargaining in 2016

With the industry back to accumulating impressive profits, the question as Unifor entered 2016 ‘Big Three’ bargaining was whether the union would signal a clear turning point and fight to reverse those losses. If that were to occur, it would appreciably reinforce other struggles to renew the labour movement.

Alongside the question of how the union would respond in its first bargaining round since the auto recovery lay another, larger but less defined issue. The promises made by elites in response to the crisis of the 1970s – that free trade, globalization, deregulation, privatization and the acceptance of greater inequality would ultimately enrich workers’ lives – were growing thin well before the financial crisis hit. But the crisis served as a catalyst for a hazy but undeniably pervasive undercurrent of frustration and growing anger. Unions cannot ignore this and how they read this mood and respond to it will determine their future role as a social force.

No social institution – not governments or corporations, not political parties or even unions – are today immune from a feeling that they are out of touch with their constituencies and have let them down. In a different era, a sullen biker played by Marlon Brando is asked what he’s rebelling against. He answers: ‘What you got?’ This alienated mood served as an additional backdrop to the significance of Unifor’s 2016 bargaining round. Would Unifor give voice to that general malaise in society? Could the union once again lead in inspiring others?

That undercurrent of rebellion has been particularly expressed on the larger political stage with totally unexpected challenges to the status quo from both the left and the right. It came in the form of Bernie Sanders placing corporate power, class inequality and the shrinking of democracy on the political agenda and the Trump challenge to the Republican Party’s elite. It included Jeremy Corbyn giving the hierarchy of the British Labour Party nightmares because a socialist proud to defend the working class had actually become leader of the party, and it was expressed in the surprise vote in Britain to leave the European Union. But it also surfaced in the 2015 round of bargaining in the USA.

A taste of the rebellious temper of the times emerged in last year’s UAW bargaining with the Detroit Three. The union leadership was aware of the undercurrent against permanent two-tiers but not of the depth of the anger. The UAW negotiated an end to that structure and moved to the Canadian 10-year grow-in. To the great surprise of national and local leaders, rather than being hailed as heroes, they witnessed Chrysler workers doing what hasn’t happened in three decades – they rejected the agreement and they did so by a 2-1 margin. The message was clear: 10 years was still two-tier in their minds. Even after the grow-in was reduced to 8 years and both the union and the company did everything they could do to cajole or scare workers into being more compliant, the Ford ratification only managed to squeak by with a 51.4% majority.

Jerry Dias, the president of Unifor, was reported to have said that his union “has studied the UAW’s experience closely and won’t repeat its mistakes.” He stated, “We saw what happened… We’ve learned our lessons” (Financial Post, Aug 12, 2016). It might have seemed that the ‘lessons’ from the U.S. as well as the broader signs of social unease were tailor made for a bold move on the part of Unifor. Here was the opportunity of a generation for the union to live up to its traditions and give voice and focus to the growing but still diffuse alienation and anger.

Unifor’s New Pattern

This gets us to Bill Murnighan’s defense of Unifor’s new pattern at GM and FCA (Fiat-Chrysler). He begins by declaring that, by definition, there really is no two-tier structure in the pattern agreement. Moving to parity over 11 years is just another expression of the principle of ‘seniority’ and in any case, as people move through the grid they will get ‘significant’ annual increases. He decries referencing the present and recent past agreements as ‘concessionary’ since the frozen wages are not really quite that because they have been compensated – not entirely, but to an extent worth emphasizing – by lump sums. The loss of the defined pension benefit for existing and future new hires is unfortunate but it was inevitable and so not worthy of real resistance. The union, he claims, far from giving in to the corporations, used its collective bargaining power to directly challenge corporate power. And above all, the members have spoken. GM and FCA workers have ratified what the national and local leaders negotiated, and anyone who challenges this is simply showing contempt for workers.

Murnighan is quite right to say that the Canadians do not have a permanent two-tier system since workers do eventually reach full parity. But to the workers on the line, doing the same work and doing it as competently as the person beside them (which normally takes a matter of months, not years) merits getting the same pay. Not getting it until the end of 11 years (almost half and at least a third of what has normally been taken in the industry as the expected life-time of a worker in an auto plant) is effectively a two-tier structure. It’s clear to workers that some of them are treated as second class citizens whatever the technical definition of ‘two-tier’ may be. To claim now that this is no more than an expression of seniority doesn’t explain why the union, backed by its members, has always resisted this structure and only adopted it under extreme pressure, and now is defending it as a collective bargaining victory and norm.

When, in 2015, the U.S. Chrysler workers rejected the 10 year ‘Canadian’ grow-in as a satisfactory alternative to a permanent two-tier structure, they were quite clearly – and articulately – saying that they didn’t consider this an end to two-tier. (The discrimination flowed into benefits such as the short-week benefit with ‘traditional’ workers but not new hires getting compensated when, for example, operations were shut down for brief periods of time because of a parts shortage). That feeling of being second class citizens in the workplace, of unjustified inequality within a union contract, is all the more reinforced when we add in the fact of the permanent two-tier pension system the new pattern put in place (an aspect of two-tiers Murnighan basically ignores).

Trying to lower worker expectations, trying to convince them this is the new normal, hardly seems to be the role of the union, especially a union with any pretensions of leading the movement. And in any case, it won’t work. Workers see it for what it is. And insofar as the new generation of workers – who would have to be the ones to take the lead in a process of union renewal – experience the union itself as a barrier to solidarity, this raises especially hard questions about how to turn things around.

Murnighan points to the fact that the first years of the grid are no longer frozen at 60% for three years. This is of course welcome yet it is understandably hard for workers to feel gratitude for a shameful aspect of the grow-in that had only added insult to injury (as a standard of comparison, the structure in place in the period 1984-2007 got them to 100% within 18 months). As for the significant increases workers get as they move from 61.25% of the base rate in force at the time of hire to its full application after the 10th year and then catch up to interim increases in the 11th year, here as well the point is technically true but more than a little misleading. Aside from the fact that had the starting rate been even lower, the increases would have been still higher, what workers understand full well is that alongside such increases lie the very substantial losses the denial of equal pay has meant up to that point and after.

In making the union’s case in this regard, Murnighan cites the example of someone with 2 years of seniority immediately getting an 11% increase relative to the old agreement followed by increases of 8%, 6% and 5% through this four-year agreement. What he skips over is that these workers, who have already demonstrated they are fully competent at their job, will be paid $11.73 less than the ‘traditional’ worker beside them in that first year ($24,000 annually) and by the agreement’s end the hourly difference will still be $8.51 (almost $18,000 annually). Murnighan considers it ‘ludicrous’ to suggest a loss over the grow-in period of some $200,000, but in his 4-year example alone, the loss is over $85,000. (For those interested, the table at the end tracks the loss relative to the 1984-2007 standard of 85% over 18 months. It shows a loss of $172,000 in direct wages. With roll-up – the impact on overtime pay, sick pay, vacations, pay for downtime, insurances, and with a contributory pension plan that is lowered by the grow-in – the loss would exceed $200,000.)

It’s worth noting, in response to the union accepting corporate limits on what is possible, that going into the 2015 U.S. negotiations, Ford was “the most vocal of the Detroit 3 about the need to keep the [permanent] two-tier pay scale” (Automotive News, May 8, 2016). Yet, when the union moved to a 10-year grow-in and the Chrysler membership pushed this to 8 years, Joe Hinrichs, Ford’s President of the Americas, not only came on side but praised the change: “while dropping the two-tier system increased labor costs, it eliminated a major source of anxiety in the plants, helping workers focus more on their jobs rather than their colleagues’ paychecks.” He went on:

One of the great things coming out of the new contract has been that we no longer talk about the differences between an ‘entry-level worker’ and a ‘legacy worker.’ All the workers are the same, [and]… that’s really good, because one of the things you really need in a manufacturing plant is there to be focus and discipline. Anxiety or distraction is the enemy of process discipline.


Fiat-Chrysler’s head, Sergio Marchionne, went even further. Even before bargaining began, he asserted: “There can’t be two classes for people who do the same work… It’s impossible. It’s almost offensive” (Bloomberg, Jan 12, 2015). Marchionne was of course looking for the kind of equality that lowered the wages of all workers. But there was ammo here that the union, with its declarations that the companies are unmovable, shied away from.

It is true, as Murnighan says, that though wages have been frozen and cost-of-living has been suspended for close to a decade, the workers have received lump-sums as partial compensation. But the union had, until recently, done an excellent job teaching workers not to be bought in by the sham of lump-sum payments which, unlike wages, need to be constantly renegotiated to retain the same income level (Murnighan himself did a yeoman’s job in this educational work in his early days in the union). As for the 2% the union got in each of the first and third years, with the once untouchable cost-of-living clause now dormant, this will more than likely keep wages lagging inflation.

Pensions: Complexity and Retreat

As for pensions, yes, this is a complex and difficult issue, as was readily acknowledged in the article Murnighan is responding to. But to deny that the retreat in the previous agreement from a defined benefit pension plan, and now consolidated in this agreement, is a major defeat for the union is quite remarkable. The companies not only got the contributory plan they’ve been asking for, with its shift of risks from the companies to the workers, but in the process it also seems that the companies have drastically reduced the monthly contributions, giving the companies a major windfall. (Estimates vary and the union seems to have stayed away from releasing such costs to the members, but one reliable source puts the company cost of pensions for the traditional workforce at close to 15% of their wage while the corporate contribution to the contributory plan is a maximum of 6% – less than half the cost of the defined benefit plan – with another 5% paid by the individual worker.)

Many traditional workers may feel relieved that they have maintained their defined benefit plan, but some serious concerns should be registered. If past trends teach anything it is that having gone so far, the companies may find it very tempting to later converge their pension – move those on the defined benefits to a hybrid and then to a contributory plan (or to a ‘targeted’ plan, which means that if returns are disappointing, the companies can lower the payouts). Nor should workers rely on governments to protect them; the same governments that give in to corporate subsidies to get jobs may see giving in to corporations on pensions as no different. Most important, ‘traditional’ workers must ask themselves whether – once they have refused to support new hires getting the same pensions they do – they can expect those workers later coming to the defense of only some workers getting the better pension?

Murnighan emphasizes the union commitment to a radically improved Canada Pension Plan (CPP) as the long term answer for providing all Canadians with a secure and adequate pension plan and that is commendable. But voluntarily eroding the pensions of new hires and presenting this as a good deal, not only undermines others trying to hang on to the principal of defined benefit plans but contributes to lowering expectations of what an adequate pension is and reduces pressures on the government to act in a way that results in universal, adequate pensions. (It might be added that from a collective bargaining perspective, it is rather surprising that the union handed GM both this major change, ending pension structures that had been in place since the 1950s, and reconfirmed the 10 year grow-in that even the U.S. had reduced to 8 years.)

Controlling Investment

Murnighan’s sentiment that unions must take on corporate power, especially their unilateral right to determine investment and what happens to communities and families is certainly correct. However, his assertion that the union was using its workplace and bargaining power to challenge corporate power includes no examples of concrete independent union action as the job numbers shrank. When was the last plant occupation? Blockade of transportation? Job action? Strike over production plans? Sustained mass protests locally or at the legislature? (It is also rather difficult to accept that the union will directly challenge corporate control over investment when the union has retreated from taking on ever greater workloads and work pace.) When a challenge to corporations’ exclusive control over investment is not in fact supplemented by direct actions at the workplace, it is pretty clear what making investment commitments the union’s number one and essentially only significant priority implies. The union enters negotiations essentially asking the corporation what it would have to accept to get the investment commitments.

Moreover, addressing control over investment always carries political implications, and this means it must be thought of with an eye to what the implications are for the broader working class, and indeed the society as a whole. In the auto industry it means asking what the industry will look like when new hires finally get to full parity – what will be the impact of the electric car, of driverless cars, of having to deal with the environment – and starting to think now about how we can collectively plan to convert productive facilities and skilled workers that the corporations no longer want to produce the goods we still need and what transforming our society to cope with environmental sanity will require. Addressing what is invested, where and when implies taking on what is wrong with free trade agreements as a priority today, and must always be presented as part of a more general drive to regulate corporations and have some democratic input into what private investors can and cannot do to our jobs and communities. We can’t treat the Prime Minister as ‘a friend of labour’ even as he signs another free trade agreement that makes it even harder to gain any democratic control over corporate investments.

Conclusion: Taking on the Fight

No-one denies how difficult things are today for all workers and their unions, including the autoworkers. The focus on auto is not meant to suggest that only Unifor merits criticism; the crisis in the labour movement runs wide and deep. The issue rather is twofold. First, what this collective agreement represents takes the union down a dead-end street. Notions that ‘we will fix’ things next time are absurd; in four years from now, there will again be threats of job losses if workers raise their expectations. And if the union is back to fighting to ‘get investment’ as its number one priority, other demands will again be cast aside. Second, this road places the union on the terrain of trying to define defeats as victories, defending the indefensible, making arguments that sound uncomfortably close to what the corporations argue. The union is pulled into containing and lowering worker expectations; justifying unjust wage grids; giving lump sums a status they should not have; scaring leaders who reject the direction; and so on. Workers see this and begin to wonder which side their union is on.

Finally, yes, the members voted for this agreement at GM and FCA and this can’t be ignored. But Bill Murnighan certainly knows very well the pressures workers are on from governments, the media and the corporations to give in, to ‘be reasonable’ and how much more difficult it is to make the fight when the union itself takes the same line and when workers know the union isn’t wanting to go into battle or preparing for it. The real news about the ratification votes isn’t that GM workers ratified, but that they ratified by the lowest margins in history, that the same seems true of FCA, that the CAMI leadership publically criticized the agreement. Insofar as the Oakville Local and its leadership have so far stood against the pattern they are clearly reflecting the views of a very many auto workers in the other plants as well as their own. At the time of writing, with GM and FCA in the barn the Ford Oakville Local 707 is the lone nay-sayer to the pattern. It will be extremely difficult for a single local to change the course of bargaining. But the Chrysler workers in the U.S. defied tradition, improved the new hire structure, and still got the new investments they hoped for. Should the workers at Oakville Assembly take on this fight, this might be the start of a renewal in Unifor and an optimistic take on the union’s possibilities as it emerges from the first great economic crisis of the 21st century.

Sam Gindin, now retired, was an Assistant to two Presidents of the Canadian Auto Workers (CAW) (now Unifor).

This article originally appeared on SocialistProject.ca.

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