Labour and the Economy in Nova Scotia: “Right-to-work” Legislation as a Means of Economic Growth

Nova Scotia Premier Stephen McNeil’s year-end interview indicated that his government will promote business development and economic growth and will move toward balancing the province’s budget. The first step toward promoting better “business conditions” and balancing the budget, however, entails public sector spending restraint, which is a politically sensitive issue in all provinces.

In nearly 18 months of governing, Premier McNeil has been forthright in his approach to the public sector, and particularly the many unions that protect it: he recently ended a day-long strike by nurses in Halifax by introducing “essential services legislation” in April, for example, and the government has also introduced legislation reducing the number of healthcare bargaining units from fifty to four. This shift toward rationalizing the public sector in Nova Scotia is surprising and encouraging, and although legislative developments this past year have been promising, the provincial government has at its helm many additional opportunities to promote economic growth in the province.

Introducing “right-to-work” legislation in Nova Scotia, for instance, would dramatically restructure how government and labour interacts and it could promote growth in the province. These laws prohibit unions from excluding non-union workers from working in a unionized industry or sector. In Nova Scotia, union membership is not mandatory and workers may freely opt-out of their membership, however, they cannot opt-out of paying union dues, otherwise known as “dues check-off” in collective bargaining agreements. The province is one of many provinces that employ the “Rand Formula,” which allows unions to force non-unionized workers to pay union dues.

This legislation is problematic for many reasons. First, it forces individuals to associate with a party to which they may not want to associate. Although workers may relinquish their membership, they still have, at the very least, a tenable association with the union via membership fees. Second, unions do not necessarily represent everyone’s interest. Because many Canadian unions are politically motivated, for example, forcing workers to pay union dues means that those who have opposing political beliefs must financially support a cause with which they do not share support.

Finally, there is some evidence that strong union presence can adversely affect job creation and economic growth. According to James Sherk at the Heritage Foundation, for instance, “right-to-work” states had an average unemployment rate of 9.2 per cent, while non-right-to-work states had an average unemployment rate of 9.9 per cent. Many businesses also factor union strength and presence into their decision to expand in a particular area. Additionally, union seniority frameworks may encourage highly-educated and skilled workers to find employment in other areas of the country where they can secure employment based on merit, instead of seniority. Furthermore, the seniority system makes it more difficult to eliminate unproductive workers and hire more productive ones. (In other words, seniority provisions act as a form of barrier to entry for new workers and as a form of protection for older workers, who may no longer be the most productive.)

Radically changing labour legislation in Nova Scotia is unlikely, however, taking reasonable steps toward increasing worker choice and promoting business development would be a positive development in the province. Perhaps reworking the Rand Formula such that workers who have opted out of their membership may pay a smaller fee, or eliminating the formula over a set period, is optimal. Likewise, phasing out the seniority system could lower barriers to entry.

These laws do not necessarily weaken unions in the province, but they simply compel them to work harder to earn trust from their members (or potential members). Unions served an important role in the past, but their current framework does not align with today’s economic realities.

Corey Schruder is an AIMS on Campus Student Fellow who is pursuing an undergraduate degree in history at Cape Breton University. The views expressed are the opinion of the author and not necessarily that of the Atlantic Institute for Market Studies

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