Friday, 20 November 2009

Canada: Unionisation Means Jobs

This comes via Right Democrat's Twitter feed:

A group of Canadian scholars has issued a collection of academic research regarding the U.S. Employee Free Choice Act, and the emerging "Canadian connection" to the ongoing U.S. debate over the provisions of that Act.

The research is published today in a special edition of Just Labour: A Canadian Journal of Work and Society. The journal is published electronically by the Centre for Research on Work and Society at York University in Toronto, Canada, and is downloadable here.

The special edition contains 10 articles by prominent Canadian university professors and other researchers specializing in labour market issues (including Pierre Fortin, former President of the Canadian Economics Association, and Michael Lynk, Associate Dean of the Faculty of Law at the University of Western Ontario). The articles review the implications of Canadian collective bargaining experience for the ongoing U.S. debate over President Barack Obama's labour proposals.

"There has been an attempt by some business lobbyists to demonize Canada's experience, as part of their all-out campaign to oppose the Employee Free Choice Act," said Norene Pupo, Director of the Centre for Research on Work and Society at York. "But an objective, scholarly review of the evidence proves that, if anything, Canada's labour market functions better than America's."

In several provinces, Canadian labour laws include features similar to those proposed in the Free Choice Act (including majority sign-up provisions and first-contract arbitration). Moreover, Canadian unionization is significantly higher than in the U.S. (with over 30 percent of Canadian workers covered by a collective agreement, versus 14 percent in the U.S.). However, Canada's unemployment rate is significantly lower than the U.S., and job-creation has been significantly faster over the past decade.

Several articles in the special edition critically examine the claim (made by some U.S. opponents of the Employee Free Choice Act) that unionization in Canada has destroyed jobs and resulted in higher unemployment here. One U.S. researcher, Anne Layne-Farrar, claimed in a commissioned study (based on extrapolating Canadian data) that the Act would destroy over 2 million U.S. jobs and increase unemployment dramatically.

Three articles review in detail Layne-Farrar's methodology and findings, noting several weaknesses in her approach. These include the inappropriate use of non-stationary (time-trended) data for econometric regressions, the exclusion of other relevant determinants of employment and unemployment, and the arbitrary and inconsistent extrapolation of her Canadian findings to the U.S. context. Correcting Layne-Farrar's approach for these problems, it turns out there is no statistically significant link between unionization and unemployment in Canadian data - and no reason to expect negative labour market consequences from the implementation of the Free Choice Act in the U.S.

Pupo said she hopes that the special edition of her Centre's journal will promote a more informed debate by Americans regarding the implications of unionization and collective bargaining. "The claim that unionization destroys jobs and raises unemployment is absolutely not supported by the Canadian empirical experience."
The special issue also includes a comparison of key labour market statistics in Canada and the U.S.:

- In 2008 (before the current recession) Canada's unemployment rate (using comparable U.S. statistical concepts) was 5.3 percent (compared to 5.8 percent in the U.S.).

- Canada's unemployment advantage has widened during the recession. Adjusted for comparable concepts, Canada's current unemployment rate is more than 2 percentage points lower than in the U.S.

- Canada's employment rate (employment as a share of working-age population) is now almost 3 percentage points higher than in the U.S.

- During the decade ending in 2008, Canada's labour market created new jobs twice as quickly (averaging 2.0 percent per year) as the U.S.

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