‘Union Monopoly of the Public Sector’


4 minute read

July 21, 2009

As a follow-up to yesterday’s post about the garbage strike, I’d like to share this fantastic article by Gwyn Morgan from The Globe & Mail that appeared in Monday’s Report on Business.

While I strategically voice my opinions in the form of a cynical, sarcastic rant, Mr. Morgan offers a more in depth look at how our various levels of government grant public sector monopolies that set the table for strikes and union strifes like the one we are currently forced to endure.

Have a read…



Gwyn Morgan

Gwyn Morgan is the retired founding CEO of EnCana Corp.

Competition is key to the vastly superior living standards of capitalist nations. It stimulates cost efficiency and innovation, while providing the public with the ability to “shop around” for the best combination of price and service. Private sector monopolies are either illegal, or tightly regulated.

But when it comes to taxpayer-financed services such as health care, education, water supply, public transit and garbage pickup, various levels of government are the dominant monopoly provider. Consequently, cost efficiency and innovation are light years behind where they would be in a free-enterprise, competitive environment. While public sector monopolies are seldom regulated, we can generally trust public officials to avoid deliberate abuse of government monopoly power. But what if the power to abuse is in the hands of another entity?

Torontonians are being forced to endure a stinky summer, held hostage by monopolistic public sector unions. In last winter’s bitter cold, Ottawa residents were held hostage by a transit strike timed to coincide with the World Junior Hockey Championships. Big international events are manna from heaven for union organizers. City councillors in Vancouver and Whistler, B.C., paid dearly for peace at the 2010 Winter Olympics, granting municipal workers a 12-per-cent wage hike over three years, igniting a growing backlash over the tax hangover residents will suffer for years after the 17-day Olympic party is over.

Even before this difficult recession, unionized public employee compensation was way beyond competitive “real world” levels. Now, when the average Canadian feels fortunate just to have a job, and many are losing them, public sector unions feel entitled to permanent employment and defend their excessive wages and astoundingly generous benefits as a sacred right.

Private sector union membership has steadily fallen, mainly because of the decline or failure of the businesses that employ them. In a competitive, globalized world, there is little room for the rigid work rules, prohibition from rewarding superior employee performance, strikebound production losses, and adversarial atmosphere that renders unionized companies uncompetitive. Witness the performance differences between Air Canada and WestJet, or General Motors and Toyota.

Now the only safe harbours for big labour are public sector monopolies, where competitive alternatives are few or non-existent. Another advantage for union leaders is that those on the other side of the bargaining table don’t have to worry that too rich a settlement might drive them out of business. Union leaders are acutely aware that their survival depends on a continuation of their monopoly powers and, all too often, strike-bound public officials support this quest by acceding to “no contracting out” clauses.

This mission to maintain Big Labour’s power manifests itself in other harmful ways. For example, the Canadian Union of Public Employees (CUPE) recently celebrated a successful grievance against PeerScholar, a new online application at University of Toronto wherein students can file papers for grading by fellow students who have completed the same assignment. CUPE spokesman Michael Swayze justified blocking this innovative educational advancement on the basis that “if students are doing marking, then they’re in our bargaining unit and must be paid.”

This illustrates another glaring flaw in our labour laws: the requirement that anyone doing work which could be done by union members must join the union, even if they don’t want to. So we have two toxic levels of public sector monopoly power: government-imposed restrictions against private service providers, and unions that are legally empowered to deprive individuals of the right to work outside a union.

When it comes to the delivery of public services, Canadians are amazingly tolerant of behaviour and service levels they would never put up with from any private business. But the time is nearing when, abused by the workers they are being taxed to pay, Canadians will cry “enough.”

Bureaucratic, uncaring and unaccountable “service” delivery experiences bring that breaking point nearer. Images of beleaguered Torontonians struggling to cross picket lines so they can dispose of their smelly garbage will only accelerate the outrage. The contrasting images of residents of nearby Etobicoke serenely putting out their garbage for pickup by privately contracted workers, and the happy Toronto parents who chose “for-profit” daycare while 57 municipal centres are temporarily closed, clearly illustrate that we just don’t have to put up with it any more.

The fact that we’ve seen it all so many times before has spawned a sort of numbed resignation. But what we haven’t seen before is the confluence of a painful recession and the spectre of public sector unions using their powers to abuse the very people who pay their wages. Once public outrage catches fire, these unions will have depleted their bank account of goodwill, and will never again be able convince people they serve any positive purpose. Then there is the stark reality that their high wage levels and outrageous benefits programs are simply unaffordable as federal, provincial and municipal governments sink deeper into the red.

Now is the time to end public sector unions’ monopoly power by moving ahead with private sector contracting of government services, under terms that provide real-world compensation and accountability.

Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

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