Labor Law Alarms Ontario Firms

ONTARIO'S provincial government, financed in part by labor unions, has proposed a new labor law that business says would drive companies out of Canada's major industrial province.

The most controversial aspect of the legislation is that it outlaws "scabs" or replacement workers during a strike, making sure a company stays shut.

Other proposals make it easier to join unions, especially for people in service industries, from security guards to employees of supermarket chains.

The Ontario Labor Relations Board will be given power to rule on disputes between business and unions. But local businessmen worry that the board will go from "being a referee to a labor advocate," as one business group puts it.

"Many of these powers are extensive considering the board is politically appointed and is generally pro-union," says Neil de Koker, president of the Automotive Parts Manufacturers Association.

However, the government says it watered down earlier proposals to keep the business community happy. It was going to allow supervisors to be unionized. And it was going to allow unionization of a company if 50 percent of the employees plus one voted for a union. That stays at 55 percent. The government feels the proposed law is a minimum.

"It sets the tone for employer-employee relationships throughout every sector of Ontario," says Labor Minister Bob Mackenzie, a former union official.

Ontario is already more unionized than most parts of North America. "The level of unionization here is about 35 to 37 percent compared with 18 percent in the United States," Mr. de Koker says. In the auto industry that percentage is higher: 100 percent at Ford, Chrysler, and General Motors, and more than 50 percent at suppliers' plants.

The proposed rules on re-placement workers mean that unions could shut down entire sections of the car industry with a strike at one key supplier, de Koker says.

"This is especially true with just-in-time delivery [which means products are delivered only when needed]. Car companies don't have any inventories so if a supplier goes on strike, they would be out of business," he adds.

One large supplier, Hayes Dana, whose Canadian operations are based in St. Catherines, Ontario, says it has put a major new plant expansion on hold because of the proposed legislation.

"The [ruling] New Democrats are essentially telling Ontario businesses not to spend money in this province," says Glen Paton, vice president of finance at Hayes Dana.

The auto industry is the province's biggest private employer. Economists estimate one job in six is linked to making cars in Ontario, a province which is the economic engine of Canada, producing almost half of the country's gross national product.

Labor unions like the law, but say it does not go far enough. "It's not as strong as we would have liked, but we'll continue to use the political process to have things reinstated," says Ken Signoretti, executive vice president of the Ontario Federation of Labor.

BUSINESS thinks it is too strong.

"This law would put up a wall around Ontario," says Dale Kerry, spokesman for the business group More Jobs Coalition. "The proposed legislation is imbalanced and out of step with other North American jurisdictions."

Two Canadian provinces, Quebec and Manitoba, however, already have similar legislation. Quebec's law banning the use of replacement workers is even tougher than the Ontario bill.

But Premier Bob Rae says business is overreacting. "This is a very modest and necessary reform," says the head of the New Democratic Party.

The socialist NDP has at least two years before it has to call an election. It has a majority in the provincial legislature and its labor legislation, which many of its supporters consider too weak already, is expected to pass.