Labour Law and the New Inequality

Abstract

Rising economic inequality in Canada and the Western world has become an unspoken but influential political theme over the past quarter century. The Great Compression between the late 1940s and the 1980s - which brought an unlamented end to the pre-war Gilded Age and its social inequities, established a post-war middle-class society in the industrial democracies, and created a host of equalizing institutions, including a vibrant union movement - has been unravelling since the rise of modern political conservatism. A hydraulic relationship exists between unionization and inequality. Countries that have higher unionization rates tend to have lower patterns of economic inequality. And as unionization rates decline, inequality tends to rise. In Canada, the political impulse to reform labour laws has been waning since the early 1990s, shortly after Canadian unions had reached their numerical zenith. As income and wealth inequality levels rose, labour's share of the Gross Domestic Product has declined to record lows in the post-war era, wages have stagnated and most of the economic productivity gains over the past 25 years have been captured by those at the very top of the income scale. One significant explanation for the eroding levels of unionization in Canada has been the country's stagnant labour laws. In particular, statutory changes to the union certification process in a number of Canadian jurisdictions has diminished the ability of unions to protect their representational levels. Empirical social science suggests that labour laws matter, not only for unionization levels, but as an important tool to enhance economic egalitarianism.