Economic, Social, and Political Environments Chapter 3 © 2012 Nelson Education Ltd.

Copyright © 2012 Nelson Education Ltd. Learning Objectives  At the end of this chapter, you will be able to discuss:  supply of and demand for labour  elasticity of supply and demand and its impact on labour power  impact of free trade, deregulation, and privatization on unions  importance of work-leisure decisions  institutional and noncompetitive factors that affect labour supply 3-2

Copyright © 2012 Nelson Education Ltd. Learning Objectives  At the end of this chapter, you will be able to discuss:  recent demographic changes in the labour force  social conditions of the labour market  public attitude toward unions in North America  current trends in income distribution and poverty  impact of compositional shifts in the labour market on labour  importance of achieving a work-life balance  the structural elements of the political system that help labour  globalization and politics 3-3

Economic Policy © 2012 Nelson Education Ltd. 3-4  Macroeconomic policy  single most important influence on industrial relations  Deregulation  designed to create more competition by allowing prices to be determined by market forces  North American Free Trade Agreement (NAFTA)  free trade agreement between Canada, the United States, and Mexico  Privatization  transfer or contracting out of services to private sector

3-5  The Great Recession 2008  triggered by worst financial collapse since the Great Depression  low or negative growth, high unemployment  Canadian Government Action Plan (2009)  Stimulate spending  Home construction  Infrastructure  Business and communities  Financial systems Economic Context Copyright © 2012 Nelson Education Ltd.

 Almost all industries have been affected:  Deregulation  Privatization  North American Free Trade Agreement 3-6 Annual Rate of Employment, Select Countries Economic Context Copyright © 2012 Nelson Education Ltd.

 Nonunion firms  labour market forces determine employee compensation and conditions  Elasticity of supply (demand)  labour responsiveness of supply (demand) caused by a change in the wage rate.  Supply curve is elastic  a small increase in wages causes a large increase in supply of labour 3-7 The Labour Market: Supply & Demand Copyright © 2012 Nelson Education Ltd.

Labour Market Equilibrium 3-8 Copyright © 2012 Nelson Education Ltd.

 Shape of the demand curve is important  Influences union’s ability to raise wages without significantly affecting employment levels  wage-employment tradeoff  The more competitive the product market  greater the employment impact of a wage increase  greater the elasticity of demand for labour 3-9 Labour Power and Marshall’s Conditions Copyright © 2012 Nelson Education Ltd.

 Substitution effect  the easier it is to substitute capital for labour, the less power labour will have to raise wages  Labour intensity  degree to which labour costs account for production costs  The more competitive the market for substitute factors of production  greater bargaining power of firms 3-10 Labour Power and Marshall’s Conditions Copyright © 2012 Nelson Education Ltd.

 Demand is more elastic and unions will have more power when:  product markets are less competitive  harder to substitute labour for capital  labour costs are small proportion of total costs  market for substitutes is less competitive 3-11 Labour Power & Marshall’s Conditions Copyright © 2012 Nelson Education Ltd.

3-12  Unions also derive power from sources other than labour markets.  Unions have successfully forged alliances with community groups to:  Assist in organizing new members  Strengthen positions in bargaining  Support political lobbying campaigns  Oppose plant closures  Support strikes and other industrial actions Labour Power & Marshall’s Conditions Copyright © 2012 Nelson Education Ltd.

3-13  Number of workers is a function of:  Population and immigration  Work-leisure and work-family decisions  Career patterns and retirement choices  Labour mobility  Noncompetitive Factors  Monopsony firm is sole market buyer of a good, service, or labour Copyright © 2012 Nelson Education Ltd. Supply of Labour

 Institutional Barriers to Supply  Lack of government resources resulting in a lack of supply of graduates in a certain profession training or higher education  Unions and Labour Supply  Hiring Hall union-run centre refers union labour to job sites as requested by firms  Demographic factors are important determinants of labour force patterns 3-14 Copyright © 2012 Nelson Education Ltd. Supply of Labour

3-15  Public attitudes to unions  Work attitudes  Trends in income distribution and poverty Copyright © 2012 Nelson Education Ltd. Social Conditions

3-16 Apparent Contradictions  See Table 3.4, View of Work, 1996 (% of employed workers), textbook, page 89  Despite the general support for unions, workers displayed very positive attitudes toward work and conditions  majority of Canadian and American workers want unions for reasons other than economics or job dissatisfaction

 Poverty rising  Union decline linked to wage inequality 3-17 Copyright © 2012 Nelson Education Ltd. Work-Life Balance

3-18  Aging population  Impact of Compositional Changes on Unions:  More Women  Occupational Shifts  Contingent Workers Part-time Temporary Flextime Compressed workweek Teleworking Copyright © 2012 Nelson Education Ltd. Social Conditions

3-19  Labour & Employment Relations Challenges  Work-life balance  Fundamental restructuring from manufacturing to service-based economy  Demographic changes dual-earner single-parent families aging workforce baby-boomer effects Copyright © 2012 Nelson Education Ltd. Social Conditions

Work-Life Balance 3-20 Copyright © 2012 Nelson Education Ltd.

 Compared to the U.S., Canadian labour movement has maintained union density  More, and labour-friendly, laws in Canada  Parliamentary system of government  Political support for labour from political parties 3-21 Copyright © 2012 Nelson Education Ltd. Political Environment

 Three important social and historic experiences for Canada-U.S. difference:  1982 Canadian Charter protected individual rights but facilitated collective bargaining  American firms in Canada more restricted in anti-union activities  Canada rejected the U.S. right to work approach 3-22 Copyright © 2012 Nelson Education Ltd. Political Environment

 Globalization pressures governments to conform to international policy norms  less policy space for provincial governments to experiment with reforms Copyright © 2012 Nelson Education Ltd. Globalization & Politics

 Building on legal context of Chapter 2  Economic context  great recession  poverty  Supply and demand for labour  elasticity  Marshall’s conditions  Social and demographic factors, Canada vs U.S.  Political differences, globalization 3-24 Copyright © 2012 Nelson Education Ltd. Summary