Unions embracing foreign workers

As we know, an increased supply of workers will tend to put downward pressure on wages, all else being equal. Because of this, there was a time when a certain labour union in B.C., The Construction and Specialized Workers' Union, fought to keep foreigners from competing for jobs held by the domestic workers they represent.

Despite the union's concerns, foreign workers were brought in by SELI Canada Inc. and issued long-term contracts. Soon after their arrival the 42 Latin Americans issued a human rights complaint with the B.C. Human Rights Tribunal. Their complaint is that they're receiving a lower wage for the relatively riskier work they're doing on the Canada Line rapid-transit tunnel. In response, the union has done an about-face and decided to help the foreigners state their claim.

"This is all nonsense,” said the firm's lawyer. “The union didn't want these people coming in in the first place. It's part of this campaign to keep out foreign workers.” He added that the human rights complaint “is part of a political campaign” for the union.

Perhaps the campaign to keep out foreign workers is still going strong, yet in a less obvious way.

First, it could be the case that the union is truly concerned for the welfare of the foreign workers. Further, the foreigners have already arrived, so there's a possibility that the union wants to prove its credibility and perhaps increase union membership (thereby increasing its collection of membership dues).

A second possibility is that the union is protecting the jobs of high-paid union members. If the union can bargain for better wages for foreigners, the relative costs to employers will increase. If the cost of hiring foreigners increases, SELI will be less likely to use them as substitutes for domestic workers.

SELI claims that it hired the foreigners for their unique skills ("they know how to handle the company's special tunnel-boring equipment"). In other words, the firm is hiring them for their productivity. If it is able to pay less for labour by hiring foreigners, all else being equal, productivity growth could be in excess of wage growth, putting downward pressure on prices.

The union could feel that it has the slack to increase SELI's costs, which would cause the company to think twice about substituting foreigners for domestic workers again.

If the union were successful, the foreigners may win in the short-run (gain higher wages) but lose in the long-run (lose future work contracts). Then again, if they have no interest in working for the company again, SELI may have a payroll full of happy workers (much to their chagrin).

Media sources are providing inconsistent details on the foreigner's earnings and labour conditions, but the anecdotes are everywhere. One foreigner was quoted in the media complaining that he couldn't afford to buy a pop in Canada. He was apparently told that his employer would send him to Ethiopia -- “that way I could save money." In sum, they are not happy.

Mark Thoma recently pointed to an article in the WSJ which says that unions in the US are not only embracing foreign workers, they're embracing illegal foreign workers, too.

On a related note, it seems that high profits in the metal industry are being met with union strikes all over the world. The Globe and Mail has a good article on this subject and a list of recent stoppages.