Good afternoon. I have provided the clerk with a copy of my remarks and I had one given to the person who is doing the translation.
I apologize for being late. I had several family issues I had to deal with today.
In any event, I am John Farrell, executive director of Federally Regulated Employers--Transportation and Communications. I thank you for allowing me to appear before the committee.
FETCO is an organization consisting of a number of major employers and employers associations in the federal jurisdiction in the transportation and communications sectors.
A list of FETCO members appears in appendix A of our document, which you don't have, so for the record, the companies that are represented by FETCO include: Air Canada; the BC Maritime Employers Association; Bell Canada; Canada Post Corporation; Canadian Airports Council; Canadian Association of Broadcasters; Canadian Broadcasting Corporation; Canadian National Railway; Canadian Pacific Railway; Canadian Trucking Alliance; FedEx; Maritime Employers Association; Nav Canada; Purolator; Telus; Western Grain Elevator Association; WestJet; and VIA Rail Canada.
FETCO has approximately 586,000 employees, of which 212,000 are union members.
Bill C-395 proposes to extend the qualifying period for employment insurance benefits by the period of time that a labour dispute, either a strike or lockout, is in progress. Currently, the Employment Insurance Act does not permit employees to count this time, which is indefinite, as part of the qualifying period.
Strikes and lockouts are permitted by the labour laws in all jurisdictions in Canada as a means for parties in collective bargaining to exercise economic leverage to achieve their collective bargaining objectives and determine the terms and conditions of employment. When a strike or lockout occurs, one party or the other is not willing to accept the proposed terms and conditions of employment. The strike is considered a fundamental right by unions.
Strikes are far more prevalent than walkouts. According to data I have secured from HRSDC, 83% of work stoppages over the last 15 years have been strikes and 17% were lockouts. Lockouts are seldom used by employers because, fundamentally, employers are interested in continuing to operate their businesses, not shutting them down.
Employees engaged in a strike do so of their own free will. They withdraw their services in order to inflict economic leverage over their employer to accomplish their collective bargaining objectives. Union members have choices. They vote to provide their union with a strike mandate. They vote to reject or accept a company proposal for a settlement. They vote on whether or not to engage in strike activity.
In a strike situation, union members exercise discretion to remove their services and not to engage in gainful employment with a particular employer. While on strike or lockout, employees are usually entitled to receive strike pay, and this strike pay is not taxable. Contributions as employee union dues are tax deductible, and when employees receive strike pay they're not required to pay tax on that strike pay, so in a sense they are receiving tax-free income while they're receiving strike pay.
In some cases, employees are entitled to receive as much as $400 or $500 a week in strike pay, which, on a tax-free basis, is quite extensive. This doesn't happen in all cases, but with certain unions that have a habit of subsidizing strike activity from one bargaining unit to another, such as the Communications, Energy and Paperworkers Union, sometimes the strike pay can be as high as $400 or $500 per week.
Employees are also free to seek gainful employment with other employers while they're on strike or lockout.
In the case of a lockout, it is clear that the company initiates the action. Usually a lockout occurs because the employer has economic or operating imperatives that must be met for the good of the business, and unions and employees are unwilling to accept the terms and conditions of employment.
In some cases, lockouts are required to counteract disruptive union tactics, such as costly rotating strikes, or threats to the business if a strike is likely to occur at an inopportune time and could cause severe economic harm to the business. In other words, lockouts are generally used by employers in response to potential strike activity as a tactical defence to manage the business in a way that is most appropriate for the company.
Lockouts, like strikes, are also discretionary. There's no doubt about that. Lockouts are part of the process permitted by the labour laws, just as strikes are.
Permitting employees on strike or lockout to extend their entitlement to employment insurance benefits will substantially reduce the incentive for employees to seek a compromise in the case of lengthy strikes.
There are situations covered by the Employment Insurance Act where the current qualifying period may be extended. They include, as you probably know: illness; injury; quarantine; pregnancy; confinement to a prison or jail; and when someone is receiving certain assistance under employment benefits programs or is receiving benefits under provincial law on the basis of having to cease working because continuing to work would result in danger to a person, unborn child, or a child that is breastfeeding.
These situations are not discretionary, unlike the situation with respect to strikes, and it makes sense for the legislature to extend the qualifying period in these non-discretionary circumstances.
Furthermore, employment insurance is a program supported by employers and employees, both union and non-union. Employers pay 58% of the premiums. EI provides benefits to employees who are temporarily unemployed through no fault of their own, not because they are engaged in a labour dispute over the terms and conditions of employment. This is unfair to employers and non-union employees, both of whom are contributing premiums to the employment insurance fund.
It is appropriate for the qualifying period to be 52 weeks and it is appropriate to have reasonable proximity in timing between gainful employment and the receipt of benefits. Striking or locked-out employees are out of the labour market because of a labour dispute, not because they are unemployed and actively seeking employment. Furthermore, employees on strike or lockout are free to seek alternate employment and are also entitled to receive tax-free strike pay while on strike or lockout.
Extending the qualifying period indefinitely for the period of a strike or lockout is unfair to employers. It is contrary to the long-standing principle that employment insurance should remain neutral when it comes to labour disputes.
Madam Chair, that is the extent of my remarks to the committee.