Labour Economics and Labour Policy

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Labor Economics and Labour Policy

Put Public Interest on the Table in Labour Arbitration: C.D. Howe Institute
April 4, 2019 – Policymakers should ensure the public interest is a priority in arbitrated public-sector labour settlements, says a new report from the C.D. Howe Institute.
In “Time to Tweak or Re-boot? Assessing the Interest Arbitration Process in Canadian Industrial Relations,” author Richard P. Chaykowski assesses the current state of the arbitration system and raises several concerns. They include whether using arbitration to settle labour disputes yields efficient and equitable labour relations and economic outcomes, whether it leads to higher wage outcomes than governments would otherwise pay, and whether interest arbitrators apply criteria that serve the public interest in crafting decisions.
Interest arbitration, commonly known as third-party arbitration, is used to resolve impasses in disputes over the substantive terms and conditions of employment that are normally determined through collective bargaining as the collective agreement expires. It has been used to settle a number of high-profile disputes in recent years, notably between Ontario colleges and the Ontario Public Service Employees Union in 2017.
“The current model appears to create a wedge between the private interests of the parties and the public interest,” notes Chaykowski. “This also has the unintended side-effect pressuring governments to act in an ad hoc – and sometimes unilateral – fashion to end disputes.”
“There is a direct public interest in such issues as ability to pay, the financial sustainability of the provision of public services and government debt loads,” he says.  “The main way in which the public interest is internalized in the arbitration process is by appealing in legislation for arbitrators to take account of such factors.”
The author also raises concerns about such issues as “arbitrator capturing,” where arbitrators have predictable self interest in being selected by the parties over time, and “patterning of awards,” where the arbitrator has an incentive to craft a settlement that avoids significantly diverging from recent settlement patterns, with the risks of an upward bias in monetary awards over time or of not fully accounting for changing conditions or emerging constraints that the parties face.

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The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada’s most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.
For more information please contact: Richard P. Chaykowski, Professor, Faculty of Arts and Science and Professor, Faculty of Law (cross-appointed) and Director, Employment Relations Programs, Faculty of Arts and Sciences, Queen’s University; David Blackwood, Communications Coordinator, C.D. Howe Institute at 416-865-1904 Ext. 9997 or dblackwood@cdhowe.org
 
 





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