In July, British Columbia’s government signed an agreement called the Community Benefits Agreement (CBA) with a group called the Allied Infrastructure and Related Construction Council (AIRCC), which represents many of BC’s building trade unions and their members. If you have not previously heard of this group, it’s logical; it is new and was made up precisely for the purpose of this agreement.
The agreement is essentially an omnibus agreement that provides the Building Trade Unions a monopoly over all provincially funded infrastructure work for the foreseeable future. A newly formed Crown Corporation called BC Benefits Infrastructure Inc. (BCIB), will act as the “signatory and employer entity” under the Community Benefits Agreement (CBA). AIRCC’s mandate is “to provide the labour workforce for the construction of select public sector infrastructure, delivered in accordance with the terms and conditions of the Community Benefits Agreement.” Apparently, BCIB will act as a “hiring hall” or “labour broker” for all workers involved in provincially-funded projects undertaken through the CBA.
Premier John Horgan suggests that the CBA is intended to achieve several objectives:
- To increase the use of apprentices on major public-sector infrastructure projects;
- To increase hiring and training of Indigenous persons and women in construction and related allied trades;
- To address existing and future “skills gaps”;
- To encourage “priority hiring” of individuals living in proximity to projects being built or developed with government funding;
- To achieve “wage alignment” with prevailing industry rates for all employees.
The residents of BC should be up in arms over this blatant collusion between the government and the Building Trade Unions to grant the BTU a monopoly over work on public sector projects. It is manifestly unfair to the construction companies and workers who aren’t affiliated with or linked to the building trades unions. This agreement requires any contractor who wishes to to qualify for work to have to accept BTU workers provided through BCIB.
Why are these agreements so unsettling?
It is estimated that between 80% and 85% of construction workers in BC are not members of a Building Trade Union. The BTU disputes this in an odd way by suggesting that they represent 58% of the workers in the ICI sector (Industrial, Commercial and Institutional). Dismissing the residential sector as not being important in the discussion here is a miss. Even if the BTU claim is true, it remains that 42% of construction workers in the ICI sector are not affiliated with the Building Trades and are thus being forced to join or at least support the BTU (through paying dues) if the contractors they work for want any public infrastructure work.
Residential construction is an important segment. This sector is filled with many, many small contractors. While these smaller contractors may not be bidders on large packages of mega project work, if the BC government wants to, amongst other things “encourage priority hiring” of individuals living in proximity to projects being built or developed with government funding” it should be looking for ways to ensure smaller work packages are available so that non-union contractors can participate without forcing them to participate in a union.
An uncontrolled market place evolves naturally and organically. Small contractors become bigger contractors and eventually become quite capable of handling large projects. This ensures new competition at all points in the spectrum of work. Equally true, construction workers learn on smaller projects, gain skills and can evolve to bigger more complex work. This will be less likely to happen if they are effectively shut-out of public sector work.
This agreement not only provides the BTU with a monopoly to collect dues and force union membership on all public infrastructure projects it disrupts the natural market place for healthy competition.
These complaints are not new issues.
This was precisely the challenge raised by the Merit Contractors in Manitoba in a suit brought against Manitoba Hydro. People should recall that while the Manitoba Merit Contractors Association representing non-union contractors did not “win” the suit it remains unheard by the Supreme Court of Canada. Therefore, there still is an opportunity to test the constitutionality of labour arrangements that force contractors or individuals to join a union in order to participate in government funded projects. In Manitoba, by the way, it has become a moot point as both the government and Manitoba Hydro have now stated they will no longer provide exclusive arrangements with the BTU.
Further Questioning the BC Government’s Logic
The stated objectives of the BC government’s decision are also suspect. For example, the majority of apprentices in BC today are employed by contractors who are non-union or affiliated with alternative unions like CLAC. The BTU, while they have an excellent reputation for training apprentices also have a notoriously closed shop which makes it very difficult for young people to get into a trade. The BTU historically have restricted the numbers of entrants into the trades and therefore contain the overall supply of labour to the market to create bargaining leverage. It has had the effect of creating a shortage of trades people in boom times. We only have to look back a few years to remember how big an issue this was across the country.
The government’s concern about labour supply begs the question as to why the BTU have not stepped up many years ago when the looming labour shortage was first identified and expanded the number of apprentices in their ranks. Quite simply, it is not in the interests of a monopoly to expand supply but rather to control it in order to extract an economic premium. It is absolutely in the interests of the BTU to leverage apprenticeships in order to gain the windfall the Community Benefits Agreement has given them, but it is fallacious to suggest that the non-union contractors and alternative unions like CLAC were not doing far more than their fair share to provide learning opportunities and increase the number of apprentices working in the province.
The objective of increasing Indigenous people and women in the construction sector via this BTU agreement is equally disingenuous. The BTU through the hiring hall restrictions and seniority practices has been one of the greatest barriers to inclusion of new workers. Again non-union contractors and alternate union contractors such as CLAC contractors have lead the way not only to actively hire and improve inclusion but to make sure non-traditional participants have a “first-in, last-out “ advantage (not a seniority based system or one based on who you know) so that these new participants can gain as many apprenticing hours as possible on projects. In addition, many people do not want to join a union. As the Manitoba case argued, it should be their choice as to whether they choose to work for a unionized or non-union contractor. Which union or whether the contractor is unionized at all should not restrict their right to bid on public sector work.
The Cost
The main concern BC residents (and all Canadians) should have is the enormous price tag this agreement is going to have and impose on them through higher taxes. A basic insight of economics is that consumers benefit from competition and choice. This agreement eliminates competition, will exclude many of the best contractors available in the market and could be used to restrict supply of labour including apprentices.
It is a giant step backwards. The previous government took the bold step of ensuring that the massive Site C Hydro project was declared an open site and allowed for competitive bids from all contractors. In 2017, the Manitoba provincial government announced that it would no longer entertain any Project Labour Agreements which granted exclusive work to the BTU contractors precisely because they recognized a need to open their projects up to competitive bids. Simultaneously Manitoba Hydro announced it too would not be entering into any Project Labour Agreements in the future with the BTU. Those who follow the industry know how beneficial competition has been in Alberta over more than a decade.
So why is the current BC government taking this extraordinary step? There are no practical policy reasons to do so. We believe the Building Trade Unions and their contractors have an important role to play in Canada’s economy and have been great contributors in the past. We simply do not see why they should be granted exclusivity at a cost to taxpayers.