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A just transition to a stronger post-COVID economy is possible, but it won't be easy

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Image: Joe deSousa/Flickr

It is not the sudden, devastating arrival of COVID-19 that has awakened Canadians to the need to do things differently. The signs that our economic models are failing workers have been obvious for some time. In this country, as in many others, we have watched economic inequality grow exponentially over the period of a generation to a record high. Whereas productivity gains used to be shared with workers, nowadays those benefits are siphoned upwards to executives and distributed to shareholders while millions struggle each day with a life uncertain.  

These outcomes are not preordained. They are the product of policy choices that glorify fictionalized "perfect" markets, trickle-down economics, the myth of meritocracy, and austerity while demonizing regulation, collective voice, countervailing power and taxes. The vast inequality of economic benefits produced by these political choices is a recipe for social and political unrest of the sort that led Canada to join with other nations at the ILO in 1919 and again in 1944 in recognizing the important linkage between just labour markets and industrial policies, and political stability, prosperity and peace. 

COVID-19 has helped expose deep cracks in the foundation of our economic and social models. It is no surprise that the working poor, including many designated as "essential" by our governments, are at greatest risk of not only physical harm, but economic ruin from the pandemic. However, as many commentators have noted, if there is a silver lining to COVID-19, it is that it provides an opportunity for governments to hit the reset button on economic and social policies that are failing so many Canadians.

All great economic transitions have followed on the heels of crisis, and in the coming months there will be an extended debate over the future direction of Canadian industrial policy coming out of COVID-19. It is possible for Canada to take this opportunity to chart a path forward towards an economy that emphasizes healthier communities, a more sustainable environment and shared prosperity. That is the sanguine take. An alternative vision, perhaps a more likely one that is the path of least resistance, would see governments once again throw billions of public dollars at corporations with few conditions attached, on faith that capitalism will fix itself. 

The challenge of economic transitions and law

Designing a substantial economic transition requires vision, courage, planning and political skill. The obstacles are substantial, particularly in a politically partisan environment in which a large percentage of politicians and voters are skeptical of government intervention in markets in any form. Another challenge is that economic transition planning crosses disciplinary boundaries in complex ways. For example, I have hypothesized in the past what would be involved in designing a "law of just transitions" that would guide a transition towards a cleaner, greener economy that also distributes risks, harms and rewards according to a theory of justice. Advocates of 'just transition' have to date mostly focused on displaced workers in non-renewable resource extraction industries, but discussion of a post-COVID transition goes beyond this narrow focus, recognizing that there are now millions of displaced workers and failed workplaces across many sectors. The economy will need a significant boost to rebuild, providing governments with an opportunity to plot an economic path forward.

However, to achieve a just 'green' economic transition requires careful planning and legislative reforms that cross multiple ministries and legal fields, including labour, unemployment insurance, welfare, environment, corporate, aboriginal, land use, planning and property, tax, and constitutional, among other areas of law and policy. Implementing an effective "just transition" strategy will require cooperation between the provinces and the federal government, and agreement on what policy levers should be used to guide the transition we want.

The challenge for political leaders with vision is to create a holistic strategy that cuts across ministerial boundaries but that is guided by a blueprint for a different sort of economic strategy that is prosperous, inclusive and sensitive to pressing environmental concerns. This is not an easy task, but it is possible. A smart first move might be to create a Ministry of Economic Transition and Planning (METP) that brings together expertise across the required fields to create a vision and a short, medium and long-term industrial planning blueprint to move Canada forward towards a more sustainable and prosperous economy. Among those represented in the METP must be experts in labour law and policy. 

Labour law and a post-COVID-19 transition

Labour law has traditionally been the means through which law attempts to protect employees from the harshness of labour markets characterized by inequality of bargaining power.  However, that mission is being overtaken by events. Fewer and fewer people qualify as “employees”, and many others benefit little from a system designed decades ago primarily to protect men working full-time in giant manufacturing facilities, mines, forests, and shipping. Some of the problems associated with linking fundamental social protections to waged employment were exposed in the scattered rollout of the Canadian Emergency Response Benefit (CERB), which the federal government was repeatedly pressured to extend as the depth of precarious workers excluded by the initial scope tied to regular employment was exposed. At a minimum, our economic transition plan must move beyond “employment” as the gatekeeper to social benefit protections and look to broader categories of “worker”. More fundamentally our METP should study alternatives for delivery of basic living necessities, as well as childcare and portability of benefits and training credits that redress labour market exclusion, that are not tied to paid labour at all.

Our post-COVID19 transitional team should also conduct a landscape analysis of work standards legislation to ensure it aligns with the transitional blueprint. There are many well known concerns with gaps in the substance and enforcement of protective labour legislation, and a number of pressing areas of concern have been highlighted by the COVID-19 pandemic, ranging from the complicated and opaque right to refuse unsafe work, to our faulty system of predominantly unpaid leaves, which encourages workers to report to work sick. Whether it is employers or some other source of revenue that funds leaves is a question for the METP to consider as part of its holistic analysis. 

Importantly, a central objective of our economic transition must be rebuilding the middle class, and this in turn will require increasing worker bargaining power. A large body of research links growing income inequality to the decline of collective bargaining and employee voice in the workplace. Put simply, as collective bargaining declines, employee bargaining power does too, and with it a fairer share of the income gains from workers' productivity. Therefore, any plan to create a more just economy in which a greater share of income gains reach working people must include some form of collective bargaining to empower workers. There are long-standing debates in labour law circles about what form collective bargaining should take beyond the enterprise-based system we have used since the 1940s. Those debates would be important within our new METP as they plan the economic transition.

An economic transition of the sort discussed need not be a partisan exercise pitting left against right. A visionary plan that pursues economic growth and sustainable industry will attract broad public support if it is inclusive. The greatest risk facing Canadians once the COVID-19 crisis is under control is that our governments squander this opportunity for reinvention by succumbing to the same old stale argument that governments must get out of the way. 

David Doorey is a professor of work law and labour relations at York University.

Image: Joe deSousa/Flickr

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