We’re going to be hearing a lot this year about inflation and layoffs. As anyone who buys gas or groceries can tell you, prices for necessities are spiking. Spoiler alert: our economic masters expect workers to absorb the impacts of economic change, from higher prices to disappearing jobs. A time-honored and knee jerk corporate response to inflation and other forms of economic turbulence is to lay off workers, a move that is often rewarded, at least temporarily, by the stock market. (Although, like much pro-capitalist received wisdom, the link between layoffs and improved profit and performance is less robust than it appears to be. More on that later.) In just the first three weeks of January, Google’s parent company Alphabet announced 12,000 job cuts around the world, with some of the bloodletting slated to occur in Canada. Amazon.com Incorporated expects to cut 18,000 world-wide. Similarly, Microsoft expects to lay off 10,000 workers this year. Canadian tech firms were also cutting workers in the opening weeks of the year, with hundreds of jobs lost at Lightspeed Commerce, Hootsuite Inc., Clearco and Thinkific. All told, over 70,000 tech workers were laid off in the past year, including the 3,700 jobs lost to the bloodletting over at the Twitter abattoir.
And the tech sector was not the only one seeing significant layoffs. From iron mines on Baffin Island to food delivery apps in Winnipeg, Canadian workers are already getting layoff notices this year, as management tries to prop up profits by reducing labour costs. The corporate slogan seems to be “Thanks for your service. Now screw off.” The situation is now so serious, and the use of the layoff tactic so common, that Fortune Magazine, one of the iconic journals of the business class, recently published a long article on how to best conduct employee layoffs. One of the helpful layoff hints Fortune offered to top management was that they should obey local laws, apparently not an obvious practice for Fortune’s CEO readers!
So, what does all this have to do with union strategies for the new year? The answer is simple: organize, organize, organize! Unionized workers, by and large, have more protection from arbitrary dismissal, and better severance packages than unorganized workers. And the protection and benefits negotiated by unions for their members tend to drive up wages, protections and benefits for unorganized workers in their localities as well. Unions create direct benefits for their members and indirect benefits for the larger economy and for their employers too, as was recently argued in a paper from the Atlantic Council.
As mentioned above, it has long been assumed in ruling class circles and in the business aligned press that the best response for companies facing challenges is to lay off workers and make operations “lean.” But some fascinating research reported in the Harvard Business Review, May-June 2018,
suggests that mass layoffs are often not only cruel and heartless, but stupid, failing spectacularly to the achieve the bottom-line targets they were implemented to accomplish. The study’s authors note:
“Yet other data on layoffs should give companies pause. In a 2012 review of 20 studies of companies that had gone through layoffs, Deepak Datta at the University of Texas at Arlington found that layoffs had a neutral to negative effect on stock prices in the days following their announcement. Datta also discovered that after layoffs many companies suffered declines in profitability, and a related study showed that the drop in profits persisted for three years. And a team of researchers from Auburn University, Baylor University, and the University of Tennessee found that companies that have layoffs are twice as likely to file for bankruptcy as companies that don’t have them. After a layoff, survivors experienced a 20% decline in job performance.”
The same Harvard Business Review researchers give an account of a powerful union-led push back against layoffs at a German plant operated by the cell phone company Nokia. When the company announced massive layoffs at the plant in the wake of the 2008 financial crisis, unionized workers there fought back with mass demonstrations and consumer boycotts. The workers persuaded the German government to demand Nokia repay subsidies they had been given earlier. According to the authors, Nokia lost seven hundred million Euros in sales and one hundred million Euros in profits in 2008 and 2009 due to this effective labour fight back. We don’t always win when we fight back, but we always lose if we surrender. And unions represent an important way for workers to fight back.
Sadly, unions have been targeted and in too many cases weakened by the shift to a globalized economy and the rise of right-wing authoritarian regimes and sophisticated anti-union ideologies around the world. Strikes are broken, labour law protections weakened, and the slimy, squalid doctrines of rugged individualism promoted. Collective efforts are disparaged in contrast to a neo-Hobbesian war of all against all. It is not an easy time to be a trade unionist, but it continues to be vital that we build and protect our unions.
The challenge to build, expand and protect independent, militant unions is a global one, but workers face different obstacles in different jurisdictions. For example, Canadian unionism, while in desperate need of renewal and expansion, is far stronger than organized labour in the US.
American union density is at its lowest ebb since record keeping on this vital matter began in 1983. Union members make up only 10.1 per cent of the American workforce, down from over 20 per cent 40 years ago. Canada has seen losses in union density too, but not as disastrous as the American case. In 1981, 38 per cent of the Canadian workforce was unionized, a figure that fell nine per cent to 29 per cent in 2022. So Canadian workers start from a better place than American, but we still have a lot of work to do if we want a union movement robust enough to fight back against what our business class masters have in mind for us.
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