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Union certification: Developing a level playing field for labour relations in QuebecTo analyze and test the impact ofmanagement opposition in the success ofcertification, Riddell used multiple regressionanalysis and data comprising 422 certificationapplications in British Columbia. He investigatedthe impact of union suppression within amandatory voting system and the interactionbetween processing time and employer behaviour.Results show that, during the sample yearsof mandatory voting in B.C., employers weresuccessful in deterring success of organizingdrives. The success rate of unionization fell by20% during the mandatory voting years in B.C.,while the number of certification attemptsdecreased by over 50%. The impacts are similar tothose found in the U.S. literature and muchhigher than those in the limited Canadianliterature. 10For Riddell, it is clear that, if a governmentwants to reduce unionization, it may do so byestablishing mandatory voting requirements.However, recent trends are toward compulsorysecret ballot voting requirements. The studysuggests that, if a government seeks a moreneutral policy toward unionization, stricteremployer penalties for improper intimidationshould be considered. The author also thinks thatstrict time limits could form a useful policy toolto enforce neutrality in the organizing process,but mentions that further investigation into therelationship between representation voting andmanagement opposition is required to make anyfinal conclusion.In a second study, 11 Riddell estimates theimpact of mandatory vote laws on certificationsuccess using data on over 6,500 private sectorcertifications from British Columbia over theyears 1978–1998. A unique quasi-experimentaldesign is used, exploiting two changes in the10. Terry Thomason, “The effect of accelerated certification procedureson certification success in Ontario,” Industrial and Labor RelationsReview, Vol. 47, No. 2 (January 1994), pp. 207-226; Terry Thomasonand Silvana Pozzebon, op. cit., footnote 8.union recognition law: first, in 1984, theintroduction of mandatory elections; and second,in 1993, the repeal of elections and theirreplacement by the original card checkprocedure. The author also estimates theeffectiveness of management opposition tacticsacross union recognition regimes. Success ratesdeclined by an average of 19 percentage pointsduring the voting regime, and then increased byabout the same amount when card checks werere-instituted. The results indicate that themandatory election law can account for virtuallythe entire decline. In addition, the findingssuggest that management opposition was twice aseffective under elections as under card checks.Using cross-section time-series analysis ofnine Canadian jurisdictions over 19 years,Johnson aimed to identify the effect ofmandatory votes and card check on certificationsuccess. 12 Her results, which are significant atabove the 99% confidence level, indicate thatmandatory votes reduce certification successrates by approximately nine percentage pointsbelow what they would have been under cardcheck. 1311. Chris Riddell, “Union Certification Success Under Voting VersusCard-Check Procedures: Evidence From British Columbia, 1978—1998,” Industrial & Labor Relations Review, Vol. 57, No. 4 (July 2004),pp. 493-517.12. Susan Johnson,“Card Check or Mandatory Representation Vote? Howthe Type of Union Recognition Procedure Affects Union CertificationSuccess,” Economic Journal, Vol. 112 (April 2002), pp. 344-361.13. Since the average success rate in the sample is 69%, this represents a13% drop in the certification success rate when the mandatory secretballot vote is in effect.20 Montreal Economic Institute
Union certification: Developing a level playing field for labour relations in QuebecImpact of the certificationsystem on a firm’s valueAs we have seen above, the type ofcertification regime greatly influences the level ofcertification attempts and successes. But thequestion remains as to whether the increase ordecrease of union density directly affectseconomic growth or even firm performance. It isundeniable that employers are generally opposedto unions on the grounds that they would affect afirm’s profitability. But the magnitude of theeffect of unions on company performance is stillunclear.There are a very limited number of studiesthat have tried to tackle this specific question.Three reasons seem to explain this: “First, largescale establishment or firm-level micro-datacontaining the relevant information on the extentof unionization are not readily available. Second,even when such data are available, omittedvariables and the endogeneity of unionization atthe firm level makes it difficult to separate causaleffects from other unobserved confoundingfactors. Third, it is difficult to find data that canalso be plausibly representative of the populationof unionized companies in the United States.” 14Nonetheless, the study conducted by Leeand Mas indicates that there is a clear relationbetween unionization and reduction in a firm’sequity value. To ensure a large sample size andtherefore robust results, the authors focused onpublicly traded firms for which stock marketinformation and other performance measureswere readily available. Their results suggest that,after a union election victory, a typical firm’smarket value is decreased by 10%, whichrepresents a decline of US$40,500 (in 1998dollars) per unionized worker.The authors obtained these results byassessing the impact of union elections on thestock market value of firms. They used the eventstudymethod to compare “the firm’s stockreturns to the returns the firm would haveexperienced in the absence of a union organizingevent.” 15 They then plotted the “average cumulativereturn of union victory firms against theaverage cumulative return of the size-matchedreference portfolios over the same time period.The figure reveals that both union victory firmsand the corresponding reference portfolios havealmost identical trends in returns prior to theunion victory. However, near the time of theelection there is a pronounced downward breakin the returns of union victory firms relative tothe benchmark, persisting for approximately ayear and a half. The average cumulative abnormalreturn implied by this divergence is approximately-10 percent.” 16They argue that this total loss in marketvalue is attributed to a combination of transfersto workers as well as lost profit due to the inefficienciescaused by unionization.Another way to consider the impact ofunion certification and union density on theoverall performance of the economy would be tostudy the question of flexibility. According to aFraser Institute report: “The key to a highperforming,efficient labour market characterizedby strong job creation, low unemployment, shortdurations of unemployment, and a highlyproductive workforce is flexibility. Labour marketflexibility refers to the ease with which workersand employers alike are able to adjust their effortsgiven changes in the marketplace. For employees,flexibility allows them to supply their labour asthey wish and shift their efforts to endeavoursthat provide the greatest return or benefit.Similarly, flexibility allows employers to adjust14. David Lee and Alexandre Mas, Long-run impacts of unions on firms:New evidence from financial markets, 1961-1999, National Bureau ofEconomic Research, Working Paper No. 14709, February 2009, p. 1.15. Id.,p.11.16. Id.,p.16.Montreal Economic Institute21
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