Commuted Value:  Context and Implications

       In their 2012 contract negotiations Ford then GM convinced Unifor to give retiring workers the option of taking the commuted value or lump sum equivalent of their defined benefit pensions instead of receiving a monthly defined benefit pension for the rest of their and their spouses’ lifetimes.  Since then a growing proportion of the workforce at GM have decided to take that option.

        Many workers see no problem with this.  They welcome getting a choice between the immediate payment of a large lump sum of money and a defined monthly pension for the rest of their life and the life of a surviving spouse.  But little is being said about the many problems that develop when growing numbers of workers opt to take the commuted value of their defined benefit pensions.  The most readily obvious is the possibility that the lump sum will be quickly spent leaving a retired worker and his or her spouse with no retirement income beyond very inadequate government pensions.

        Other less obvious but very real problems that arise when growing numbers of workers opt to take the commuted value of their defined benefit pensions.  One is that choosing this option generates a big windfall for employers who get to unload the “legacy costs” associated with defined benefit pensions.  Indeed, Unifor facilitated this growing windfall for them evidently without getting anything in return and later reinforced what’s now a trend rejecting defined benefit pensions by agreeing to defined contribution “pensions” for new hires.

       A less obvious problem when growing numbers of retiring workers take the commuted value option is that choosing it typically goes together with another choice.  The other choice is to start working for a new employer in order to continue to earn a wage which very often is a minimum wage or little better. 

      What’s wrong with this?  What’s wrong is that autoworkers fought in 1950 to win defined benefit pensions so that they have an income for life sufficient to live on without having to work.  It means the commuted value option is facilitating a situation where a great many “retired” autoworkers see a financial need to work for years and years after leaving the auto industry.  Significantly, this compounds the effect of the Ontario legislation that ended mandatory retirement at age 65 because it is similarly conducive to workers working till they die greatly benefiting employers.

      The commuted value option is also having the unintended effect of severing large numbers of autoworkers’ relationship with the union that first negotiated defined benefit pensions in 1950.  Workers who take the commuted value of their defined benefit pensions rather than a monthly pension benefit have no option to have retired members’ union dues deducted from a monthly pension benefit.  Absent this very few workers opting to take the commuted value make the effort necessary to go to a union hall and pay union dues.   Consequently, they stop being members in good standing of their union. Thus, taking the commuted value option usually becomes synonymous with effectively ceasing to be part of the life of the union.

       This is a prescription for the eventual disappearance of viable retired workers chapters.  This is shown by the fact that in Unifor nearly every functioning retired workers chapter is comprised of autoworkers with defined benefit pensions.  Eliminate defined benefit pensions and retired workers chapters will vanish because defined benefit pensions are effectively the lifeblood of retired workers chapters.  Furthermore, insofar as retired workers chapters are invaluable reservoirs of history and experience within a union like Unifor that history and experience will stop being readily available to active workers who could benefit from it.

     These things define the context and implications of the commuted value option in auto.  They show that its widespread acceptance in Canada’s auto industry is consistent with and conducive to the ongoing retreat of Unifor as a social and economic force drawing its strength from both active and retired members and which should be focused on building on past gains like defined benefit pensions not helping them to disappear.   

Unifor Embracing the Ontario NDP?

         At last year’s Ontario Federation of Labour Convention Unifor found itself at odds with almost all the other unions present in not favouring unequivocal support of the New Democratic Party (NDP).  Yet, barely more than half a year later, Unifor finds itself effectively in line with those other unions in Ontario because its friends leading Ontario’s governing Liberal Party are tanking in the polls just three weeks before the June 7 provincial election.  Unifor is consequently being forced to come to terms with the fact that presently the Ontario NDP alone can stop the election of a majority government in Ontario led by Tory leader Doug Ford.

         That said a meaningful embrace of the Ontario NDP by Unifor would, in any case, effectively require that a lot of recent history be flushed down an Orwellian memory hole.  Indeed, there is nearly 20 years of this history starting with the CAW’s initial embrace of strategic voting at the end of the 1990s. 

        Some of this history would be very hard to forget such as when CAW President Buzz Hargrove gave a beaming Liberal Prime Minister Paul Martin a CAW jacket in front of loudly applauding delegates to a CAW Council meeting.  Less well remembered was the time shortly afterwards when Buzz Hargrove introduced his good friend and then Ontario Liberal Premier Dalton McGuinty to another loudly cheering crowd at a CAW Council meeting in Port Elgin.  On that occasion Hargrove declared that Dalton McGunity was “doing a great job of giving good government to the people of Ontario.”  Much less well remembered was how the next CAW President Ken Lewenza openly supported right-wing Liberal Sandra Pupatelo in her unsuccessful campaign to succeed Dalton McGunity as Ontario Premier.

        During that long, sordid history of embracing strategic voting and leaders and would be leaders of the Liberal Party the union’s relationship with the New Democratic Party, which had once seemed unbreakable, was strained at best and hostile at worst.  Relations with unions which remained steadfastly loyal to the NDP were similarly problematic largely owing to the warming relationship between the CAW and then Unifor with the Liberal Party.

                                       What Now?

      The question immediately posed by the situation Unifor now faces in Ontario is whether these inconvenient truths about the past two decades can or will disappear down an Orwellian memory hole, particularly within Unifor, and be conveniently forgotten as if they had never existed?  The answer to that question is almost certainly no.

       The legacy of this history is certain to endure because this alignment with the NDP is limited to Ontario, momentary and specific to a situation which will cease to exist after the provincial election on June 7.  The hard truth of the matter is that although Unifor is ditching its Liberal friends in Ontario it is not about to ditch the Liberal Party elsewhere let alone renew the type of close relationship it had with the NDP before the late 1990s.  This is principally because the ongoing love affair between the national leadership of Unifor and the national leadership of the Liberal Party is evidently not being affected by the current, unique political moment in Ontario

       Faced with a politically weak, almost marginalized NDP federally together with the prospect of a 2019 federal contest for power between Justin Trudeau’s Liberals and Andrew Scheer`s Tories Unifor is consequently certain to shun the federal NDP just as Unifor shunned the Ontario NDP until just weeks ago.  The politics of convenience will trump focused political consistency.  Likewise, nary a thought will be given to abandoned ideas about fundamentally changing society that were implicit in the forgotten CAW commitment to what it referred to as social movement unionism and which were never seriously promoted by the union within the NDP.

        That mask is not just off.  It has been cynically discarded.  Opportunism prevails.   Unifor’s objective now is not to fundamentally change society.  Its objective is to be embedded in the corridors of power alongside the representatives of Capital as a “stakeholder``, as it has been in the current, doomed NAFTA negotiations.  That objective was first clearly set out when Unifor was founded.  Achieving it remains the order of the day.  

        Analyzing, exposing and challenging the agenda accompanying that objective will be a monumental task.  But analyzing, exposing and challenging it at every turn is imperative and must be consciously carried out as part of a much larger effort to forge a fighting labour movement in this country.

Unifor Holds First Townhall on Trade

       Close to one hundred people attended the first of a series of People’s Trade Agenda Town Halls sponsored by Unifor.  The event was held in Hamilton, Ontario on April 20, 2018.  The Council of Canadians co-sponsored the townhall.  The event featured speeches by Maude Barlow of the Council of Canadians and Angelo DiCaro of Unifor’s Research Department.

       Maude Barlow was the main attraction.  This was reflected in the composition of the participants.  About three quarters of those in attendance appeared to be members and supporters of the Council of Canadians who had shown up in large measure to see Maude Barlow speak.  The turnout by Unifor members was small. 

      The most notable thing with respect to the participation in the townhall was who was not present.  Representatives of other unions were nowhere to be seen.  Both the Hamilton and District Labour Council and the Canadian Labour Congress were conspicuous in their absence.  So were representatives of the United Steelworkers.  This brutally demonstrated the consequences of Unifor’s departure from the Canadian Labour Congress.

        Unifor deserves credit for taking up the trade issue and seeking to engage as many people as possible about it particularly at this critical juncture when a revived Trans Pacific Partnership (TPP) is about to be implemented, the North American Free Trade Agreement (NAFTA) is being renegotiated and Trump is erecting trade barriers.  Nonetheless, the impact of Unifor’s effort to address trade agreements is doomed to be negligible if the rest of the labour movement is going to deliberately stay away it did in Hamilton.  This, in turn, highlights the compelling need to end the split between Unifor and the rest of the labour movement in Canada. 

       This split must end.  It must end if for no other reason than to make it possible to build a movement capable of blocking trade agreements like the TPP and NAFTA insofar as these trade agreements are consciously designed to meet the needs of Capital via provisions synonymous with their being corporate bills of rights. 

      What is more, a powerful movement against these trade agreements must not only be built in this country.  It must be built together and simultaneously with efforts to build movements that resist these trade agreements in the U. S. and Mexico.  In short, there is a compelling need to forge what amounts to a powerful, multinational movement to stop these trade agreements and the agenda they are designed to facilitate.

        Discussion of the need for such a multinational movement and how to build it was lacking at the townhall in Hamilton.  It is imperative that the need for such a movement be seriously discussed at future Unifor townhalls and that the rest of the labour movement both participate in those events and support such movement building efforts regardless of Unifor’s relationship with the CLC.  The glaring need for such unity in action both within Canada and across North America demands nothing less.  In this context rank and file labour activists, local union leaders and community-based activists must boldly take the initiative by being at the forefront of efforts to forge this unity in action whenever possible and on the largest scale possible.