Air Canada Bargaining and the Fight for Middle Class Jobs

CAW members at Air Canada are coming down to the wire in their bargaining with the company, with a strike deadline set for this Monday at midnight.  It’s really the first “normal” round of bargaining the workers have been able to undertake since 2000.  Since then, they’ve been through two rounds of CCAA court-supervised restructuring bargaining, one arbitrated wage settlement in 2006 (since a condition of CCAA exit was no strikes for 6 years), and an emergency contract extension in 2009 (when the global financial crisis threatened to put Air Canada right back into CCAA).  Over that decade, the workers have lost 10% of their real wage, several non-wage benefits (including considerable paid time off), and watched their pension fund become precariously underfunded due to repeated contribution holidays negotiated to address Air Canada’s cash flow challenges.

One round of bargaining can’t repair all that damage, of course, but the CAW members (like other Air Canada workers) are darned determined to at least start heading in the right direction.  Air Canada, in contrast, seems to have become “hooked” on repeated concessions as a core feature of their business model.  Despite decent profits, a lock on high-yield business travelers, and a growing global reputation for quality, the company has made enormous demands for still more concessions, including outsourcing, more part-time work, and pension reductions (including eliminating defined benefits for new hires, which inevitably means eliminating them for everyone).

The union has portrayed the fight at Air Canada as symbolic of the broader challenge we face to defend middle class jobs in the whole labour market.  If you can’t count on a decent wage, benefits, and pensions at a world-class company like Air Canada, where can we possibly hope for them?  (The same could be said of the current confrontation at Canada Post, the fight against privatization of public services, and many other current union campaigns.)  Of course, a so-called “middle class” job is simply a working class occupation in which those doing the work have managed to win a decent standard of living.  And that’s exactly the point: the continued exercise of union power (and other instruments of labour market regulation) is essential to preserve the very idea that workers are entitled to a decent income — rather than scrabbling at the bottom of a “deregulated” labour market.

To that end, here is an op-ed from today’s Vancouver Sun by Ken Lewenza, defining the fight at Air Canada as a fight for the middle class everywhere:

Stormy Skies for Canada’s Middle Class

By Ken Lewenza

The Canadian middle class is in crisis. Each year, its share of our national income shrinks, relative to that of the richest few. Recent reports show Canada’s wealthiest one per cent accounted for 32 per cent of all income growth between 1997 and 2007 – the most in recorded history. Thanks to skyrocketing executive compensation levels and an aggressive attack on well-paid, family-supporting jobs, the gap between the rich and the rest of us grows ever wider.

Nothing epitomizes this situation more than the recent history of Air Canada. In the last decade, Canada’s national carrier has suffered unprecedented financial turbulence, including run-ins with bankruptcy protection. According to the Canadian Auto Workers’ internal research, over the same period Air Canada’s CEO at the time, Robert Milton, pocketed $86 million – while thousands of front-line employees were forced to take cuts, to the tune of about $10,000 per year, including an erosion of real wages, lost vacation, paid lunch breaks and other benefits.

Air Canada workers made major sacrifices. The company plowed ahead with plans to do more with less. Work intensified and productivity skyrocketed. Measured in seat miles delivered per employee, labour productivity at Air Canada jumped 75 per cent. Yet many who had earned a good (albeit modest) salary saw their quality of life and working conditions decline.

This storyline has played out in too many workplaces across Canada. “Good” jobs are on the wane, in all sectors – whether in factories, service shops, office buildings, or among the professional classes. Many have come to accept the logic that jobs in the “new economy” are inherently insecure. Pension plans exist only in fairy tales, and personal sacrifice has become the new norm. We accept the mantra that the next generation of workers will be worse off, and assume they simply aren’t in a position to demand better.

This attitude must change – for everyone’s benefit. The squeezing out of Canada’s middle class has major implications for our collective prosperity. Middle-class incomes drive economic growth, pay for public services, support healthy families, and build communities. Society cannot subsist on crumbs left over by the rich. Workers cannot accept the logic that relentless cuts and constant sacrifice will bring better days ahead.

Air Canada employees have already drawn a line in the sand during their current contract talks. They’ve resolved to make up ground on lost wages. They’ve rejected a program of two-tiering, which would make second-class workers of future generations. And in a recent show of solidarity, the CAW, the Canadian Union of Public Employees, and the International Association of Machinists and Aerospace Workers (three unions representing the lion’s share of Air Canada employees) rejected a company proposal to undercut and eventually eliminate the current defined benefit pension plan. By saying “no” to these demands, Air Canada employees are facing down the corporate-led riptide that’s pushing Canada’s middle class to the brink.

With the company’s return to profitability in 2010 and a brighter future on the horizon, Air Canada’s demands for more cuts, fewer full-time jobs, and outsourcing appear baseless. It’s made worse by CEO Calin Rovinescu’s hefty 76 per cent pay hike that landed him $4.55 million in compensation last year, a defined benefit pension that would pay him $351,000 per year at age 65, and a $5 million retention bonus he would be paid just for staying on the job until March 2012. His insistence that workers accept less reeks of hypocrisy.

Not surprisingly, the frustration and anger among Air Canada employees is reaching a breaking point. Demonstrations have been taking place in communities across Canada, with impressive turnouts. CAW members recently voted 98 per cent in favour of strike action, as a last resort. They know that what’s at stake in these negotiations goes far beyond their own self-interest.

Air Canada is recognized as a world-class carrier and has received dozens of awards for quality service, largely because of its hard-working employees. It’s time they receive their fair share.

The Air Canada battle is a principled fight about fairness and justice. It’s about reclaiming workers’ rights to good jobs, as well as our collective ability to demand better from employers and government. It’s about closing that ever-widening wealth gap and strengthening the middle class, for all Canadians.

10 comments

  • Thank you for your insightful article. As an employee of Air Canada since 2000 I have witnessed and experienced these changes first hand. Hopefully, Air Canada management will realize and appreciate how much we, as employees, have given up in the last decade in order to sustain our company’s viability and growth, even though our cost of living has increased dramatically. Now that Air Canada is financially solvent, even profitable, we only want to recoup what we lost. Hopefully this will end well for all and we can all return to the jobs we love.

  • Stormy skys for middle class.PS I did not know that postal workers are middle class. THIS ARTICLE IS NOTHING SHORT OF TRIP.No wonder there are no comments.

  • Sorry , should read short of tripe.

  • You didn’t know postal workers were middle class? You apparently also didn’t know the article was about airline workers rather than postal workers.
    So, the article is tripe because you’re ignorant?

  • A sensitive topic this defined pension and benefit plan of government and ex government corporations. Maybe the taxpayer is tired of funding the unfunded liability of these plans.A storm is brewing,YES.

  • we are being put through a middle class steam roller of the financial meltdown and the failure of actually existing capilalism.Flattening the last large lumps in the middle class. Further and further we fall, and it is being performed by the classic divide and conquer and easy targets of the middle class like highly productive auto workers and public sector workers who work just as hard doing value adding of a similar level. The current assault driven by austerity from the recession and forward by the CFIB/fraser inst/etc is all and in an attempt to reframe the hopes and dreams of the middle class. We are no longer expected to expect much. It is the only way the system can move forward in this culture war and without a major fight back through such means as the thousands of shop floor across this country that can fight back- how is it was are to hold the leaders put in charge of defending the middle class and expanding the avenues of the flows into the middle class.

    Middle class is the goal, and the goal is for all workers to be middle class oriented and we need to push for such heights rather than join the war on flattening the last remaining nodes of middle class.

    Its all about hopes and dreams now- we can not relent to some nihilistic right wing Harper fueled right wing utopia.

  • Steve MacDonald

    The unfunded liability of the Air Canada plan is indeed a reality. But how much of that liability would exist if the company had paid their share of the pension fund, insted of stripping money for other things, like “rebranding”, new uniforms, excessive executive compensation and pensions, etc? Hundreds of millions have been spent by this company, without any of it going to the actual improvement of the company or how it operates. Efficiencies have occurred on the backs and wallets of the people actually doing the work of moving people and cargo safely and efficiently from A to B, and the only ones to benefit are a few upper level executives, who for the most part, aren’t capable of performing any one of the the jobs involved in actually moving the people and cargo.
    Until the value of the worker is recognised, and the value of the executive in relation to the worker is normalised, the disparities of the economic divide will continue to exist. Having a university education and wearing a suit to work does not automatically make ones compensation worth more, nor does it entitle one to benefits not available to others within the company.
    This company has been poorly run for decades. It was given carte blanche to put CP Air out of business, and it took a great many years to do so, while CP was on a tight budget, and operated within that budget. Many of Air Canada’s problems can be traced back to those years of profligate spending, and it is past time that the employees, who have borne the brunt of the recovery costs, get to the front of the compensation line, rather than be treated as liabilities.

  • Many Thanks to Ken Lewenza and Jim Stanford for there excellent articles on this subject!…..wish they were posted on the fron page of every newspaper all over the world!

    Michele McDonald
    Flight attendant with Pwa/Canadian Airlines/Air Canada since 1987

  • Thank you Mr. Stanford, you have put in writing what I have been sharing with friends and family for years. I am encouraged to read your post in addition to Ken Lewenza’s article and hope, albeit with reserved enthusiasm, for more to express such thoughts. I am a proud Flight Attendant with Air Canada but I have also worked proudly in management in the private sector. In this other life, when sales and productivity targets were hard to reach and profits below forecasts, the front-line employees’ benefits were not to be touched. Employees contributed with their knowledge and first-hand experience of the business and clients to special programs to help improve results. Salary freezes and cancelled bonuses were imposed on the executives and their management team (myself included.) I was not working for a mom’n’pop shop but for the Canadian head office of an international company doing business in over 30 countries. We were dealing within the same capitalist economy as Air Canada but front-line employees were respected and management did not complain over their compensation packages either! (And this may shock some businessmen; managers did not run away because they didn’t have a retention bonus.)
    What Mr. Lewenza and you have written cannot be repeated enough: “Middle class is the goal, and the goal is for all workers to be middle class oriented and we need to push for such heights rather than join the war on flattening the last remaining nodes of middle class.” Sincerely, thank you.

  • Dear Sir, I thank you from the bottom of my heart for writing this excellent article….

    Why is it so difficult to see this for most, I will never understand….

    The judments thusfar have been more than non forgiving and quick to judgment because for once we said ENOUGH…

    A complete insult to my love for my career and my passengers ..
    Why should I quit what I love the most and accept abuse, would you?
    Would you go to work and sit on a hard seat in a lonely airport for 4:58 hours NOT PAID.. Would you?

    I have adored my career for 32 years but sadly everyone is trying to take this passion away from me……

    This is the first article that I have read thusfar, that spoke the truth …..

    And we have to listen to *Facts of life of a flight attendant* Oh please……………………
    Insult to Injury……..

    We should all be working hand in hand at this moment in making this a better airline for our passengers and not destroying the front line people whom have been awarded the best flight attendants which behind the scenes only they have done the most with the least …

    I passionatly thank you from the bottom of my Heart as this truly touched my heart, finally someone is seeing the truth!
    Yours truly!

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