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Rise of Labor movements in Canada

Interdisciplinary Studies (IDST) Program: Economics, Commerce and History Topic: Rise of Labor movements in Canada

The rise of labor movements in nations such as Canada throughout the late 19th and early 20th centuries can be of great interest to economists due to their social, economic, historical, and political ramifications. This era was historically significant in Canada for its rapid industrialization, labor force spike, and urbanization. Labor unions and labor movements inevitably emerged as a consequence, drawing attention to the deficiencies of economic development by means of labor activism dynamics and thereby emphasizing the multifaceted advantages of economic expansion while also its shortcomings. More specifically, the rise of labor movements raises concerns about the impact of labor activism on the trajectory of economic growth and societal change in Canada. A wide range of proponents feel that labor movements were important vehicles for pushing for better working conditions, better wages, and broadened labor rights, demonstrating labor movements' contribution to greater social equality and economic stability. Furthermore, labor activism demonstrates the relevance of institutional reforms and the possible role of institutions in addressing labor grievances and eventually building an egalitarian and stable economy. During the same time period, many people regarded labor activism, mainly in the form of protests or movements, as a barrier to potential economic efficiency and productivity. Labour movements in Canada at the time resulted in the establishment of strict rules as well as the disruption of general industrial relations. Furthermore, from an economic standpoint, this phenomenon raises concerns about the trade-offs between labor rights and economic competitiveness, indicating the potential negative effects of excessive unionization and labor avocation on investment, employment, and government changes.

This paper argues that the emergence of labor movements during the late 19th and early 20th centuries had a substantial impact on improving working conditions, diminishing income inequality, and establishing more effective bargaining outcomes. The paper employs a self-interpreting approach, relying on secondary sources to examine the complexities involved in the rise of labor movements in Canada. An examination of historical literature in the form of newspapers, as well as contemporary secondary sources that supplement the effects of historical labor activism, will be used to construct a narrative that interprets the role of labor activism in shaping the current structure of economic and social development in Canada. This approach will shed light on the underlying mechanisms as well as the dynamics that resulted from the labor movements. To provide an economic perspective to this paper, the "Efficient Bargaining Model" created by economists such as John Dunlop and Richard Lester will be explored (Kaufman, 2002). While the concept broadly complements labor economics, it is primarily a model that highlights the role of labor union-employer bargaining in maintaining maximum economic efficiency in labor markets through the determination of appropriate wages and working conditions. By investigating and evaluating the distribution of power between labor and employers, as well as examining the effectiveness of these negotiating outcomes, this model will eventually reveal insights into the economic implications of previous labor movements at work, as well as their socioeconomic consequences.

Before delving into the historical and economic context of labor activism in Canada, it is necessary to understand the fundamental economic principles of labor markets, with a special emphasis on the microeconomic forces of supply and demand. In labor economics, supply and

demand are the primary forces that govern the relationships between labor and employers (What is labor economics?, n.d). More specifically, labor supply indicates the quantity of individuals willing to work for a certain wage rate and time, whereas labor demand reflects how many people a firm is willing to hire for a given wage rate in order to produce goods and services (Kenton, 2023). Labor activism can have a considerable impact on the forces that drive labor markets. This can be accomplished through bargaining and negotiations, which eventually influence labor supply and demand dynamics. For example, labor movements campaigning for better wages or better working conditions may increase labor costs for employers, reducing demand for labor. Labour supply can also be affected by the prospective introduction of minimum wage laws or working conditions restrictions, which would encourage more people to join the labor force and so increase labor supply. After gaining a fundamental understanding of labor markets and the basic interaction of labor activism with labor market dynamics, it is critical to investigate the Efficiency Wage Theory. The theory in question implies that a firm may be interested in paying wages that are higher than the equilibrium level in order to generate an incentive for labor to be more productive and reduce labor turnover (Hayes, 2022). The concept, when applied to labor activism, underlines the impact of collective bargaining and advocacy on higher wages and better working conditions, resulting in a more productive labor force. More specifically, this theory proposes that some investment by firms can influence absenteeism, organizational efficiency, and higher rates of job satisfaction among workers.

The theory can be linked to labor activism since both have a favorable influence on labor union baseline demands, as well as positive spillover effects in the form of greater consumption, increased demand for labor, higher productivity levels, and, eventually, economic growth (Hayes,

2022). In addition to the efficiency wage theory, it is critical to investigate the impact of labor market regulations in shaping labor market dynamics and outcomes. While labor market regulations are designed to promote and safeguard labor rights, they may also have unforeseen implications for previously mentioned economic forces such as employment, wage levels and distribution, and general economic efficiency. For example, if a minimum wage is set above the market-clearing wage, it may unintentionally result in unemployment for workers with lower skill levels, even if the law may have been enacted to guarantee a standard of living for labor. Thus, according to economic theory, collective bargaining can increase workers' bargaining power but also result in the creation of inflexible labor market structures that firms might find difficult to adjust to. This dilemma thus gives legislators an ultimatum to determine if labor market restrictions are beneficial enough to justify the possible costs associated with them, such as diminished competitiveness and market rigidity. In essence, labor activism can be a valuable instrument for influencing labor market dynamics, potentially impacting the equilibrium between labor supply and demand, which influences economic forces such as employment, wages, and income distribution. Following that, this paper aims to delve deeper into the complexities of labor activism in influencing labor market dynamics, drawing on historical and current evidence as well as economic theory to provide a self-interpreting understanding of the implications of labor activism on economic development and societal change in Canada.

Labor activism in Canada has been marked by several historical events and incidents between the late 19th century and the early 20th century. One such notable event was the Winnipeg General Strike of 1919. The strike is seen as an important juncture in Canadian labor history, triggered by a number of factors including rising prices, postwar economic insecurity,

terrible working conditions, and low wages. In May 1919, about 30,000 workers from several industries, including transportation, metalworking, and construction, joined together in solidarity to seek higher wages, shorter working hours, and bargaining rights (Glover, 2021). The Central Strike Committee, an organization made up of various labor unions, led the strike, which brought life to a halt in Winnipeg and paralyzed the economy (Spirit of the Strike, n.d). The government and other conservative forces disagreed, believing that the strike constituted a threat to law and order. In addition to not meeting the workers' demands, the government also deployed the Royal Canadian Mounted Police and enacted special regulations during the strike. This was despite the fact that the strike represented a collective action by workers to achieve what they believed they were entitled to. This intensified the conflict between law enforcement and the striking workers. This event serves as a strong example underscoring the significance of labor activism in shaping economic and social outcomes. The Winnipeg General Strike serves as an important case study for investigating the influence of labor activism on strategies and outcomes, helping us to get a more nuanced knowledge of its impact on economic development and societal change in Canada. For example, the Winnipeg strike resulted in the formation of the CLP, or Canadian Labour Party, which was the first political party created and funded by various labor organizations to promote Canada's labor movement. The CLP later grew into the CCF, or Cooperative Commonwealth Federation, which in turn evolved into the NDP, or New Democratic Party. The origins and evolution of the CLP can be linked to the potential of labor activism in political mobilization and institutional reforms, reflecting greater political transformation in Canada. While it sparked change, the strike also raised various socioeconomic questions about income disparity, highlighting the necessity for policies that promote societal welfare as well as policies that address the economic concerns of the Canadian working class. Furthermore, the strike

demonstrated the importance of appropriate government engagement, asking for a democratic approach rather than the state's illegitimate power in suppressing the strike to maintain social order. From an economic aspect, the strike had an impact on numerous sectors of the Canadian economy, including market dynamics, government policies, and investment. Since the strike disrupted vital industries in Winnipeg, policymakers expressed urgent concerns about the labor market's stability and competitiveness. The Winnipeg General Strike of 1919 provides an opportunity to investigate previously discussed economic theories, such as the efficiency wage theory and the Efficient Bargaining Model. As previously stated, the efficiency wage theory suggests that employers may feel compelled to pay wages above market equilibrium in order to generate an incentive to boost labor productivity. In the context of the strike, the demands, primarily around better working conditions and greater wages, can be considered as manifestations of the principles of the discussed theory. Employees who engage in a coordinated strike in pursuit of higher wages may be interpreted as attempting to increase their own productivity and decrease employee turnover, which is consistent with the outcomes predicted by the efficiency wage theory. Furthermore, the aforementioned context can be linked to the Efficient Bargaining Model, an economic framework that underscores the significance of employer-labor negotiation in establishing optimal working conditions and remuneration to promote economic efficiency. In the case of the strike, the Central Strike Committee served as the negotiating party between labor unions and employers, addressing the concerns of the larger labor population.

Another notable event in Canadian labor history was the 1935 On-to-Ottawa Trek. The Relief Camp Workers Union (RCWU) organized the strike to demand better working conditions

and relief measures from the government during the Great Depression. The mass protest movement was a trek undertaken by unemployed males, commencing in Vancouver and ending in Ottawa, to voice their problems directly to the federal government (Howard, 2006). Similarities can be drawn to the Winnipeg General Strike, since both events were motivated by economic hardship, high unemployment, and discontent with government policy. More specifically, unemployed workers in relief camps in British Columbia attempted to alleviate poverty and inequality by demanding better wages, social assistance programs, and employment opportunities. The movement was founded by labor activist Arthur 'Slim' Evans, with support from other labor unions and liberal organizations. Similar to the Winnipeg General Strike, the On-to-Ottawa Trek represents workers' collaborative struggles against economic inequality and social injustice. Furthermore, the event emphasized the impact of the labor movement on institutional reforms in Canada. This is due to the fact that the trek not only generated a lot of sympathy for the struggling workers, but it also underscored the importance of the government being directly involved with the formidable forces of unemployment and poverty during the Great Depression. Furthermore, the founding of the RCWU and its partnership with other labor unions demonstrate that labor activism has a tremendous influence on political mobilization (Liversedge & Hoar, 1973). From an economic aspect, the event raises concerns about the government's involvement and efficiency in providing appropriate relief measures. While the workers addressed their individual issues by advocating for greater wages, better job opportunities, and societal welfare programs, they also highlighted bigger challenges at play such as income inequality and economic instability. Similar to the Winnipeg General Strike, the trek was met with defiance by authorities, with police stopping it, resulting in a violent clash between the strikers and the police known as the Regina Riot. The context of this incident is relevant to

the Efficient Bargaining Model, which emphasizes labor-management dynamics. Negotiations between the RCWU and the government could have addressed workers' concerns and led to a mutually beneficial arrangement for all parties. Alternatively, the model's emphasis on bargaining processes may have allowed both labor and employers to reach an agreement on labor demands while acknowledging the economic interests of firms and the government. The inability to reach a negotiated agreement, followed by violence during the Regina Riot, demonstrates the difficulties of enforcing bargaining rights in the face of underlying power dynamics.

The Winnipeg General Strike of 1919 and the On-to-Ottawa Trek of 1935, among other events, are significant in Canadian labor history because they illustrate labor solidarity and collective action in campaigning for higher wages and better working conditions. Furthermore, these events demonstrate the impact of labor activism on political mobilization and institutional reforms in Canada. At present, Canada has made numerous advances in labor laws and regulations that directly address the issues addressed during these historical movements. For example, Canada has enacted minimum wage laws in response to public demand for higher wages. Additionally, labor standards have been introduced, establishing a baseline for employment terms across most industries. Furthermore, to strengthen workers' rights, Canadian legislation has enacted the Canadian Labour Code (Branch, 2020), which establishes standards for issues such as bargaining rights, workplace safety, and working hours. Furthermore, the government has implemented social assistance programs to combat income disparity and economic instability, in response to the issues highlighted by the Winnipeg General Strike and the On-to-Ottawa Trek. Employment insurance, social assistance, and pension plans all assist workers who are unemployed or struggling financially, contributing to social stability and economic resilience. From an economic standpoint, these policies seek to alleviate the negative consequences of economic downturns while promoting inclusive growth by ensuring that all members of society have access to basic necessities and possibilities for advancement. Although some issues continue to exist, the events outlined have had an impact on Canadian social policies, labor laws, and labor-management relations.

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