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Organized Labour and Charest's Third Way

The Danger of the Gaspesia Gambit

Beryl P. Wajsman & James C. Duff

10 November 2004

“Villainous company hath been the spoil of me.”

~ Shakespeare, “Falstaff”



One might be forgiven for wondering what happened to the wave of populist anger that was supposed to have taken to our streets this fall in protest against the Charest government’s plans to re-engineer the Quebec economic model. Was there a new status quo in place?

Apart from a modest four-day walkout this past weekend by 3,800 SAQ employees and a union blitz at the Jonquiere Wal-Mart, this has been one of the calmest falls in the recent history of Liberal governance, an accomplishment little short of astounding in a political jurisdiction where some 40 percent of the population has a tie to organized labour, a level approached only in Denmark, Sweden, Italy and Israel.


The big reason was the decision by the Quebec Federation of Labour (FTQ) to sit out a proposed one-day general strike that the hospital and public-service unions had hoped would send the message to the Charest Liberals that privatization wouldn’t fly. The Liberals’ intimacies that led to the FTQ’s decision are now crumbling under perceived Liberal betrayals in the Gaspesia blame game. If the government goes too far in union-bashing, last year’s demonstrations could be dwarfed by things to come.


Upon his election Jean Charest vowed to remake what he called the “Quebec model”. Ostensibly what he had in mind was to reduce government intervention in, and cut state engineering of, the economic and financial directions and decisions in this Province. His version of English Prime Minister Tony Blair’s ‘Third Way’. But hidden landmines that threatened structural failure were never cleared.


It was a fully legitimate political position of course. After all, reducing state involvement is the backbone of conservative thought. However, it succeeds only within a thoroughly thought out policy framework. Without one, a new broom sweeping out a generation of  entrenched constructs produces dire consequences. Unfortunately the Liberal government had no defining moment comparable to Margaret Thatcher slamming down a copy of Friedrich Hayek’s ‘The Constitution of Liberty’ and barking at the British press “This is what we believe!”


Clearly there were problems with the Caisse-SGF-Investissements Québec world. But despite them Quebec’s economic engine helped propel Montreal ahead of Toronto in total investment dollars for the first time in a generation in the last two years of the PQ mandate. Precisely because partnerships with state institutions were possible, we attracted major engagement from foreign investors. And some of the successes were quite dramatic. A case in point being the $100 million plus joint venture between SGF Santé and the Netherlands’ DSM-Biologic, the world’s second largest generic pill maker, that resulted in the construction of Canada’s first laboratory for the testing of new pharmaceuticals on humans and the creation of several hundred jobs.


As the dismantling of  ‘Québec Inc.’ began to attract negative attention to its directionless nature, the government turned its attention from the economic to the social side of the agenda. And everything that was touched created bitter discord and division. Clawbacks on  pharmacy drug costs for the elderly. Tightening of immigration rules that some critics called racial profiling. A proposed elimination of local community representation on health-care boards. Six months into its mandate the new government was reeling with the lowest approval numbers in history. Then came the attack on Section 45 of the Labour Code.


The Charest government sought to allow a greater degree of outsourcing in the public and private sectors. A key element of its neo-lib-con ‘Third Way’. This required a change to an essential part of the status quo on labour relations. As much as Quebec’s unions were troubled by the socio-economic policies of this government their concerns had been voiced in the media and in consultative sessions with Mr. Charest and his Minister of Labour. Until now.


The leaders of organized labour appealed to Mr. Charest in face-to-face meetings not to go through with a one-sided reform. Henri Massé, President of the FTQ, strongly urged the government to seek a compromise by working in a step-by-step approach with labour. But it was clear that as last year’s Indian summer turned into fall, resolution was far away. It was then that Quebec’s major unions began to plan for the largest common front demonstrations in a generation.


This was not done without some trepidation. Many union leaders felt Quebec workers would take to the streets only on money issues. There was concern that Quebecers could not grasp the implications of such a broad opposition to a majority government’s entire approach. Or why it was so important at this time. Finally, they were fearful that if their call for mobilization failed, their own legitimacy would be put into question.


Their fears were ill-founded. The people grasped the issues viscerally. In a society of much bounty but with only a thin veneer of affluence where over 20% of the able-bodied cannot find work and where one-third of the gainfully employed are ‘working poor’ with only a few weeks of salary to their names, the people rose as one and one million took to the streets on December 11th of last year. The Gazette headline said it all: “Round 1 To The Unions”.


But as a one-day Round 2 general strike for earlier this year was being planned, the air was slowly seeping out of the balloon. In Joseph Heller’s immortal words “Something Happened”. Even as a record 150,000 people were turning out for the May Day March led by Henri Massé, the momentum was changing.


The Charest government was fast realizing that its economic policies could create dislocations of grave proportions. As the book value of the 300 plus companies in the “Quebec Inc.” portfolios were being written down to prepare them for sale, buyers were almost non-existent. Only some 40 companies had found suitors. Without government participation, potential acquisitors began to get cold feet. Syndicates formed with major American capital partners were evaporating as it became clear that there would no state supports or subventions. Thousand of jobs would be lost.


The Liberal government began to make some profound changes. The reality sunk in that in order to attract foreign investors some partnership with Quebec institutions had to be created. The only place where disposable funds that large resided were with the unions. Overtures began from the highest government mandarins to the leaders of organized labour. Work with us. Look at these investment syndicates. Try and take a lead. Help us and…you guessed it…we won’t push Sec.45 reform.


This process continued through the summer and early fall. Even as some of the ablest labor leaders such as Louis Bolduc of the United Food and Commercial Workers were organizing Wal-Mart, a consensus was building that there was much to be gained by prudence. Co-operation not confrontation was the by-word. Then came the Health-Care Summit.


Historically, disagreements between labour and government in Quebec take a back seat to a united voice in power-sharing negotiations with Ottawa. Charest’s approach of asymmetrical federalism fit right in with the mind-set of labour’s leadership. Labour felt an organizational, and ideological, imperative to support a new common front that could reverse twenty years of Trudeau-inspired federal strength. Here was an opening to out-Meech-Meech. And it succeeded.


Political expediency dictated that Martin and Charest needed perceived victories. And they got just that. Perceived wins. Nothing would make the capitulation at the Ottawa Congress Centre right. The people would not helped. Suffering would not be reduced. But the provinces got more power. Charest and labours’ leaders could declare they championed Quebec’s broader interests. The tentative truce between the Liberals and labour held.


But as the blame game unfolds in the Gaspesia debacle, all further bets on labour peace are off. Last Friday, Radio-Canada was leaked an internal auditor’s report into the cost overruns at the former Abitibi Consolidated paper plant in Chandler, showing that the former Péquiste government was in such a rush to get the paper plant running again for purely political reasons, it squandered $78 million on mid-construction changes.


Meanwhile, the carefully chosen commissioners of the government’s inquiry have been making noises that this occurred in order to solidify a pre-election compact between the PQ and labour. Unions are viewing the government’s spin doctors as orchestrating a direct provocation to achieve a hidden agenda since the Liberals know full well that the FTQ refused to endorse Landry’s PQ in the last election.

The Charest government appears to be seizing on the Gaspesia saga in the hope that it will convince Quebeckers beyond a reasonable doubt that the Quebec model of state capitalism is irreparably broken, with public-private partnerships being the only way to go. But the difference this time is that Big Labour has a $70 million stake in the idle, partially renovated Gaspesia mill.


The FTQ was a partner in this ill-fated venture with the Societe generale du financement and papermaker Tembec and if liquidator Ernst and Young is successful in convincing a judge this week to allow it to sell off the mill in pieces, the FTQ’s Fonds de solidarité stands to lose every cent and the paperworkers of Chandler will lose any chance of seeing the mill in operation ever again.

The Charest Liberals may have gone too far in attempting to embarrass labour in order to press its case. FTQ leaders and senior advisors are holding emergency meetings to plan strategy leading up to the resumption of the Commission of Inquiry on November 30. If the FTQ breaks its silence the perceived status quo will be a distant memory.

It is to be hoped that the institutional intimacies of the past year are not turned to institutional betrayals and that Quebec labour’s proud record of progress of the past fifty years will not fall victim to Shakespeare’s Falstaffian warning that “Villainous company hath been the spoil of me.”




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