First NAFTA Labor Secretariat Special Study Reviews Plant Closings and Labor Rights in U.S., Canada and Mexico

The Secretariat of the Commission for Labor Cooperation today released its first "special study" under the labor side agreement to NAFTA, entitled Plant Closings and Labor Rights. The study is available on the Commission’s website: http://www.naalc.org. Acting on a request from the Council of Ministers (US Secretary of Labor, Mexican Secretary of Labor and Social Welfare, Canadian Minister of Labour), the Dallas-based Secretariat reviewed the effects of plant closings and threats of plant closing on the principle of freedom of association and workers’ right to organize unions in the three countries party to the North American Agreement on Labor Cooperation (NAALC).

The Ministers requested the study as part of an action plan resulting from Ministerial Consultations initiated by México in 1995 and prompted by the sudden closing (by Sprint Corporation) of a telemarketing facility in San Francisco immediately prior to a union election. The Sindicato de Telefonistas de la Republica Mexicana (Union of Telephone Workers of the Republic of Mexico) filed a submission under the NAALC with the National Administrative Office of Mexico’s Department of Labor, leading to ministerial consultations between then-U.S. Labor Secretary Robert Reich and Mexican Labor Secretary Javier Bonilla, joined by Canadian Minister of Labour Alfonso Gagliano.

The Study describes how the labor laws of each country protect against the use of plant closures or threats of closures to prevent union organization, and then examines the experience with the administration of these laws over the past five to ten year period.

"The Ministers asked us to look at an extremely important issue in this first study," said John McKennirey, Executive Director of the Secretariat, "It is a fundamental principle of labor law in all three NAFTA countries that employees should not be forced to choose between having a union and having a job."

For the United States, the Secretariat reviewed more than 400 federal court and NLRB decisions in cases of plant closings and threats of plant closing in a 5 year period (1989-95), roughly 90 per cent of which the NLRB or the courts found to be unlawful. The study notes the active enforcement by the NLRB of these types of cases.

A supplementary survey of U.S. union representatives found what respondents believed were plant closing threats reported in half of the sampled organizing campaigns during the 3-year period studied, with a higher incidence in industries more susceptible to closing such as manufacturing, trucking and warehousing.

With a similar legal framework, Canada's labor law systems saw 36 cases dealt with by the federal and provincial labor boards involving alleged plant closings or threats of plant closing in a 10-year period. In about 60% of these cases employers were found to have acted unlawfully. The proportion of this type of case in relation to the number of union organizing attempts per year is much lower in Canada than in the US.

Analyzing the Mexican experience, the Secretariat Study noted that there are generally no union organizing "campaigns" or elections in Mexico where employers might respond by closing or threatening to close the plant. Mexican labor law is "fundamentally different," so that cases involving alleged plant closings or threats of plant closing in order to prevent union organization do not arise in the Mexican legal system.

In a first ever systematic review of cases before the Mexican Conciliation and Arbitration Boards in this area, the Secretariat found that the legal procedure by which workers or unions could challenge an employer’s motivation in plant closures is virtually unused. Instead, Mexican workers and unions press for enhanced severance pay and other benefits when a plant closes. The vast majority of closures occur with the consent of the union.

The Study concludes with "issues for further consideration" including improving information, areas of further research in regard to this matter, and addressing plant closures and labor rights in codes of conduct for firms engaged in North American trade based on models accepted by the NAALC countries developed by the Organization for Economic Cooperation and Development (OECD) and the International Labor Organization (ILO).