Monday, May 28, 2018

Strikes : Good or Bad?

WestJet Airlines          

      When the pilot's union of the pilots of WestJet voted 91% in favor of strike action, the travelling public started to worry about their travel plans.  WestJet Airlines employees were not part of a union until recently.  WestJet Airlines employees are WestJet owners, which was part of the commercials.  See, instead of having pensions like their Canadian competitor Air Canada, WestJet employees could purchase company stock as part of an employee stock purchase plan.
       
       On May 25th of 2018, WestJet CEO and head of pilot's union made an announcement that the threat of strike action has been eliminated and the people can book with WestJet with 100% confidence.  One of the major sticking points involved the soon to launch ultra low cost carrier Swoop.  Swoop was going to have pilots from other parts of the world and they would not be WestJet Pilots.  WestJet has come out and said that Swoop planes will be piloted by WestJet pilots.  This will likely mean, the cost to fly on Swoop will be increased to offset thee pay of the unionized pilot.   The parties have agreed to mediation and possibly binding arbitration to come to a contract.
           On this news of no strike action, the price of WestJet stock, WJA.TO, increased 5% and then started to retract to between 2 and 3%.

Canadian Pacific Railway

     Over the weekend, the unions of Canadian Pacific Railway gave a 72 hr strike notice after rejecting the company's latest offer. 

     What happens when a Class 1 railway goes on strike?  The economy is strongly affected as a lot of companies ship by rail to reduce cost considerably and the belief that it is more environmentally friendly.  Trains transport commodities such as coal, crude oil and grain. Trains also transport goods via intermodal containers and temperature controlled intermodal containers.
   
    The federal government will get involved very soon if the matter is not settled within a matter of days.  Canadian Pacific Railway is preparing for a work stoppage.  Their main competitor in Canada, Canadian National Railway, has stated they will not be able to accommodate shippers in the event of strike by Canadian Pacific Railway.

Are Strikes Good or Bad?

      Strikes can sometimes cause hardships for everyday people.  In 2011 or 2012, Metro Transit drivers of Halifax went on strike. The strike lasted approximately 6 weeks and it was during the winter.  A lot of people rely on buses to get back and forth to work and university.  A lot of people had to quit their jobs because they did not a viable means of transportation due to lack of money.  The bus drivers wanted higher pay, more safety and better work schedules.  Bus drivers get to pick their schedule of when their start time and which routes they will drive.  This picking of schedules is done by seniority.
     
       Was their anyone compensation for the public who had to quit their jobs? No there was not.  A goodwill gesture, Metro Transit made the buses free for 2 weeks to help their passengers financially.

         Union employees get paid more than regular employees to the same type of work.  I recall being told by someone in 2005, that their friend got paid $24 an hour to work at Canada Post's sortation plant in Halifax.  Canada Post is unionized.  Courier companies like Purolator and Sameday Worldwide pay their dock employees a lot less. Often times the courier companies work would be harder physically than Canada Post, which has lots of letter mail.

     When I was at Dalhousie University, the professors went on strike about 2 weeks before final exams. All classes were cancelled obliviously, or that was what we were told.  One professor decided to teach his class during the strike saying that you guys are paying for this course.  A few days before exams were scheduled to start, the strike was over.  A lot of students were stressed out during the strike wondering if their semester and possibly year ( full-year courses) were in jeopardy.
 
    Years ago, that a bus driver was suspended for taking his lunch break at a different time that when is lunch was scheduled.  The driver was late due to an accident and construction along his route.  The bus driver was part of a union.  So, his suspension lead to his fellow bus drivers walking off the job.  Did any of the bus drivers get fired?  No bus driver lost their job.  If a non-unionized employee did this, they would be fired instantly.

   When not a part of a union, there is no protection in a job.  A boss or fellow co-worker could scream at you and such.  If you quit your job, you will have a hard time to convince the employment insurance office that you had a valid reason for quitting.  Therefore, your source of income is lost completely as there is no job income or employment insurance income.  We all have been there or know of someone that quit a job because of a toxic work environment.
    Some worksites will not even allow non-unionized workers on site.

Conclusion:

     Strikes can be good or bad depending on the individuals involved.  A strike can lead to better working conditions and higher pay for the employees involved.  The downside is that the public can drastically affected.  An example of the latter is when public transit goes on strike.  The travelling public could be left without a reasonable cost effective way to get to and from work.

Disclosure: Long WJA.TO


DISCLAIMER
I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

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