Strikes Possible as Unions Have the Upper Hand

I n labor disputes in the transportation sector around the world, one thing is clear: Unions have the upper hand.

Mark Szakonyi of the Journal of Commerce writes that “containerized supply chains are ripe for industrial action” right now. The pandemic magnified the importance of transportation workers, he says, as the flow of personal protective equipment became a major issue. With global consumer inflation around 7 percent, those workers are going to demand significant pay increases. Unions are also pushing for improvements in working conditions and schedules, after many workers put in long hours over the past year due to a shortage of labor.

Szakonyi quotes the general secretary of the International Transport Workers’ Federation, Stephen Cotton: “You’ve got a bit of a perfect storm for industrial unrest, and I’d go a step further, social unrest, without advocating for it.” Cotton goes on to say that he does not think strikes have to happen, but the attitude of unions is clear: They’re emboldened, and as Szakonyi writes, “the balance of power has — for now — tilted towards labor.”

As I wrote last week, transportation unions in South Korea, Germany, Belgium, the U.K., Canada, and Argentina have already gone on strikes of varying lengths this year. A potential strike turned into an actual one when pilots from SAS, the flag carrier for Denmark, Norway, and Sweden, went on strike on Tuesday.

It’s notable that these disruptions are taking place at all in Scandinavia and Germany, countries where labor relations have been tranquil in recent history. After a sixth round of negotiations, workers and employers at Germany’s North Sea ports have yet to come to an agreement, with more strikes possibly on the horizon. According to the Süddeutsche Zeitung, the port employers’ group has repeatedly improved its offer on wages, with a 12.5 percent raise now on the table, to no avail. A negotiation leader for the employers said arbitration is urgently needed, lest the conflict escalate further.

In the U.S., there’s an additional factor in organized labor’s favor: the Biden administration. During the West Coast ports negotiations, the administration has talked about being a broker between employers and labor, but it’s no secret where Biden’s sympathies lie. His secretary of labor, Marty Walsh, is a former union president. Last month Biden gave a speech at the AFL-CIO’s convention in Philadelphia where he played up his reputation as the “most pro-union president in history,” a title he says was bestowed on him by former AFL-CIO president Richard Trumka.

The West Coast dockworkers’ contract expired on July 1, which means they are no longer bound by the contract’s no-strike clause. It’s relatively normal for negotiations to extend beyond the expiration date, and both sides have said they don’t want any work stoppages.

The joint statement from the Pacific Maritime Association and the International Longshore and Warehouse Union from July 1 says that “both sides understand the strategic importance of the ports to the local, regional and US economies, and are mindful of the need to finalize a new coast-wide contract as soon as possible to ensure continuing confidence in the West Coast.” That logic cuts both ways, though. The importance of America’s West Coast ports also means organized labor can inflict a lot of economic pain by going on strike. That’s a credible threat, too: The ILWU went on strike in 2015, causing significant economic damage.

The Wall Street Journal reported in early June that the ILWU “wants to draw a line against any further use of automated cranes, self-driving vehicles and other equipment,” which would represent some of the most meaningful changes the U.S. could make to allow its ports to be internationally competitive. The story says that Los Angeles/Long Beach was ranked dead last in a global port-performance index, trailing ports in Angola and South Africa. Because of the structure of labor relations and various other regulations and laws, modernizing American ports along the lines of a highly efficient port, such as Singapore’s, is essentially illegal.

It’s not just dockworkers, either. There’s a possible freight-rail strike on the way as well. Railroads and unions were in mediation before their contract expires July 18, but that process ended with no resolution last month. The Railway Labor Act makes striking very difficult, requiring mediation before a strike is even an option and giving the federal government significant powers to resolve disputes before they result in work stoppage (in this case, disputes have been ongoing since January 2020). But with mediation concluded, and July 18 fast approaching, businesses are getting concerned.

The U.S. Chamber of Commerce sent a letter to President Biden yesterday, urging him to appoint an emergency board of arbitrators to resolve the dispute, a power at his disposal under the Railway Labor Act. As Jeremy Lott noted for the Washington Examiner, it’s expected that Biden will do so right before July 18. The board then has 30 days to do its work, followed by a 30-day cooling-off period. That gets us to September 16 as the first possible strike day.

But it should never have gotten to this point, Lott writes. Two Biden appointees to the National Mediation Board voted to release the railroads and unions from mediation after only two months, which is unusually short. That decision set in motion one of the few pathways in the Railway Labor Act that could lead to a strike.

Neither a dockworker strike nor a rail strike is a sure thing. There’s plenty we don’t know as negotiations carry on in private, and parties have said they want to avoid work stoppages. But looking around the world and reading the domestic political scene, it seems that organized labor has a good hand and is willing to play it regardless of the consequences for the economy at large. Even if strikes are avoided, that will probably be due to concessions to union demands, which will further entrench inefficiency in our already globally uncompetitive transportation systems.