Trading Workers’ Health for Profit in a Petro-State

Trading Workers’ Health for Profit in a Petro-State

Athabasca University Arts and Science Lecture Series

18 May 2012, Edmonton

Bob Barnetson, Associate Professor

Labour Relations, Faculty of Humanities and Social Sciences

Introduction

One of the more interesting research projects underway at Athabasca right now examines the intersection of oil and democracy by querying whether and to what degree Alberta is a petro-state. Today I’m going to present a high-level overview of some research I’m doing about occupational health and safety (OHS) in Alberta. Broadly speaking, this research supports the notion that Alberta is a petro-state.

I’m going to start by identifying some of the characteristics of petro-states. Then I’m going to move into a discussion of Alberta’s OHS record and system. These two topics are linked together by the notion of human rights—that workers have a right to a safe work environment, rights that are undermined by Alberta’s anemic OHS enforcement system.

I’m then going to turn to some explanations of why this is the case. We’ll look at Alberta’s weak labour movement. This includes the ways the government acts to keep workers’ complacent as well as the effect of the oil-driven boom-bust cycle on worker interest in unions. We’ll also look at how employers pressurize politicians to create ineffective OHS enforcement. This includes considering the degree to which Alberta’s OHS regulatory system has been captured by employers.

Alberta as a Petro-State

Petro-states derive a significant portion of their revenue—typically >20%—from rents levied on petroleum extraction. Examples of petro-states exist in the Gulf (e.g., Iraq and Qatar), Africa (e.g., Libya and Nigeria) and South America (e.g., Venezuela and Brazil). Norway, Britain and Russia are also petro-states. At the sub-national level, Alaska and Alberta (25% of revenue) are also petro-states by this definition.

Petro-states display a number of characteristics. These include highly concentrated wealth, weak public institutions and authoritarian rule. These characteristics appear to flow from heavy reliance on oil rents. The link between the government and producers is strengthened because oil is the “golden goose”.

To the degree they exist, links between government and citizens are weakened. Governments are less reliant upon personal taxation to operate and oil wealth facilitates buying off and/or repression opposition. The economy also becomes slaved to oil: manufacturing and agriculture are suppressed by a high dollar and high wages dampening export markets.

Counter-intuitively, petro-states tend to exhibit high levels of poverty, low level of education and poor health care and nutrition. There tends to be significant corruption and a democratic deficit. The question that Lorna Stefanick and Meenal Shrivastava are looking into is the degree to which Alberta demonstrates these political, economic and social characteristics.

Workplace Injury in Alberta

Bluntly, Alberta jobsites are unsafe places to work. Each year, the government reports approximately 150 occupational fatalities and 50,000 serious injuries. The true level of injury in Alberta is approximately 500,000 annual injuries. This reflects widespread employer non-compliance with Alberta’s Occupational Health and Safety Code. For example, in 2011, the government announced a safety inspection blitz in the residential construction industry. Despite knowing government inspectors were coming, the majority of the 387 employers inspected were found to have safety violations on their worksites.

Non-compliance reflects anemic enforcement. Employers know there is almost no chance they will be caught violating safety rules. For example, on average, workplaces are inspected less than once every 14 years in Alberta. And it can take safety inspectors up to 18 days to respond to reports of unsafe workplaces. Employers also know that, if they do get caught, there is almost no chance they will be penalized.

Alberta does prosecute a handful of employers each year—typically when the employer has killed or seriously maimed a worker. Fines are levied years after the event and are tax deductable (i.e., tax-payer subsidized). A good lawyer can get the fine paid for an employer-sponsored safety organization—that is to say, a tax-payer subsidized fine can be paid to other employers to do safety work the employer should have been doing in the first place.

As a result of this dynamic, employers adopt a cost-benefit approach to safety. They only prevent injuries that are cheaper to prevent than to incur. As Alberta allows employers to externalize much of the cost associated with injuries onto workers and the taxpayer, few injuries are “worth” preventing. Consequently, we have half a million annual injuries.

Human Rights and Democracy in Alberta

The nexus between OHS and petro-states is found in notions of human rights. Albertans possess a range of human rights, which often characterize liberal democracies. Two human rights important to this presentation are the freedom to associate (which is the basis of collective action in the workplace) and the right to health (which underlies injury prevention efforts). The freedom of association finds protection in the Canadian Charter of Rights and Freedoms as well as expression in provincial statutes, such as Alberta’s Labour Relations Code. The right to health exists in the International Covenant on Economic, Social and Cultural Rights, which includes the right to safe and healthy working conditions. Alberta has accommodated workers’ desire to avoid workplace injuries by enacting a variety of statutes, including the Occupational Health and Safety Act.

One categorization of human rights divides them into civil, political and social rights. Civil rights codified a set of relations between individuals based on the capitalist mode of production. The purpose of these rights is to protect individual liberty, property, security and justice. Civil rights are typically embedded in nations’ constitutional documents and are protected by the state.

Also embedded in these constitutional documents are certain political rights—rights allowing direct or indirect participation in the establishment or administration of government, such as the right to vote and hold public office. These political rights (eventually) allowed (most) citizens to participate (in various ways) in periodic elections, thereby legitimizing the government: the ruled choose the government of the day and its policies. Yet the political choices available to citizens do not typically challenge the underlying civil rights that structure relationships in society. Further, the notional political equality of citizens is significantly undermined by the economic inequalities between various groups of citizens, most commonly labour and capital.

Social rights were the last type of rights to emerge and are an attempt to ameliorate the negative effects of capitalism (i.e., the operation of civil and political rights). For example, when workers are unable to access the basic necessities of life because their wages are poor or they are unemployed, this threatens the availability of workers as well as workers accepting their subordinate position in society—necessary components of social reproduction. For these reasons, the state may intervene in the operation of the labour market or workplace or provide necessary services or supports.

The regulation and public provision associated with social rights often infringe upon civil rights and are a source of conflict between labour and capital. As social rights run contrary to civil rights, they also do not typically find expression in constitutional documents. Rather, they are voluntarily codified by the state in legislation or international agreements. Consequently, social rights are much easier to change over time than are political or civil rights, are often weakly or not enforced, and are more subject to particular political alignments and pressures.

It is axiomatic that rights without remedy are not really rights at all. That is to say, if workers cannot consistently realize their right to health, then they don’t actually have such a right in anything other than a notional sense. As I noted before, Alberta workplaces are extremely unsafe and workers are routinely maimed and killed because government enforcement is ineffective. This seems to naturally lead to the question of why is government enforcement of workers’ rights to health so ineffective?

Organized Labour in Alberta

A part of the answer is that organized labour is a weak presence in Alberta workplaces and is largely excluded from public policy making. There are a number of factors that contribute to this situation. Only 25% of Alberta workers (mostly in the public sector) were unionized in 2011, the lowest rate of unionization in Canada. Further, the largest sectors in Alberta’s economy (energy, construction and finance) are mostly non-unionized. In this way, the dominant employment paradigm in Alberta has been (and remains) non-union. While segments of Alberta workers periodically exhibit significant support for trade unionism, this has not translated into union members or political influence.

This may be partly explained as an impact of successive Alberta governments enacting employer-friendly labour laws. For example, the Labour Relations Code requires certification votes regardless of how much worker support a union demonstrates. Under such a system, workers are less able to gain union representation than card-check system. The Alberta Labour Relations Board does not have the power of automatic certification to remedy unfair labour practices during organizing campaigns. And the government has resisted calls for first-contract arbitration provisions. All of these policy choices aid employers to resist union organizing campaigns.

The government also frequently intervenes directly in the labour market to the benefit of employers. For example, the government has intervened in unionization to benefit “friendly” unions and punish combative ones as well as widely prohibiting strikes in the public sector. The government has expanded the labour force via migration to limit the labour market power of workers and facilitate union avoidance tactics. And the government intervenes directly in collective bargaining, but only when it benefits employers (including itself).

That said, it is also important to recognize that many Alberta workers do not see trade unions as particularly useful. Alberta’s energy-driven boom-and-bust cycles mean that workers have substantial personal labour market power during the booms (thus do not need unions). During the busts, unions have experienced difficulty protecting worker interests. Further, migrants from other provinces comprise a significant portion of Alberta’s workforce and they have historically exercised exit options rather than resist unfavorable working conditions. The upshot is that Alberta’s labour movement, while not powerless, is not a key player and is often unable to shape public policy.

Impact of Oil and Agricultural Industries on Public Policy

In addition to a weak labour movement, Alberta has an influential employer lobby that appears able to shape public policy in ways that advantage it. Some of this stems from the basic neoliberal orientation of Alberta progressive conservative politicians: they broadly accept that the purpose of government is to facilitate the operation of business. Alberta employers also have a number of ways of exerting influence on public policy. For example, it is useful to examine the electoral benefits that accrue to politicians who maintain a repressive and injurious labour relations system.

Historically, agriculture was economically and politically important in Alberta. Prior to 1945, the agricultural community supported limits on farm worker rights. Although the economic importance of agriculture diminished after the 1947 discovery of oil, rural Alberta has retained political importance through the development of a symbiotic electoral relationship with the provincial government. Revenue from the growing oil and gas industry has allowed the government to fund significant rural public infrastructure (e.g. highways, hospitals and nursing homes) and programming. This spending has, in turn, garnered the government strong political support from rural constituencies that governments have ensured are electorally over-represented in the legislature.

One outcome of this arrangement has been that the government continues to exclude farm workers from most basic statutory employment rights despite the absence of any substantive argument for doing so. A second outcome is that the government can continue its long tradition of privileging employer interests, particularly in the oil and gas industry. For example, during the 1950s and 1960s, Alberta’s Social Credit government sought to maintain a weak labour movement to facilitate the development of the oil industry. The election of a Progressive Conservative government in 1971 broadly continued this policy direction.

Alberta’s boom-and-bust cycle has also triggered state intervention to curtail workers’ ability to resist employer demands. This includes legislative change in the 1980s to facilitate union avoidance, public-sector wage rollbacks and job losses in the early 1990s as well as further changes to labour laws and the expansion of child labour and migrant worker populations to loosen the labour market in the 2000s. Similar favorable treatment of the oil industry in environmental regulation and taxation as well as regulatory reform favorable to other employer groups has also been identified.

The upshot of these circumstances is that Alberta employers, among whom oil companies feature prominently, have created pressures, opportunities and inducements to continue and exacerbate Alberta’s tradition of privileging the interests of employers over workers. They have also made significant direct financial contributions to the Conservative Party, which can’t hurt their ability to access and influence policy. In workplace health and safety issues, there is evidence that employers have effectively captured the regulatory system and turned it to their own ends.

Regulatory Capture of Alberta’s OHS system

Regulatory capture occurs when a state agency designed to act in the public interest instead acts to advance the interests of an important stakeholder group. Once captured, a regulatory agency can then be used by that stakeholder group to impose costs on other stakeholders, even if such costs are contrary to the public interest. Captured regulators often see themselves as partners of the captors they are supposed to regulate and may even find themselves financed by that group.

Alberta’s OHS system exhibits several characteristics of regulatory capture. This includes including ineffective regulation of workplace safety by employers that transfers costs to workers, employer funding, industry-government partnerships that allow employers to set standards and perform auditing, the introduction of a questionable safety incentive systems for employers, and government messaging around safety that deflects blame for workplace injuries onto workers.

The ineffective enforcement of Alberta’s OHS laws has been discussed already. This issue of who funds OHS in Alberta is trickier to unravel. Of the $23.3 million Alberta spent on OHS in 2009, roughly $21.7 million came from employer premiums transferred to the government from the Alberta Workers’ Compensation Board (WCB). In this way, OHS is (indirectly) funded by employers. This funding is contingent upon continued approval by the WCB’s industry-dominated Board of Directors.

Since the 1990s, industry-funded safety associations have increasingly entered into “partnerships” with the government. These partnerships allow employers play a formal role in determining policy and standards as well as sponsor various safety awareness campaigns and perform safety auditing functions. 

A 1997 strategic plan for Alberta’s Partnerships framework explains the thinking underlying this approach:

“Partnerships is based upon the premise that more can be achieved through a cooperative, collaborative approach than by a one sided, dictatorial or interventionist approach. Leverage and synergy is possible without duplicating efforts and ‘re-inventing the wheel’. Partnerships strives to promote a culture of increased proactive health and safety attitudes and behaviour in the workplace. These cannot be legislated!”

This model prioritizes employer autonomy over regulation and government is viewed as a facilitator of employer-driven initiatives. Given the level of injury in Alberta workplaces, I think we should rightly question whether this partnerships model is effective.

The “collaborative” processes established by government to review standards created employer dominated “working groups” deliberating over small changes for extended periods. This led to a “culture of compromise” among labour representatives on the groups, which undermined the effectiveness of labour’s capacity to improve safety for workers.

The government has also linked the achievement of a Certificate of Recognition (COR) and employer claims costs to WCB premium reductions. These incentives are in addition incentives that exist under the WCB’s own experience-rating system. Yet, a 2010 audit raised questions about whether the Partnership in Injury Reduction program has made workplaces safer.

The partnership model has also intensified government promulgation of the careless work myth in Alberta injury prevention efforts. The careless work myth explains occupational injuries as the result of workers being accident prone, careless or even reckless. The most egregious example is the 2008 Bloody Lucky video campaign. The videos clearly and inaccurately portray workers as the cause of their own injuries.

For example, one video shows a shoe-store employee climbing a rickety ladder in high heels, reach to grab some stock (which is stacked precariously), fall backwards, break an unguarded light fixture and then fall onto the glass. The impression the video conveys is that the worker was at fault. In fact, the employer told her what shoes to wear, gave her a defective ladder, stacked the stock up high and unstably and failed to guard the light fixture. While the proximate cause of injury was the worker’s behaviour, the root caused was dangerous job design.

Bloody Lucky is the culmination of a trend in Alberta safety campaigns (that intensified during after 1995) of blaming workers for their injuries. Analysis of this campaign demonstrates that the bureaucrats involved with the campaign have difficulty identifying blaming behaviour and view such a messaging as important in securing political support for the campaign. The result of this campaign is that the state has mis-informed young workers about the nature of workplace hazards and appropriate mitigation strategies by publically shifted blame for injuries away from employers.

Workplace injury as a bellwether for democracy

The purpose of this research was to consider whether workplace safety in Alberta is consistent with the petro-state thesis. I believe the answer is yes.

There is substantial evidence that employers have disproportionate access to and say in legislative decision-making around occupational health and safety. Some of this influence comes from direct political contributions made by employers to the Conservative Party. And some of it comes via the importance of these employers to Alberta’s economic stability. Consider the fallout from the Stelmach government’s oil royalty review of 2007. Oil companies threatened a capital strike and Stelmach retreated. Oil companies then began funding an alternative political party, which came close to defeating the Conservatives. Clearly, you don’t screw with big oil in Alberta.

The long-term result of this arrangement is labour policies that are favorable to employers. Indeed, Alberta’s workplace health and safety system exhibits characteristics suggesting regulatory capture by employers—the very group OHS agencies are supposed to regulate. There is evidence of similar extraordinary employer influence in employment standards, labour relations and Alberta’s approach to immigration. As a result of this, employers appear to receive special treatment before the law. Specifically, employers have little chance of being caught breaking the law and virtually no chance to being assessed a penalty.

Alberta has also placed significant limits on workers’ freedom of association. This has created a weak labour movement that, in turn, has facilitated Alberta undermining workers’ right to health via ineffective injury-prevention efforts. Consequently, the costs associated with work-related injuries are externalized onto workers, their families and society. Where significant resistance emerges to this behaviour, the state is often able to buy offs unions through well timed settlements.

Stepping back from the specifics of OHS, what we see is evidence of power being concentrated in the hands of oil companies and conservative MLAs, creating an authoritarian and highly stable power structure. Public institutions are captured by employers and weakened to serve employer interests. Worker rights are virtually unenforceable and thus are meaningless. This is consistent with the notion that there is a democratic deficit in Alberta.

Generalizing from such narrow research has its perils, which is why I’m keen to see what the other contributors to this project come up with. I have a second project examining how the growth and treatment of temporary foreign workers accords with the petro-state thesis that I’m working on with Jason Foster from the Faculty of Business. We’ll be presenting some preliminary results at the Canadian Political Science Association conference in June.

The short version of that research is that migrant workers are a population vulnerable to exploitation. Alberta employers have sought to increasingly meet their labour needs via migrant workers. This lowers employer’s direct wage bill and undermines the labour market power of domestic workers.

The federal and provincial governments have responded to the desires of employers by making it easier to bring in “temporary” foreign workers. The state has sought to manage issues of exploitation of these workers mostly by managing the message and, when there is a big stink, through minor and ineffective regulatory processes. This behaviour is broadly consistent with the behaviour of Gulf states, which utilize large amount of unfree guest workers and again adds evidence that Alberta is a petro-state.

-- Bob Barnetson