Regulatory Frameworks for Employment: The Quebec Manufacturing Industry in the Context of Economic Integration

In a context of economic integration, does a distinctive regulatory framework for employment act as a restraint on economic development? This is often publicly asserted by representatives of Canadian employers, who maintain that the Quebec regulatory framework is detrimental to employment and penalizes Quebec in firms’ strategic decisions. On the basis of a comparison of the American and Quebec regulatory frameworks, this assertion is discussed in light of the perception of decision makers working in multinational firms established in Quebec and the United States. Our study reveals that the Quebec regulatory framework is perceived in a highly differentiated way by the decision makers interviewed. This calls into question some of the stereotypical ideas on this subject and leads us to initiate a theoretical exploration of the links between the regulatory framework applicable to employment and economic development policies. Regulatory framework refers to the set of laws on labour and employment including those applicable to collective relations. In other words, it entails formal sources of labour regulation emanating directly from the state. In addition to this narrow definition of regulatory framework, we also seek to take into account the formal regulation associated with collective labour relations since the latter are themselves conditioned by law. Strategic decisions relate to firms’ choices of investment or development of operations, including those related to production locations and targeted markets. Through an analysis of the relevant literature, the first part of the article identifies the research objective and presents the research design. The second part examines the two regulatory frameworks under consideration, with a particular focus on the distinct logic underlying each one. The third part of the article sets out the results of our study of leaders of firms operating in these two systems. The conclusion identifies a number of research avenues in the areas of both theory and public policies. This study draws on two methodologies: a comparative analysis of the two regulatory frameworks and an exploratory empirical study of the perceptions of actors whose experience allows us to compare these systems. The co-authors personally conducted 22 interviews in eight firms between May 2004 and January 2005, usually at the head office located in Quebec province. All the interviewees were involved in strategic decision-making — division heads, plant managers or more often, vice-presidents of human resources. In the specific area of collective labour relations, during the Second World War, Quebec adopted a legal framework inspired from that established under the New Deal in the United States during the previous decade. Ever since, while its essential principles have been maintained, numerous changes have been made to Quebec’s legal system, thus intensifying its specific character and distinct nature in terms of labour relations. However, the examination of the entire regulatory framework, as explored in this article, highlights much more fundamental differences between the Quebec and American systems. In particular, the two frameworks are derived from two different legal regimes — the Civil Code and the Common Law — and in recent years, Quebec has made much more progressive and substantial advances in the minimum conditions that apply to the entire working population. The particularities of the Quebec regulatory framework arise from its hybrid nature. Owing to its origins and history, it is at the same time a product of French civil law, certain characteristics of the British and Canadian approaches, and especially, more belatedly, of the American approach to collective labour relations. This hybrid nature places the Quebec system half-way between American liberalism and the interventionism associated with several countries in continental Europe. Three types of observation emerge from the interviews. First, the firms’ leaders tend to assess the characteristics of the Quebec regulatory framework for employment in the context of economic integration with the United States. Without making the regulatory framework a primary factor, the economic context is nevertheless seen as giving it considerable importance in strategic corporate decisions. Second, their perceptions go beyond the content of public discourses on the “costs of regulation” in order to specify what are, in their eyes, the main challenges and the real issues. It is then possible to define how the various aspects of regulation can influence certain types of corporate decisions. Third, although the decision makers interviewed did not call into question the foundations of the existing labour regulation regime in Quebec, they nevertheless suggest that this framework is only viable in certain sectors of economic activity and in certain types of production. The hybrid nature of Quebec’s regulatory framework reflects European approaches, notably French civil law and recent laws on equity and social protection, but also the American collective labour relations regime. This phenomenon is, of course, significant for thinking about the economy and public policies but it also raises important theoretical questions in social sciences. The conclusion explores these two dimensions in light of the empirical data presented in this study. The key question concerns the possibilities and limitations of a distinct regulatory framework, with all its attendant particularities, in an environment in the grip of neo-liberal hegemony.

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