Alcan Aluminium Limited, a Canadian corporation, is the parent company of a global group that is active in 22 countries and is the world's second largest producer of aluminium (accounting for almost 10 percent of world production). The principal activities of the group and its 34,000 employees include bauxite mining, alumina refining and aluminium smelting. The end products are used principally in the containers and packaging; transportation; building and construction; and electrical industries. Worldwide sales were $9.2 billion in 1995. In Canada, 1.1 million tonnes of aluminium are produced by 8,723 employees with much of this production and employment concentrated in Quebec (825,000 tonnes of production with 6,890 employees).

The Alcan operations at the Jonquière complex in northern Quebec are important ones for the Saguenay-Lac Saint Jean region. Employment is approximately 3,300 excluding management with the vast majority being in hourly rated employment. These jobs are regarded as well paid - base salaries vary between $46,500 and $48,500 for hourly employees. Both hourly rate employees and the 400 clerical and office workers are organized by the SNEAA, which is affiliated with the Federation des Syndicats du Secteur de l'Aluminium (FSSA). The most recent collective agreement was signed in October 1995 after 10 months of negotiation including a work stoppage. The agreement runs from October 1995 to October 1998 with wages made retroactive to May 1995. Since the signing of the collective agreement the FSSA has signed a service agreement with the United Steelworkers of America (USWA) which is affiliated with the Quebec Federation of Labour, one of the central labour bodies in Quebec.

In the early 1990s a series of layoffs occurred as a result of the replacement of seven "vat rooms" and by the construction of new facilities at Laterrière and various organizational changes. The number of surplus employees at the complex averaged approximately 500 for each of the years 1992 to 1995 and affected workers with significant years of seniority (8 years of service for hourly workers and 18 years for office workers). This was despite the use of inter-factory transfers and special programs for early retirement and severance pay. The result was that between 1989 and 1995, employment at the Jonquière complex fell from 4,960 to 3,109 - a reduction of 37.3 percent in 6 years. This is set against the background of a region with traditionally high unemployment (a 14 percent published unemployment rate).

Employment prospects for those displaced were thus bleak in such a remote region - the alternative for some was a move away to Montreal. The imbalance between laid off workers and those remaining at Alcan was easily apparent in such a small and close knit community. Consequently, the SNEAA found itself under pressure from its members who had been laid off to propose some solutions to this imbalance. In response, the union proposed for the 1995 round of collective bargaining, discussion of the principle of sharing work between those currently employed and those laid off.

The company, in entering into collective bargaining, also wished to achieve changes in three areas. Firstly, the company wished to negotiate changes in the organization of work including greater flexibility among different trades to alter responsibilities and tasks. Secondly, the company wished to improve its relations with the union through means to provide for employment security and to develop opportunities for joint activities around job sharing, employment creation and work organization in order to increase productivity. A final objective was to modernize some of the industrial capacity through a $4 million program to replace old facilities. This would raise aluminium production in the province from 825,000 tonnes to 1.2 million tonnes and would also have an impact on employment and the company's ability to raise productivity and compete in world markets.

The agreement between Alcan and the SNEAA addressed these issues through four measures:

The adverse impact of these measures on workers was mitigated by support from provincial and federal governments.

Banking of Unpaid Hours. The first part of this innovative agreement was the 40-38 program. This was a voluntary program. Workers continued to work 40 hours per week but were paid for 38 . A similar scheme was introduced for office workers who would work 35 hours and be paid for 33 hours.. The remaining two hours were put into a bank where hours could accumulate. If twenty workers volunteered to be in the 40-38 program then one job was created which would be given to a new hiring. In return participants in the program were entitled to extra vacation - on average an additional 11 days per year. To cushion the financial impact of the unpaid hours measure, wage rates were increase by 25 cents per hour in addition to the other wage adjustments negotiated. Furthermore, having agreed to participate in the program, a worker could not withdraw from it until having accumulated 40 hours in the hours bank. In cases of absence due to illness or accident, the hours are not accumulated. The use of banked hours to create permanent employment was obligatory under the agreement, but the company had flexibility to ensure that these hours were used in a manner consistent with company objectives.

Payment of Overtime Hours. For several years, Alcan had established a voluntary program for accumulating overtime hours to be taken in time off. Under the new agreement, the program was made compulsory for those hours actually worked in overtime. The bonus half time, however, could be paid in cash or added to one's vacation entitlement at the choice of the individual. The only circumstance where overtime would be paid wholly in cash was when workers were specifically called in for special cases to work overtime. The combined effect of this measure and the 40-38 scheme was to facilitate the creation of permanent positions for those workers in temporary positions.

Integration of Statutory Holidays. Being a continuous operation, it is necessary to operate the plant through statutory holidays. Previously, permanent workers who worked a statutory holiday were paid for the holiday and received a day in lieu. The agreement between the company and the union has integrated 12 statutory holidays into workers schedules so that these workers receive the day off and surplus employees will now work the holiday, thus allowing previously laid off workers to be reabsorbed back into the operation and earn income. Participation in the integration of statutory holidays into workers' schedules is at the discretion of the individual worker. If the formula had been applied at the Jonquière complex it was expected that this treatment of statutory holidays would create some 62 jobs over the year. However the formula was only applied at the Beauharnois plant where it created a small number of new jobs.

Training Efforts. The goal of this measure was to use the surplus employees in order to increase training and skill development activities. The training effort was expected to double over the life of the three year agreement. The training program was targetted to ensure that each employee developed and maintained specific occupational skills and an acceleration in the development of particular skills required for new forms of work organization such as team working, communication skills, problem solving, inter-personal skills and trade flexibility

Government support. To offset some of the losses in income, and increases in costs, the federal and provincial governments agreed to provide support for the measures in the agreement on a pilot-project basis. The level of government support was tied to employment created under the 40-38 program. Furthermore, the amount provided for each job created would decline by 50 percent in each year of the three year agreement. For the three years, total support from the two levels of government was capped at a maximum of $2.3 million, split equally between the federal Human Resources Development and the Société québécoise de développement de la main-d'oeuvre (SQDM). Furthermore the company agreed to pay an extra 25 cents per hour for each employee participating in this program. The support helped alleviate some income losses for current workers, but does not completely offset them.

Alcan was able to achieve some of it aims regarding increased flexibility in the organization of work. Fully 22 classifications for trade employees were merged into 6 groups. To compensate for this regrouping $1.35 would be added progressively to hourly rates over the length of the agreement. In addition a bonus would be paid as work teams were developed through all categories of workers. A decompartmentalization bonus was also to paid for certain maintenance activities that would now be performed by service workers and operators.

The impacts of this agreement can be measured in terms of some immediate results, particularly on employment, costs and incomes. The voluntary 40-38 program has been subscribed to by 70 percent of the workforce (2,300 workers)at Jonquière. The results of the hours banked has been the hiring of 112 workers who had previously been on layoff. Many of these workers had not found a job since their layoff and had been on welfare. The hirings thus, had a wider impact on social spending than simply increasing employment at Alcan.

For those employees already at the Jonquière complex, some income losses were apparent. Much of this was attributable to the reduced number of overtime hours that were paid, but were now compensated in vacation time. The 40-38 program also produced some losses, but not in direct proportion to the reduced number of paid hours. Working forty hours and being paid for 38 represents a 5 percent reduction on paid hours. After tax income losses were less than 1 percent depending upon the type of work (hourly or salary) and the actual level in the pay scale (percentage losses were higher at higher pay levels).

From the company's perspective, hiring new workers does have an impact on costs. The company incurs some fixed costs of new hires through benefits provided to these workers. The company estimates this cost to be $14,000 per year per worker. In addition, the additional 25 cents per hour paid to participants in the 40-38 program translates in an additional $10,000 cost per year per new worker. The calculation is as follows: 20 workers each work 40 hours to create 40 hours of work for one worker for one week. Therefore the additional annual cost is $0.25 x 20 x 40 x 50 = $10,000. The total additional cost is therefore estimated by the company to be $24,000 per year per new worker.

In the long run Alcan believes that any immediate increases in costs will be offset by the new, more efficient, forms of work organization together with significant flexibility among trades regarding responsibilities and tasks. These new forms of organization are seen by the company as essential to increase productivity and guarantee the economic viability of the Jonquière complex and its employees in the future. In essence, the future productivity gains have been borrowed against to help facilitate important and necessary changes in the organization at the complex.

The full long-term impact of this agreement may have to await the completion of the three year agreement, since the full impacts of these measures cannot be fully known until they have been in operation for some time, e.g. the impact of reduced government support, and the impact of greater employment security on the surrounding community. It should be noted that this case has attracted much attention both in the media and among labour market participants. Other USWA locals and other unions have expressed an interest in exploring similar options.

The most notable feature of the agreement is the genuine and innovative attempt to share the available work within a community and hence alleviate any social problems created through the imbalance of higher unemployment and higher incomes for the employed. The fact that the community is relatively small and closely knit and with few alternative employment opportunities is an important factor.

The case is particularly noteworthy for the extent to which pressure from outside the company-union nexus led to a search for an innovative solution.

Although the agreement was ratified by a significant majority of workers, some workers were critical of the overtime provision in the agreement, principally because of its compulsory nature. Others, particularly those with heavy financial commitments based on salaries with a high overtime component, suddenly faced a dramatic change in their incomes and the lack of any transitional period to soften the blow and allow for planning for the changes was seen as a failing by these workers. Against this, there are many in the community and at the plant who recognized the imperative of sharing the available work and welcomed the additional hirings and subsequent boost to the local economy, as a result of this agreement.

The case is significant, not just because of its innovative measures, but because it highlights important principles in developing new arrangements to share work time and work. First and foremost, the arrangements instituted were the result of an agreed joint process and indicate the range of options that can be explored if both parties are willing to seriously discuss complex issues.

Another important principle is evident in the trade offs agreed to particularly between security - which is important for the union - and productivity, which important for the employer. The case demonstrates that both issues need to be addressed if agreements are to achieve progressive and innovative solutions together. With some signal that the company would address the employment security concerns of unions, the union was prepared to discuss important changes in organization that would benefit productivity. Likewise, a willingness to discuss workplace changes by the union enabled the company to negotiate around measures to reabsorb previously surplus employees.

The case also highlights other principles of interest to the Task Force.