The Long-Term Privatization of Alcohol Retailing

This recent strike was fought with the threat of privatization looming, but the push toward outsourcing alcohol retailing in Ontario has been decades in the making.

The LCBO currently operates nearly seven hundred retail locations across the province, employs over nine thousand union members, and invests roughly $2.5 billion a year into public services like health care and education. Thus, despite years of purposeful erosion, it remains an important source of public revenue.

Yet for decades, the Crown corporation has been in the crosshairs of Conservative and Liberal governments alike, considered ripe for a sell-off. Unable to implement a wholesale privatization, governments have instead slowly undermined the LCBO by casualizing its workforce and opening additional privately operated “agency stores.” On the eve of the strike, roughly 70 percent of LCBO workers were nonpermanent casuals.

After its election in the mid-1990s, the Conservative government of Mike Harris swiftly initiated a broad privatization plan affecting huge portions of the public sector and Crown corporations, alongside an aggressive overhaul of the province’s labor legislation. Notably, revisions to the act governing Crown corporations eliminated successor rights for unions whose jobs were outsourced to private or not-for-profit sector employers. This meant that the battle against privatization was also an existential fight for public sector unions such as OPSEU, who engaged in a bitter, five-week strike in February 1996.

Like this most recent strike, job security was a central issue in the 1996 job actions. As a result of the 1996 strike, the union was able to extract contract language that forced the government to make “reasonable efforts” toward securing new jobs for affected workers. Litigation over the meaning of these “reasonable efforts” ultimately helped to frustrate and delay some of the government’s privatization and outsourcing but did not appreciably change the direction of change. In the intervening years, alcohol privatization has proceeded apace.

Moreover, the push to privatize liquor sales has gained momentum across the country, with current and former governments in Western Canada implementing various outsourcing schemes and undercutting unions in the process. The current Ontario government has sought to supercharge liquor retail privatization up to and during the recent OPSEU strike.

“The Elephant in the Room”: Ford’s Privatization Scheme

In May, Ford announced that his government was fast-tracking its plan to expand the sale of beer, wine, cider, and ready-to-drink cocktails to convenience stores and all grocery stores by 2026. The proposed framework would maintain the LCBO as a wholesaler and the only retailer of high-alcohol spirits, but gut its retail sales footprint. The union correctly identified the threat posed by hundreds of shuttered LCBO retail stores and massive job losses.

Consequently, a contentious round of bargaining at the LCBO was all but inevitable. As OPSEU reported to members in early May, LCBO bargaining representatives refused to discuss the government’s ongoing plans to expand alcohol sales at private retail outlets — “the elephant in the room,” as the union characterized it.

While claiming that the retail privatization was about “more choice and convenience,” the government couldn’t hide the considerable costs involved, both in terms of choking off LCBO revenues and breaking preexisting contracts with beer retailers.

For example, the fast-tracked scheme requires paying the Beer Store $225 million dollars to compensate for exiting an agreement signed by the previous Liberal government that made the Brewers Retail corporate partnership the exclusive seller of twelve and twenty-four packs of beer. The plan seems to involve reducing the Beer Store’s retail operations, while continuing to rely on its distribution network and recycling program.

As the Canadian Broadcasting Corporation further reported, the LCBO itself expected revenue losses of between $98 million and $150 million per year due to the privatization plan. This is in addition to the millions in rebates, subsidies, and other payments to private sellers that the full proposal will necessitate.

The union characterized Ford’s announced plan as “a corporate handout to big-box grocers,” attempting to draw public attention to the revenue impacts of privatization. “Expanding private alcohol sales is just the latest scheme to transfer public funds into the pockets of CEOs and Ford’s friends while further gutting our public services,” OPSEU president J. P. Hornick said.

Adding insult to injury, just days into the strike, the Ford government premiered an online tool — “a searchable digital map” — directing consumers to private alcohol retailers during OPSEU’s strike at the LCBO. The union countered with a demand that not a single LCBO job be lost through Ford’s privatization plan. For now, it appears they have secured this demand, though its long-term outcome is uncertain.

Returning to Work and the Fight Ahead

Throughout the strike, the Ford government remained steadfast in its commitment to privatization, showing no signs of backing down.

In response, OPSEU worked to build a broad base of public support around its strike demands, focusing in particular on the public revenue consequences of LCBO outsourcing. As the union succinctly put it, “When you buy a beer, that should help build a hospital — not pay for a billionaire’s new yacht.”

The union also pitched a set of core demands meant to simultaneously address the needs of members and garner support from the general public. These included expanding LCBO retail locations and hours; growing the LCBO’s warehousing, logistics, and ecommerce capacity; and fighting for more full-time permanent jobs. Many of these issues will need to be addressed in future negotiations.

Earlier in the bargaining process, the union outlined two possible futures: In the first, the Ford government hands over alcohol sales to big-box retailers like Loblaw and Circle K, leading to gutted public revenues and worsened working conditions. In the second, workers and the public demand the LCBO grow its retail and distribution footprint, continue to help fund public services, and expand access to good jobs.

With Sunday’s ratification, the union seems to have secured a hybrid of the two futures. Members return to work with assurances that their contract protects against job losses for the next three years. However, outsourcing will continue during this period, meaning that the fight to protect the LCBO is far from settled.