MONTREAL (Reuters) - A government push to rein in the power of building trades unions in Quebec threatens to hamper infrastructure development and impede efforts to tempt investors to the French-speaking province.

Major work sites across Quebec were shut down for two days last week as unionized construction workers staged wildcat strikes over legislation proposed by the provincial government to set up an agency to assign workers to jobs.

In Quebec, construction unions currently have the power to handle which members, and how many, work on major projects.

The strikes were a new black mark against a sector weighed down by corruption, an inept bureaucracy and strong unions, with a dash of mob influence tossed in.

That combination adds up to spiraling bills for public works projects, with cost overruns on major projects of C$347 million ($343 million) in 2010, according to a report by the province's anti-corruption task force.

In Quebec, construction is the only industry where the owner of a company puts in the investment, signs the check, but doesn't have the right to hire his own people, said Gisele Belanger, a spokeswoman for the Association de la construction du Quebec, which represents about 15,000 contractors.

The proposed changes are tame compared with anti-union legislation in parts of the United States, but they have stirred up a firestorm in Quebec, which has traditionally been one of the most progressive jurisdictions in North America.

It is the only province that requires construction workers to be part of a union and it is the only place in Canada where unions control worker placement. 

Too much power can lead to abuse, Belanger said, noting that previous attempts to limit union control over job placement have failed. There is always, always an undercurrent of intimidation.

TRANSPARENCY COMING?

Under the new legislation, workers would register with a provincial agency and it would assign workers to construction sites. The system would be overseen by a committee of labor and company representatives.

It will be much more transparent, said Yves-Thomas Dorval, president of the Conseil du patronat, the government's main business lobby group. For employers, it will reduce the issue of having to buy peace in order to be sure that your construction site will work on time, on budget.

Under the current system, there are five construction unions in the province, but the two strongest groups represent two thirds of the workers. Companies say they are often forced to hire more workers than they need, or to import workers from other regions, which adds up to higher costs.

But the unions say contractors are ultimately responsible for deciding how many workers are needed and that the union simply makes recommendations when asked.

Either way, it adds up to risk for companies building mines, mills and factories, and a cause for concern for the Liberal government and its C$80 billion private-public investment plan to develop industry in northern Quebec.

To contain that risk, the province says the construction sector must be reformed to restrict the unions' power and to stem contractor corruption.

But the head of Quebec's biggest union, the Federation des travailleurs du Quebec (FTQ), blames cost overruns on government corruption and the padding of political coffers by the Mafia.  

The major question in this province is: Are we paying too much for the construction of roads, hospitals and bridges because contractors, engineers, lawyers and so on have to give money to different political parties? said FTQ President Michel Arsenault.

They're blaming workers. They're trying to create a diversion on us when we all know what the real problem is.

ORGANIZED CRIME

In a report leaked to the public in September, Quebec's anti-corruption task force found evidence that construction companies linked to organized crime hold a monopoly over roadwork contracts in parts of the province.

It also highlighted corruption among civil servants and shady contributions to election campaigns, but it did not mention the unions.

A separate government report on inefficiencies in the industry targeted the unions and prompted the legislation to restrict their power.

The workers' response was swift. As the government held hearings on Bill 33, which would also force the unions to open their books to public scrutiny, construction workers walked off major projects across the province.

Other opponents took a more sinister approach.

The labor minister said an anonymous caller had threatened to break both her legs, while another lawmaker had feces smeared on the door of his office.   

The unions have denied involvement in the strikes and intimidating behavior, but public support for reforms to the construction industry is mounting amid roadwork stoppages and crumbling infrastructure.

In July, a Montreal overpass collapsed. No one was hurt, but it brought back memories of a similar collapse in 2006 that killed five people and was blamed on shoddy construction work.

The corruption scandal has boosted public support for changes in the construction industry and changes in the role unions play on work sites, said George Smith, a fellow at the School of Policy at Queen's University, in Kingston, Ontario.

When you tie that into some very public incidents of bridges falling down and people being put in harm's way by apparently shoddy construction practices, eventually all the dots get connected, he said.

($1=$1.01 Canadian)

(Reporting by Julie Gordon; editing by Janet Guttsman and Peter Galloway)