When we had our last check in for this instalment in February of this year, we had reviewed cost-containment and fiscal restraint facing a few different governments. As we are all aware, this is a problem not going away any time soon whether it be in Canada or elsewhere. Where are we today in this ongoing saga?
Just south of the border, the financial troubles faced in Detroit that led the city to declare bankruptcy in July 2013 recently were in the news again. As part of the effort to emerge from bankruptcy, Detroit’s public sector retirees and current workers voted to accept an arrangement that will see previously agreed upon pension benefits and/or cost of living increases be reduced by up to 4.5%. Interestingly, only around half of the approximate 32,000 retirees and workers eligible to vote did in fact vote on the issue.
Closer to home, Ontario’s focus on restraint appears to be continuing following a spring election that resulted in the Liberals achieving a majority government. Public sector compensation, whether paid directly by the Government or through transfers to institutions such as hospitals and universities, accounts for half of Government spending. Management of this compensation has been identified by the Government as an important priority. In the recent budget and related commentary, with little exception, the Ontario Government is publicly taking the position that there will be no new money for compensation increases in collective bargaining. The exception is an increase for front-line child care workers in licensed establishments and personal support workers who are working in publicly funded homes and the community care sector. An example of the Government’s approach is seen in the four-year agreement recently reached with its 10,000 professional and administrative employees (AMAPCEO) that apparently contains no overall increases to compensation. Legislation was also recently introduced to extend a freeze on MPP salaries until the budget is balanced in 2017-18 (the freeze has been in place since 2009). (See our July 31, 2014 Communiqué titled “Broader Public Sector Accountability Bill Re-Introduced” for other initiatives of the Ontario Government to manage the public purse.)
On the west coast, B.C. appears set to begin the school year without a collective agreement with its teachers. A strike that began near the end of school in June has continued through the summer. The teachers and the B.C. Government last met to bargain in early August. A mediator has been appointed but there appears to be no mediation date set at this time. Earlier in the year, a court in B.C. had declared that legislation that cancelled a collective agreement and made certain other changes was unconstitutional. The saga continues as the B.C. Court of Appeal granted a stay of the implementation of the lower court decision pending an appeal by the B.C. Government. But not all appears to be conflict in B.C. Under the “2014 Economic Stability Mandate”, the B.C. Government has now reached tentative or ratified collective agreements affecting about half of its 300,000 public sector workers. As an example of this process, the deal reached with 15,000 community health workers earlier this year provides for a 5.5% wage increase over 5 years.
With public sector compensation forming a significant part of provincial budgets, we can expect that negotiating collective agreements with the unions that represent the employees to continue to be a focus and challenge for governments in Canada. And for the taxpayer.