Proposed five-year contract has 5.5-per-cent increase guaranteed
By Gordon Hoekstra, Vancouver Sun December 4, 2013
A tentative five-year deal struck by the B.C. Liberal government with some public-sector unions that would tie additional wage increases to improvements in the economy is unusual, say labour experts.
In the private sector, prospective wage or income increases would normally be tied to workers’ efforts.
But there’s little government workers could do to improve the larger provincial economy, noted Ken Thornicroft, a professor of law and labour relations at the University of Victoria.
“The thing that differentiates this thing in my mind from private sector arrangements of the same ilk is that often in the private sector it’s a profit sharing arrangement, whereby the employees have a more direct linkage between the firm’s performance and their own efforts,” observed Thornicroft.
“Whereas here you are talking about the macro economy, and it’s hard for me to see how public sector employees could do much if anything to influence GDP,” he said.
GDP, or gross domestic product, is the value of all goods and services produced in an economy.
Simon Fraser University professor Mark Thompson said essentially the deal provides a productivity bonus, but what is interesting is it depends on the productivity of everybody else.
“It’s not like people can say we are going to process twice as many welfare recipient claims in an hour. It sounds like the kind of thing that a government desperate to hammer out a deal might throw in to soften it,” said Thompson.
So far, three tentative five-year deals cover 51,000 workers in government, social services, environment, community living and aboriginal services. The workers are represented by a number of unions including the B.C. Government and Service Employees’ Union, the Canadian Union of Public Employees, the Hospital Employees’ Union, and the Health Sciences Association.
The government has yet to negotiate deals with teachers or nurses.
The three tentative agreements, which would expire in March 2019, includes wage increases amounting to about 5.5 per cent.
The agreement also provide the possibility of increased payments to workers if the province’s real gross domestic product exceeds the forecast by the independent Economic Forecast Council published each year in February. That will be determined using Statistic Canada data that will be compared against the forecast.
If the real GDP growth is one per cent above the forecast, then workers would receive a 0.5 per cent wage increase above the already-negotiated increase. Therefore, a worker earning $50,000 a year would receive an extra $250 if the economy outperformed the forecast by one per cent.
As the B.C. government would expect to increase revenues by at least $200 million a year for a one per cent growth in GDP, it would be able to fund the wage increase.
“There is a dimension to this that is new and novel, and one that I’d be kidding if I didn’t say I’m intensely interested and excited about,” said Finance Minister Mike de Jong. “Under this mechanism, public sector workers will share in the benefits that flow from that additional (economic) growth. We think that’s appropriate.”
A similar deal was struck in Quebec in 2010, although it was tied to nominal GDP growth, which is not adjusted for inflation. The five-year deal provided guaranteed wage increases of seven per cent, which could increase another 3.5 per cent if Quebec’s economy grew faster than government estimates used to achieve a balanced budget.
BCGEU president Darryl Walker said he didn’t necessarily disagree that public sector workers do not have a big impact on the province’s economic growth, but noted there are revenues that are produced in the work they do.
Crown agencies such as B.C. Timber Sales generate revenues for the province, which are indirectly accounted for in GDP.
Walker said the union was aware of the Quebec situation, but didn’t instantly jump at the idea. When they discovered an analysis of the past dozen years showed workers could have received an additional raise of 1.5 per cent, they decided to look at it, noted Walker.
“We thought it was worth agreeing to,” he said, noting they are already guaranteed the 5.5 per cent increase.
Thornicroft believes the unusual deal, ultimately, is a way for the B.C. government to get a longer deal than unions may have been willing to agree to because now workers will benefit if the economy improves more than forecast.
Normally, you’d expect unions to sign a three-year deal, he said.
The B.C. Liberal government under Premier Christy Clark has floated the idea of a 10-year contract with teachers.
Thornicroft believes that unionized workers will vote in favour of the five-year agreement.
Thompson said while not a lot of money is at stake in the portion of the agreement tied to economic growth, workers might be concerned that the unusual deal will set a precedent where future raises are tied to economy’s performance.
In some way, they’ve increased the risk on their paycheque, he said.
With file from Canadian Pressghoekstra@vancouversun.com
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Finance Minister Mike de Jong says the provincial government wants to ‘share the benefits of (economic) growth with the people that helped us get there.’Photograph by: Adrian Wyld , THE CANADIAN PRESS
Andrew Phillip Chernoff 