Public sector wage bonus tied to B.C. economic growth puzzles experts

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

© Copyright (c) The Vancouver Sun

30 Years Ago: British Columbia On The Brink of A General Strike

by Andrew Chernoff

Thirty years ago, the provincial government of the day and British Columbia workers of all stripes: union and non-union; private sector and public sector, were galvanized in a common cause.

Rod Mickleburgh, writing for the Globe and Mail on November 1, 2008, on the 25th anniversary of Operation Solidarity, wrote of that highly volatile time in BC labour history and B.C. politics as follows:

IT WAS THE NIGHT THE PROVINCE OF BRITISH COLUMBIA STOOD STILL

Behind the drapes of Premier Bill Bennett’s golden-carpeted, Kelowna living room, the Premier and union leader Jack Munro were engaged in extraordinary, head-to-head bargaining to stave off what was getting closer to an all-out general strike.

More than 40,000 government employees were already toughened by nearly two weeks on the picket line. Tens of thousands of teachers and other education workers had been out for a week. And B.C.’s vital ferry system was just hours from being shut down as the next wave in an escalating strike strategy to combat a government onslaught against public-sector unions, social services and human rights that even Mr. Bennett had called doing the unthinkable.

Finally, with the clock ticking toward midnight, the gruff-talking Mr. Munro stepped out on the Premier’s darkened patio to announce that a deal had been reached. The few paltry details of the so-called Kelowna Accord contained little sign of government give, with vague promises of consultation, a commitment to keep money saved by the teachers’ strike in the education system, and no reprisals. But that was enough for Mr. Munro, supported massing of extra-parliamentary opposition to an elected government in this perennially polarized province’s history.

“They were truly amazing days,” recalled labour-relations expert Mark Thompson at the University of British Columbia. “I knew I was watching history right there. The sheer size of the protests has never been close to being matched, before or since. I’ve been here 37 years and I’ve certainly never seen anything like it.”

Years later, on the eve of the 25th anniversary of the movement’s demise in Kelowna, few who were part of it have forgotten, and emotions over why and how the strikes were called off remain as raw as if events unfolded yesterday.

“No, they sure as hell haven’t forgotten,” groused Mr. Munro, who became the target of bitter denunciation both inside and outside the labour movement for his role in negotiating peace.

Yet the former president of the then-powerful International Woodworkers of America is unrepentant over the decision to end the walkouts and the reluctance of his and other private-sector unions to join in.

“It was a serious, serious problem. It would have been a goddamned mess,” he said. “You had all these people passing motions for a general strike and none of them was in a union.

“In retrospect, it was a hell of a call. You’re damned if you do, damned if you don’t. … But a lot of people were pretty mad at me.”

The only mistake Mr. Munro will own up to is talking to Mr. Bennett on his home turf. “It was weird,” he said. “We should have gone to a neutral place, in a hotel or something like that. But everyone was in such a hurry.”

There are those who believe the protests that banded together as Operation Solidarity, inspired by the Solidarnosc fight-back against Communism [sic] in Poland, were a high-water mark for B.C. trade unions, never to be approached again.

That viewpoint is shared by Art Kube, the rotund, dedicated trade unionist who headed Operation Solidarity and became the leading public figure of the anti-government crusade. “I wish the thing had turned out better. It would have given the labour movement in the entire country a lot more courage,” he said. “There’s a saying that you never really lose a strike, but at the same time, the labour movement became a lot more conservative afterwards.”

THE MOVEMENT BUILDS

But what a time it was.

Thousands of people who had never before been part of a union were galvanized to join the struggle, believing it was for social justice, not bread-and-butter labour issues. For the first time, unions, community groups and activist organizations set aside their many differences and banded together in common cause.

Over the course of the summer and into the fall, Operation Solidarity captured the public’s imagination. Organizers packed 25,000 people onto the lawns of the legislature. “This is bigger than the Queen,” said one admiring police officer.

More than 40,000 union members booked off work one day in August and crammed into creaking Empire Stadium. Two months later, just as observers were writing off Operation Solidarity in the face of government intractability, they gambled on one last protest, knowing that a flop would mean surrender.

Instead, upwards of 60,000 people marched through the Vancouver streets to surround a downtown hotel where the governing Social Credit Party was holding its annual convention, the city’s largest-ever political demonstration. Equally impressive rallies were held throughout the province, drawing thousands of protesters in such Socred strongholds as Williams Lake, Kamloops and Prince George.

The explosion had been set off by a breathtaking series of 26 bills, introduced one by one in the legislature on a single, unforgettable day in early July. They wiped out the province’s human-rights commission and rent-review office, tightened government control over school boards and colleges, watered down medicare, dropped government enforcement of employment standards, and extended wage controls indefinitely.

The most contentious legislation, Bills 2 and 3, gutted union contracts in the public sector, giving employers the power to fire workers without cause or regard to seniority. Many were let go that very day.

Operation Solidarity took off immediately. Independent Canadian unions sat down with their bitter rivals in the B.C. Federation of Labour. Gays and lesbians discussed strategy with church groups. One prominent activist lawyer was heard to say that his practice was going to seed. “All I do is go to meetings,” he said.

“We had book clubs. We studied. We smoked too many cigarettes. We drank too much beer,” remembered Frances Wasserlein, a prominent member of a new protest group, Women Against the Budget. “I also recall a lot of pacing and talking at the back of union halls. There were disagreements, but everyone listened.”

Activist poet Tom Wayman, who subsequently denounced the Kelowna Accord in a long bitter poem called The Face of Jack Munro (“How could it occur/that direction of our struggle/shrank to one man…”) said the atmosphere was infectious.

“There was a feeling throughout B.C. that something was happening, that everything was up for grabs. People stopped talking about sports and what was on TV last night. It was heady stuff.”

For many, the emotional highlight of the entire campaign took place during the rally at Empire Stadium. After every nook and cranny seemed to be filled, in came the rousing band of the Vancouver firefighters, followed by hundreds of uniformed firefighters marching in step. A roar erupted from the crowd that seemed to go on forever.

“The firefighters risked a huge set of consequences by walking out. Yet there they were,” said Ms. Wasserlein, still moved by the memory.

The opposition NDP, meanwhile, staged round-the-clock filibusters in an unsuccessful attempt to halt the bills. At one point, as tempers frayed, party leader Dave Barrett was dragged out of the legislature by two sergeants-at-arms, who dumped him in the corridor on his rear end.

CHAMPAGNE AND BITTERNESS

It took until late October for the government to blink, just a bit. By inserting his savvy deputy minister Norman Spector into exhaustive contract negotiations covering the 40,000 members of the B.C. Government Employees Union, Mr. Bennett signalled that he was open to exempting unions from the onerous provisions of Bill 2 and Bill 3.

Still, there was no agreement and the BCGEU hit the bricks on Nov. 1. A week later, the teachers went out, while negotiations continued at the B.C. Labour Relations Board to get the BCGEU a contract and prevent further walkouts. British Columbians held their collective breath.

Diane Woods, a vice-president of the BCGEU and one of the first workers to be fired, said everyone was conscious of the high stakes involved. The tension was palpable.

“It was pretty scary being in that room and thinking what we were involved in. I don’t think anyone went through it all without some tear-shedding. I know I broke down from emotion and exhaustion several times.”

On the afternoon of Nov. 13, the BCGEU and the government concluded a new collective agreement. Firing without cause was gone. While the BCGEU celebrated with champagne, social activists wondered what would happen to their concerns during Mr. Munro’s dramatic meeting with Mr. Bennett.

Basically, they ended up with nothing. When push came to shove, it was a union show. Late in the game, activists learned the hard truth that union leaders were not prepared to sacrifice their members’ paycheques for non-union matters.

“The community, the labour movement. It was all so powerful,” Ms. Wasserlein said. “We were getting stronger and stronger every day, and then it was trashed. What a waste.”

Cliff Andstein, now at the Canadian Labour Congress but then the chief negotiator for the BCGEU, agrees that the final settlement was a bitter pill for Solidarity’s activist coalition. But he sees a deeper significance in the struggle, despite the disappointment of the final outcome.

“This was the first qualified success on the continent in combatting or confronting that Reaganomics, Thatcherism ideology that was everywhere at the time,” Mr. Andstein said. “It gave heart to the public sector in other provinces. It sent a signal to people that fighting back was possible.”

As for Art Kube, who famously told Mr. Munro over the phone at the Premier’s house to “get the hell out of there,” there are plenty of good memories, but regret at not accomplishing more.

“It came in like a prairie wildfire, and it went out like a prairie wildfire,” he said. “We simply didn’t have the clout.”

THE CONTROVERSIAL BILLS, ONE BY ONE

Operation Solidarity was spawned by a series of 26 bills introduced by the Social Credit government on a single afternoon, July 7, 1983. Opponents saw them as a concerted attack on trade union, social and individual rights in the province:

Bill 2 wiped out the right of unionized government employees to negotiate such basic issues as major overtime, scheduling, hours of work, seniority and job security.

Bill 3 gave public employers the right to terminate employees “without cause,” regardless of seniority.

Bill 5 eliminated rent controls, closed down the Rentalsman’s office that reviewed landlord-tenant disputes and allowed landlords to evict tenants at will.

Bill 6 gave extraordinary control over local school-board budgets to the minister of education.

Bill 8 dissolved the Alcohol and Drug Commission.

Bill 9 declared regional district plans null and void, permitting individual municipalities to ignore regional planning.

Bill 11 extended the government’s wage-control program for the public sector indefinitely, allowing wages to be determined by an employer’s “ability to pay.”

Bill 15 increased the sales tax from 6 to 7 per cent.

Bill 18 reduced pension entitlements for employees who are laid off.

Bill 19 gave the government widespread control over the B.C. Institute of Technology, erasing student, faculty and staff representatives on the BCIT board.

Bill 20 extended government control over community colleges, including course content and budgets.

Bill 21 disbanded a legislative committee that scrutinized Crown corporations.

Bill 23 eliminated mandatory vehicle inspections and closed motor-vehicle testing branches across the province.

Bill 24 allowed doctors to opt out of medicare, while at the same time restricting how much doctors in the system could bill. User fees were increased and opportunities for doctors to “extra bill” were enhanced.

Bill 25 ended the life of the Harbours Board.

Bill 26 wiped out the Employment Standards Board, transferring complaints over labour standards to the courts.

Bill 27 abolished the Human Rights Branch and the Human Rights Commission. Staff were fired immediately, ordered out onto the street, their keys snatched from them before they left. A clause banning “discrimination without reasonable cause” was missing from the new Human Rights Act.

Bill 28 centralized control and authority over borrowing by government and Crown corporations.