Pensions dominating collective bargaining

As workers age, unions turn their attention to pensions

Some unions are setting their sights on increasing pensions as their members age, according to Gord Sova, editor of CLV Reports, a newsletter that reports on collective bargaining and other labour issues.

Sova said the recent agreement between Hamilton’s Stelco Inc. and the United Steelworkers of America for its 4,000 members was surprising because the union received virtually no wage increases, opting instead for substantial pension increases. The monthly pension plan for an employee retiring with 30 years of service is $2,160, up from $1,830 in the last agreement. Employees with 35 years of service are eligible for $2,410 per month, up from $2,055.

The focus on pensions is a trend he’s noticed coming out of collective agreements in recent years. The trend isn’t surprising, he said, simply because of the demographics in many union environments.

He called the Stelco agreement “stunning” because of the number of workers who will be eligible to retire by the end of the agreement. Nearly half of the workforce will be eligible for at least early retirement, based on age and years of service, when the agreement expires in the summer of 2006.

“There hasn’t been a lot of hiring in some of these industries in a few years so they’re getting older,” Sova said. “For those people it’s much more advantageous to get 15 years of higher pensions than it is to get four or five years of higher wages.”

He said while it’s not usually a case of older workers selling out younger workers, there are examples of that happening. A 1997 agreement between the Teamsters union and Neilson Dairy in Ontario contained a $2,500 retirement buyout at the expense of a lower wage scale.

“The people on the bargaining committee were older and they increased the pensions and promptly took their retirement,” said Sova.

There was even an article in Teamsters Canada magazine to that effect.

“Past employees at Neilson had sold out our next generation of workers by accepting a rich severance package in exchange for a weak collective agreement,” the article stated.

geneviéve bich, vice-president of industrial relations for Bell Canada, said that pensions are an extremely hot issue in bargaining but doesn’t think they’re being focused on at the expense of younger workers.

“Pensions are important because there are more people impacted by this question than by other questions, but I would not say that it’s an old versus young thing or that it’s pension versus wages,” she said. “People are certainly worried about pension funds and just as the baby boomers drive anything they drive this too. But I’m not sure it’s at the detriment of wages or at the detriment of younger workers.”

Sym Gill, the director of the Canadian Auto Workers’ pension and benefits department, said the CAW has always put a high priority on pensions.

“What is new, though, is that for a variety of reasons the pension issue is more at the forefront because of the cost of pensions,” he said.

Over the last couple of years, many funds have taken a hit because of weak market conditions.

“That means pension fund assets haven’t grown very much or have actually declined and on the liability side, liabilities have increased both because of natural increases in terms of service and because interest rates have gone down,” said Gill. “With that kind of environment, there may be some paying more attention to pensions versus other things simply because the cost of providing a pension has diverted attention from other economic areas.”

He said weak markets have meant that bargaining in the area of pensions has become much tougher for unions than it has been in the past.

To read the full story, login below.

Not a subscriber?

Start your subscription today!