Wage increases hit major slump
UNIONS ARE FACING a volatile and tumultuous time ahead at the bargaining table, something made all the more clear after the latest numbers revealed wage hikes have hit a new low.
Recent numbers from Employment and Social Development Canada show that in 2013, wage improvements were the lowest they have been over the previous 16 years — with average pay increases for unionized workers sitting at 1.4 per cent. In the public sector, average pay hikes sat at 0.9 per cent, while private sector workers saw gains averaging 2.1 per cent.
Austerity agendas touted by governments, coupled with wounds still not yet healed from the 2008 recession, has ended up in modest wage adjustments across the board in unionized environments.
"The language of restraint and fiscal responsibility has become accepted over the last four years," said Simon Mortimer, a labour and employment lawyer at Hicks Morley in Toronto. "In discussions and negotiations there is an understanding, almost a baseline understanding, of trade unions and others that we have an obligation to our economy to fiscal responsibility."
Whereas public sector employers are held by the directives of the government, Mortimer said private sector employers have tightened the purse strings in order to keep their heads above water.
"For private sector employers, I believe the focus is on them ensuring they have long-term stability plans for fair and reasonable long-term structural integrity," Mortimer explained.
That translates to a push for stability at the bargaining table. A stable relationship with no sudden movements has been the mantra for employers at the bargaining table and — perhaps surprisingly — for unions too.
An overall atmosphere of recession-like fiscal conservatism runs through unions’ veins, especially in the public sector, where governments have focused on balancing the books.
"Austerity seems to be the order of the day at almost all levels of government, and private companies are sitting on record amounts of cash," offered Paul Moist, national president of the Canadian Union of Public Employees (CUPE). "Everything points, in the public sector, to a very complicated and difficult bargaining environment. We’re predicting wage increases will remain low, less than inflation."
According to data from Statistics Canada, the national inflation rate was 1.5 per cent in January.
Moist calls the immediate past, present and future of negotiations sluggish, and predicts tough bargaining times ahead in 2014 as pressure continues to reduce costs.
But it isn’t all bad news. The end could soon be in sight for this period of constraint.
The private sector saw moderate wage gains in 2013, according to Karla Thorpe, director of leadership and human resources research at the Conference Board of Canada. Gains were especially apparent in the primary industries.
"The impact on unions, on workers, is maybe not as serious as it might seem at face value," she said.
Overall, private sector settlements put wage gains at around 2.2 per cent, with the construction industry averaging just under three per cent.
"Unions are now in a position to hold on to the benefits they have, rather than make substantial gains at the bargaining table," Thorpe said.
Backed into a corner
Because organizations do not have the financial flexibility to offer up generous salary hikes, caution should be exercised should they choose to compensate by swapping out other provisions — which could leave employers in a tight spot.
"One of the dangers on their part is that, because they don’t have a lot of chips to use at the bargaining table in terms of financial compensation, sometimes it can lead them to make concessions in other areas where there may not be an immediate financial impact — but can have some longer term implications for the organization," Thorpe said.
For instance, an employer might give up certain management rights’ provisions pertaining to scheduling practices, which can have a financial impact or create operational challenges down the road.
So what does the near future hold for collective bargaining?
"While we see negotiations being contentious, it also seems like there is very little appetite — certainly on the part of the federal government — for work stoppages," said Thorpe, adding that does not necessarily translate to more strikes as governments give teeth to intervention policies.
Take, for example, the 3,000 employees at CN Rail, who narrowly averted a strike in February after signing a tentative collective agreement in the eleventh hour. But before that, Ottawa swiftly made it known it would go ahead with back-to-work legislation had workers walked off the job.
Mortimer agreed, predicting that in the next few years the labour movement will return to its roots and adopt more aggressive bargaining models at the bargaining table.
The rise of the short-term has also emerged, Mortimer added. Two-year agreements are growing increasingly popular, compared to three or four-year agreements. In doing so, both employer and union are able to cautiously test the waters to determine if the financial situation will pick up in the near future.
Like emerging from a dark cave, most view this era of restriction as nearing its end. That said, the immediate future looks bleak, and it will be up to both labour and management to collaborate on recovery strategies.
