Many sectors still in concession bargaining mode three years after recession ended
While wages will continue to be the key bargaining issue for management and unions in the new year, workers are unlikely to see significant increases, according to the Conference Board of Canada’s Compensation Planning Outlook 2013.
The annual report projects an average wage increase of two per cent among unionized employees: 1.8 per cent in the public sector and 2.1 per cent in the private sector. By comparison, actual negotiated increases in 2012 averaged 2.1 per cent, with a 1.7 per cent increase in the public sector and 2.4 per cent in the private sector. Overall salary increases last year — including in-range adjustments, merit and step progression — averaged 2.6 per cent, the same as the 2013 projected increase.
“We’re expecting a steady state in line with what we have seen in 2012,” says Karla Thorpe, director, leadership and human resources research at the Conference Board. “Moving forward we won’t see many gains as the economy is slow to recover.”
Many sectors are still in concession bargaining mode as a result of the recession, with the exception of industries such as mining and oil and gas, where wage increases will be slightly higher, she says.
That means unionized workers in Alberta could see wage settlements closer to three per cent, she says, with those in Quebec seeing average increases of two per cent and workers in Ontario and British Columbia seeing gains of about 1.5 per cent.
“Gains in those two provinces will be modest and slightly lower than inflation,” Thorpe says, adding the picture is unlikely to change much over the next three years with the economy still in a fragile state.
On a positive note, she says there is less volatility expected over the coming year with slow but moderate growth expected.
Chris Roberts, a senior researcher with the Canadian Labour Congress, remains pessimistic. He points to ongoing challenges in the euro zone, a slowdown in China and the inability of the United States economy to rebound.
In a report released Oct. 29, parliamentary budget officer Kevin Page also lowered his outlook for the Canadian economy for 2013 and 2014, while predicting a higher jobless rate over the next year — to 7.6 per cent from the current rate of 7.4 per cent.
“Outside of Alberta, Saskatchewan and Manitoba, unemployment is still quite high,” Roberts says. “This suggests there’s still slack in the labour market.”
Spending freezes and a decrease in federal spending on infrastructure have also put pressure on unionized wages, he adds.
“When you combine the public and the private sluggishness, it’s difficult to see where any significant dynamism will come from.”
In the public sector, unions are accepting zero increases or increases below the rate of inflation, he adds, while in the private sector economic pressures are also keeping workers from making significant wage gains.
The recent deals struck between the Canadian Auto Workers and the Detroit Three automakers include a signing bonus but no increase in base pay, he adds.
“There are ways in which employers under pressure can agree to increases in overall compensation but not an increase in base salary,” he says.
The expansion of retailers such as Target into Canada will also put pressure on wages, particularly in the retail sector, according to Sid Ryan, president of the Ontario Federation of Labour (OFL). Target has not promised to rehire any former unionized Zellers workers and has opposed unions in several jurisdictions.
Aside from wages, unions are primarily concerned with protecting their rights in negotiations over the coming year, says Ryan. After a year that has seen settlements imposed in both the private and public sectors, at Air Canada and two teachers’ unions in Ontario respectively, he says protecting the right to strike and bargain constructively remain key concerns.
According to the Conference Board report, the majority of unionized organizations (86 per cent) do not expect any work stoppages in 2013, with 52 per cent of all organizations rating their overall union-management climate as co-operative.
Next to wages, productivity and organizational change remain top negotiation issues for management while employment security and health benefits are a priority for unions, followed by pensions.
Almost all unionized employers (98 per cent) have an employee pension plan in place. The majority (73 per cent) are defined-benefit plans, while about 39 per cent are defined-contribution. Roughly one-quarter (24 per cent) are group RRSPs and three per cent are hybrid plans.
Over the next year, Roberts predicts settlements that see workers paying more into their pension plans, as well as further pressure to change the terms of pensions, including later retirement dates and changeovers from DB to DC or hybrid plans.
“We’ve especially seen that in the private sector,” he says. “They’ve been very successful in forcing changes to pension plans and yet they still have significant costs to deal with. It’s being dealt with in a piecemeal way.”
