Labour in ‘new normal’ of modest increases: Report

New economic reality is slow near-term growth and fiscal restraint: Conference Board

After a tumultuous year in labour relations, some are expecting unions and managers to head into a relatively full bargaining calendar in 2013 with realistic expectations and a willingness to work through issues.

Driving this spirit of pragmatism is the economic reality of slow near-term growth and fiscal restraint at all levels of government in the medium term, says the Conference Board of Canada in its report, Industrial Relations Outlook 2013: Embracing the “New Normal.”

“Coming out of the recession there was a lot of tension at the bargaining table about how quickly the economy would recover,” says Karla Thorpe, director of leadership and human resources research division at the Conference Board of Canada in Ottawa.

“Now, both management and labour recognize that we won’t be back to that pre-recession level, and that we need to settle into a more stable, more predictable ‘new normal.’ ”

Four years into the recession, economic uncertainty around the globe continues to keep the Canadian economy struggling, with forecasts of modest growth at 2.3 per cent in 2013. As a result, wage expectations are scaled down. According to the Conference Board’s survey of 401 organizations across all regions and sectors of the economy, projected average base pay increases for non-unionized workers are 3.1 per cent in the private sector and 2.8 per cent in the public sector. For unionized workers, increases are expected to be lower — with average increases of 2.1 per cent for private-sector workers and 1.8 per cent for public.

In spite of this financial picture, most of the nearly 200 unionized organizations surveyed (86 per cent) don’t expect work stoppages in 2013. Not one respondent said a strike or lockout “will definitely occur.” More than one-half (53 per cent) described their union-management relationship as co-operative.

This “new normal” of modest economic expectations comes at a time when unions are battered on several fronts. The year 2012 will be remembered for the high-profile instances where unions were deprived of the right to strike. In the cases of Air Canada and Canada Post, the federal government intervened early with back-to-work legislation. In Ontario, the government passed a bill to limit strike action by teachers and other school workers and prevent the unions from turning to the courts for judicial review of the act. It also gave the government the option of imposing a contract after a deadline.

But perhaps the biggest potential impact on the labour relations environment, says Thorpe, will come from south of the border. Several states, including former union stronghold Michigan, have enacted right-to-work legislation that effectively weaken unions’ membership base and wipe out a big chunk of their dues. With the opposition Progressive Conservatives in Ontario calling for similar law in the province, “there are definitely some legislative possibilities on the horizon that would have major impact on the labour movement and on the collective bargaining environment,” Thorpe says.

It’s a climate in which unions are not so much pushing for gains but instead trying to protect what’s already in place, says Ken Lewenza, president of the Canadian Auto Workers (CAW) union.

“With the high unemployment, the economic environment we see ourselves in, the insecurity of workers which I believe has never been higher, there is a more collaborative approach at the CAW to try to get a deal — with the objective of maintaining past gains,” says Lewenza.

He sees victories in what might have once been seen as concessions. Referring as an example to the hybrid pension plan the CAW agreed to for new hires at Air Canada, Lewenza says it’s an improvement over what the company had proposed, which was a defined-contribution plan for new employees.

“What we’re trying to do is position ourselves for alternatives. If conditions get better, we’ll be in a better bargaining position to convert that back into a (defined-benefit) plan,” says Lewenza.

“Those are a kind of victory for us. I know they’re not victories that you’d go out and celebrate over. But they’re victories in terms of making sure that workers ultimately will reach their top pay and ultimately have a pension plan.”

But some unions take issue with the notion members are tempering their expectations.

“I think they can live with anything around three per cent in terms of an annual increase. But they get angry when it’s zeros and ones,” says Joan Jessome, president of the Nova Scotia Government and General Employees Union, speaking of the general sentiment among public servants across the country.

Referring to the 30,000 public-sector workers she represents, most of whom are under contracts that are up for renewal this year, she says they expect no less than a 7.5 per cent increase over three years. That’s quite a distance from annual one per cent raises the province wants to maintain.

Her members feel they deserve wage increases because they’ve been dealing with a heavier workload as a result of staff reductions and a more demanding public, she adds.

At Air Canada, senior vice president of employee relations Kevin Howlett agrees with the Conference Board that 2013 will be a quieter year on the labour relations front. That’s because the last two years have seen some very difficult negotiations, particularly at the federal level, he says.

“They were negotiations that were predicated on change — on the need to cast your employment agreement to adapt to the new normal and do it in a responsible manner,” says Howlett.

“As companies communicate to their employees the risk and the rewards of a changing business environment, I think our labour leaders have to ask themselves, ‘How can we improve how we communicate that message to employees?’ Because, guess what, the costs are changing.”

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