The purpose of this column is not to provide a blueprint for a new bargaining framework, but to stimulate discussion on what it might include and why it is desirable. A new framework requires trust, a willingness of all the parties to explore the boundaries that might define the agreement, and recognition by the public that a problem exists.

The Campbell government boasts that dozens of collective agreements have been concluded within its framework of 0-0-0. The unions that have signed those agreements deserve credit for realism. The government holds all the power and the best the unions can do is minimize the damage to their members within very difficult constraints. To use one of Campbell's favorite words, no one should think that the unilateral imposition of limits to bargaining is "sustainable". It is like stretching an elastic band until it breaks.

The government's position that all public sector "agreements" will be for 0-0-0 received little public criticism; however, it is unlikely that any government could get away with saying that wages will be frozen for the next 10 or 20 years. Similarly, public sector unions could not get away with saying that compensation for their members should be two or three times higher than comparable private sector jobs. Those extremes are examples of limits or parameters for bargaining.

A new framework for public sector bargaining should include a dispute resolution mechanism, and a set of limits or principles for bargaining that are accepted by all parties - the government, the unions and the public. One of the challenges is to narrow the ridiculous extremes between eternally frozen wages and unacceptable private sector multiples.

People join unions in order to improve their situation; they are not going to accept that their wages should be driven down to lowest non-union comparison, although that seems to be the direction the Campbell government is headed with many of its privatization initiatives. It may be possible to come to a consensus with respect to comparisons between benchmark jobs in the unionized public and private sectors, and with jobs that lack comparisons by bridging through job evaluation. Such comparisons will always be rough guidelines since total compensation packages must be examined, not just hourly or monthly pay rates.

A characteristic of the dark ages was that nothing changed; in modern times people expect some noticeable improvement in their standard of living. One of the foundations for a renewed bargaining structure could be recognition that, like workers in the private sector, it is reasonable to expect some long run improvements in compensation. To be sustainable, long run improvements cannot exceed long run revenue growth. That poses a problem if government claims that it cannot afford to increase pay because it has cut taxes and thereby lost its ability to do so. Like equalization payments which are based on a hypothetical standardized tax system for all provinces, the principle of limiting long run compensation increases to match revenue growth could be based on some standard of revenue potential rather than the latest government whim.

"Transparency" is another favorite catch word for governments. While negotiations occur best in private, the collective agreements they produce need to be transparent so the public knows where the biggest component of government spending is going. It is very difficult today to find full collective agreements, including wage scales for many public sector unions, but the Labour Relations Board is rectifying that with easy access to agreements on its site. That doesn't mean that it will be easy to compare and cost changes in agreements. Full transparency requires agreement on the costing of changes and public access to the calculation.

Some suggest that a new bargaining framework might be as simple as agreeing to some form of COLA clause, or at least a long run cost of living agreement. That would probably be going too far. More general principles would allow the parties to distribute the cost of changes between a wider menu of options.

Even with broad mutually accepted principles, it might not always be possible to reach collective agreements. Where public sector bargaining fails most miserably is in the dispute resolution mechanisms. Government can wait until the public mood shifts against the union, and then legislate a settlement. Decades ago governments included penalty clauses in back-to-work legislation, but now the legal framework allows government to craft imposed contracts in such a way that defying the law can result in charges of criminal contempt of court. The consequences that flow from conviction on contempt charges are more severe that anything used in earlier times. A new bargaining framework needs to get out of that trap because it takes the "free" out of bargaining.

There are many names for alternative dispute resolution mechanisms, but they all amount to arbitration. Public sector employers are traditionally reluctant to accept arbitration out of fear that the arbitrator will go far beyond government's willingness or ability to pay. However, an arbitration that is rooted on agreed upon principles, including long run sustainability and keeping costs in line with long run revenue growth, removes any legitimate basis for employer rejection of arbitration.

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March 19, 2004

Public Sector Bargaining - The Elephant