December 12, 2005

Bargaining Framework

Minister of Labour and Citizens' Services, Mike de Jong confirmed, when speaking with Vaughn Palmer on Shaw Cable's Voice of BC on December 7th, that any settlement with BC's doctors will come out of the pockets of BC's social workers, prison guards and clerical workers. Minister de Jong spent most of his answer personally attacking me (as I had pre-taped the question that was put to him), but in between the lines he confirmed that the "new negotiating framework" is a fixed pot structured such that settlements for those at the top will come out of potential incomes for those at the bottom.

On November 30th Finance Minister Carole Taylor announced that: "Over a five-year period, including the current year (2005/06 to 2009/10), the Ministry of Finance forecasts that $11.4 billion in unallocated fiscal room is available for budget decisions. Half of that amount, or $5.7 billion, is set aside for compensation agreements across the broad public sector." She went on to say that $1 billion of the $5.7 billion was only available to those bargaining units that settled before April 1, 2006, and that an additional $300 million would be available if the province finished fiscal year 2009/10 with a surplus greater than $150 million.

To put the framework in context, the news release said: "The negotiating framework applies to approximately 258,000 unionized workers and 42,000 management and other non-union employees. Under existing agreements, wages and benefits for public sector employees are forecast at $17.2 billion in 2005/06." Now we have confirmed that any settlement with BC's doctors will come out of the framework; de Jong's statement is consistent with what the director of communications for the Ministry of Finance previously stated.

If all 300,000 workers who are expected to share in the monies available in the framework shared equally, they would get a pay increase of 2.7% per year for each of the next four years plus a share in the $1 billion that is available for one time payments before April 1, 2006. According to financial statements for BC's Medical Services Commission, BC's doctors were paid $2.5 billion during the fiscal year ending March 31, 2005. If their payments are included in the $17.2 billion for all public sector workers and if they receive 5% per year for the next four years, it means that $14.7 billion is the base for all other workers and $3.4 billion is the amount available for their annual increases. In the absence of other distortions due to top loaded settlements (and there will be others), that would reduce the average settlement for the remaining workers from 2.7% per year to a little under 2.3% per year. It won't take many more top loaded settlements before hundreds of thousands of public sector workers will again find themselves losing to inflation. That poses the question of what is fair about protecting half of the projected surplus while telling public sector workers that they can fight between themselves for any division of the balance.

A similar question about fairness can be put to the government about the $1 billion it says is available for one time payments if the money is used before April 1, 2006. According to the government's claims "strict accounting rules" prevent those monies from being carried forward to the next fiscal year. Tell that to the First Nations who have received $100 million that will be expensed in this fiscal year but spent over future years , or tell it to regional boards which have received millions of dollars, expensed in this fiscal year but to be spent over future years, or try that line on various social service agencies which received lump sum grants, expensed in the year of the grant although the monies are for years in the future. The truth is that government routinely moves monies between fiscal years either through the use of arms length trusts or by simply making appropriate entries on its balance sheet. The restrictions on the $1 billion early settlement bonuses it is dangling before unions and other bargaining agents has nothing to do with accounting and everything to do with reducing future costs by eliminating the compounding that flows from including settlements in base salaries.

Labour Minister Mike de Jong should learn to be much less angry and much more transparent, or perhaps he already is transparent and his lesson is to be much more sincere.