Mar 19, 2019

The last recession in Canada ended almost ten years ago, yet provincial governments across the country are still asking public sector unions to ‘tighten their belts.’ CUPE’s senior economist Angella MacEwen explains why public sector workers’ wages have barely budged in a decade—despite a healthier economy—and why the battle against austerity will be fought and won at the bargaining table.

A decade of slow economic growth

The 2008-2009 recession was milder in Canada than the U.S. largely because global demand for oil and other natural resources remained high. Strong wage, employment, and economic growth in the three oil-producing provinces masked a weaker recovery in the rest of Canada.

The collapse in oil prices in 2014 was felt nationwide. But by 2016, economic growth across Canada had normalized, and by the end of 2017, unemployment rates were starting to reach 40-year lows in almost all areas of the country. Given the strength of these economic indicators, wages should be rising faster, but average wage growth is stuck at 2.5 per cent. Public sector wages are growing even slower than private sector wages, and in most provinces aren’t keeping up with inflation.

Where is the end to austerity?

The last recession in Canada ended almost ten years ago, yet provincial governments across Canada are still asking public sector unions to cut costs and accept a variety of concessions. In almost every case, these governments are failing to address their real problem, a revenue shortage, and in some cases, they are making it worse by cutting taxes.

Here’s a brief overview of provincial government attacks on public sector wages:

• In March 2017, the Saskatchewan government asked public sector unions to take a 3.5 per cent wage cut. By the end of 2018, 34 of 39 bargaining units in Saskatchewan had expired collective agreements, and the government had not persuaded a single one to accept the rollback in wages, prompting the finance minister to announce that the wage cut was off the table.

• The Manitoba government introduced legislation in 2016 which would freeze public sector wages for two years, followed by 0.75 per cent and 1.0 per cent in years 3 and 4. While unions are taking the government to court, the wage freeze may go ahead in the meantime. The province has reduced funding to school boards citing poor economic conditions and expects the shortfall to come out of wage growth.

• In Nova Scotia, the provincial government used the Public Services Sustainability Act to limit an arbitrator’s ability to set wages higher than guidelines provided by the province. They used this legislation in 2017 to set a wage pattern that froze wages for the first two years, and then increased wages by 1.5 per cent and 1.0 per cent in years 3 and 4.

• Successive governments in New Brunswick have held public sector wage increases to an average of one per cent per year over the past decade, not even enough to keep pace with inflation. The recently elected coalition government has promised to reign in public spending, hinting at cuts to post-secondary education and health care. Many expect to see further privatization and cuts to services.

• Ontario’s Fall Economic Statement in 2018 painted the picture of a large deficit and unsustainable debt. Instead of looking at ways to increase revenue, the Ontario government took the opportunity to provide tax cuts to the wealthiest. Public sector workers in Ontario are braced for further privatization, cuts, precarity, and two-tier contract offers.

Before the 2008 recession, governments were already pushing privatization and squeezing the public services that we all rely on. Public sector employers were increasingly shifting secure positions to temporary and precarious ones—the share of public sector workers on temporary contracts is up by more than 50 per cent since 1997, and one-quarter of CUPE members are employed in precarious jobs.

Ten years of austerity have only made matters worse.

Bargaining forward

How can we fight back against provincial austerity and a decidedly anti-worker agenda? In two words: collective bargaining.

Bargaining is one of CUPE’s best tools to improve wages, working conditions and benefits for our members. In 2017, CUPE’s National Executive Board announced an updated bargaining policy, focused on fighting austerity, precarious work, and privatization. This policy included concrete strategies to fight concessions and two-tier contract provisions. This strategy recognizes that the key to successful bargaining is building worker power. Economic conditions are irrelevant if workers haven’t built up the capacity to hold firm against austerity.

The Bargaining Forward strategy goes beyond collective bargaining to include building political support for public investment in the work and services performed by CUPE members. Strong public services benefit the broader community, but higher wages for public sector workers also have a multiplier effect that helps to support local economies.

Ultimately, when unions make gains in bargaining, it sets the standard for all workers. The benefits and wages that we all enjoy today were fought for first at the bargaining table.