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Remarks by OPSEU President Warren (Smokey) Thomas to the Conference Board of Canada Industrial Relations Roundtable

Remarks by OPSEU President Warren (Smokey) Thomas to the Conference Board of Canada Industrial Relations Roundtable

We the North
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The Industrial Relations Roundtable, held every year, is an invitation-only event that brings together top employer and union representatives to discuss current issues in labour relations in Canada and share expectations about the year ahead. The Conference Board asked presenters to address the following questions in their remarks:

  • Who are you (i.e., a brief history of your organization and the path that has led to your current state of labour relations)?
  • What do you expect to be the top union and management issues at the bargaining table in 2016?
  • Do you have any thoughts on your labour-management relations vis-à-vis other sectors and industries?
  • Are there specific stories of union-management relations that you would like to profile?

OPSEU President Warren (Smokey) Thomas used the notes below as the basis of his remarks:

Introduction: Who we are

Hi, I’m Smokey Thomas, president of OPSEU. My union represents about 130,000 Ontarians from just about every part of the public sector in Ontario.

Originally we started out as a union representing only frontline workers in the Ontario Public Service, but about 40 years ago we began branching out. At first we reached out to hospital laboratory technologists and community college staff, but today we represent workers in about 20 distinct sectors.

We issue OHIP cards and protect the integrity of your personal information.

We maintain provincial parks.

We sell and control beer, wine and spirits.

We take x-rays, help you breathe, and analyze your blood to diagnose medical problems.

We teach the next generation of workers.

We guard accused murderers and administer the courts.

We protect children from abuse and neglect.

We restart your heart if you have a heart attack.

We care for young children, people with disabilities, and frail seniors.

We might even hold your hand when you die.

Public sector employees are vitally important to the well-being of all our families and communities, yet far too often our contribution is overlooked or underappreciated.

We are seeing this happen in collective bargaining right now.

What’s happening in collective bargaining

Right now collective bargaining in the public sector – and I’m just speaking about Ontario, now – is being affected both by where we are in the economic cycle and by a long-term restructuring of the economy and government itself.

History has shown that bargaining is toughest for private sector workers during economic downturns and toughest for public sector workers after them. During recessions, governments typically boost spending. They don’t typically lay off their workers or demand pay cuts. But once the private sector is back on its feet, governments are left with debts to pay. And that’s when they call on public employees to pay those debts.

This is not fair, and it’s not logical. But it’s what happens – over and over. Public spending and the wages of public employees did not cause the recession of 2008-09, but apparently that doesn’t matter. Public employees across the country have been paying for it ever since.

So here’s the current state of public sector bargaining in Ontario, which looks likely to change only slowly for the next couple of years at least.

Overall, real wages (after inflation) for public employees in Ontario are not improving. After deep cuts in the early 1990s, real wages for public employees returned to their 1992 levels in 2008. Unfortunately this didn’t last.

In the aftermath of the recession, real wages began to fall again. So today, real public sector wages are actually lower than they were two decades ago. This has happened despite much greater productivity right across the public sector.

Within the public sector, the municipal sector is seeing, to some extent, what you might call “normal” bargaining, although many settlements are still bringing in pay increases slightly below the projected rate of inflation. These are real cuts, however small.

At the federal level, wage increases are below inflation; in addition, federal public sector workers are dealing with legislative changes that allow their employer to unilaterally change articles in their collective agreements, such as sick leave entitlements. These are real cuts, too.

The provincial level is complex.

Overall, the Wynne government’s stated framework for bargaining is what it calls “net zero,” which means pay increases and other improvements are possible but must be paid for with cuts to benefits and working conditions in other areas. (This appears to be what has happened with recent negotiations between the government and certain groups of school teachers.)

In our union, certain bargaining units, such as college faculty and public service employees, accepted two years of zero-per-cent pay increases after the recession. But they have been loathe to do so a second time.

College faculty were able to win decent increases in their collective agreements after the one in which they took the zeros.

Right now we are in bargaining with the government in the Ontario Public Service over the same problem.

In 2010, the government’s original announcements around the so-called wage “freeze” were aimed at getting all bargaining units to accept two years of zeroes. But what we’re seeing instead is an attempt by the government not only to extend that program, but to deepen it. We’re seeing demands at bargaining tables where the employer is not just asking for a wage cut equal to two years of inflation – which could be four per cent over two years, or more – but is also asking for other cuts worth at least that much again. So it’s a tough environment.

There is a great deal of variation in how different parts of the provincial public sector work, however.

Some sectors, like universities and colleges, receive provincial funding but also have their own revenue sources. Certain groups, like hospital professionals, do not have the right to strike, so their contracts are often settled at arbitration. This has meant that many bargaining units have done okay, even under the current austerity program.

That being said, a “satisfactory” outcome these days means one in which wage increases are only slightly below the projected rate of inflation and cuts to benefits are as small as possible. In the current environment, not going backwards is a considerable achievement for any union bargaining team.

Still, this is not always possible. Bargaining outcomes these days are very uneven from sector to sector and from bargaining unit to bargaining unit.

One employer tactic that has become increasingly common is the use of lump-sum payments in lieu of pay increases on the wage grid. These are really deferred wage cuts, as the wage grid doesn’t move even though inflation continues to rise. Nonetheless, some workers have accepted them when no better option was available.

Of course, public sector bargaining has never been easy. There are lots of reasons for this:

  • We have been the target of a sustained campaign for many decades to portray public employees of all types as underworked and overpaid. We are neither.
  • When we bargain, it is the public as a whole that pays for any contract improvements we achieve.
  • On those rare occasions when we are forced to strike, we find ourselves asking the public for support at the exact same time that we are taking away something they need.
  • Lastly, public sector employees are the only workers whose employers have the power to unilaterally change the legal rules of bargaining – even in the middle of bargaining.

So we are used to challenges. And I’m happy to say we’re holding our own in spite of them.

Broader issues

I don’t think it’s possible to understand what is really happening in bargaining – in the public sector or the private sector – without looking at the broader context in which that bargaining takes place. So I’d like to make a few comments on that.

The current bargaining environment is the product of a number of assumptions, many of which I see reflected in the Conference Board’s Industrial Relations Outlook for 2015. These assumptions are the “facts” that we are supposed to consider when we are in bargaining.

The problem is, a lot of them are not facts at all. They are stories. I want to talk about four of those stories.

The myth of “constrained resources”

The first story is that we are living in a time of constrained resources. That’s why governments are broke. That’s why workers can’t get pay raises.

This is, simply, not true.

If you look at our wealth as a society, what you will discover is that Canada, and Ontario, are richer than they have ever been.

This might sound odd, but it’s a fact: despite the recent stumble in the Alberta oil patch, Gross Domestic Product per capita in this country, adjusted for inflation, is at record levels these days. The same is true in Ontario.

There is lots of money in this country. This country is not poor. This country is rich.

And yet eight out of ten provincial governments are running deficits.

If you look at the workforce, more and more jobs are part-time, temporary jobs with low wages and little job security. Millions of working people have seen stagnant wages for years. They’re simply not getting ahead. This applies in both the private and public sectors.

So if government is broke, and workers are broke, where’s the money?

Well, there’s only one place it can be. Business, particularly big business, has it. We have restraint at the workplace level, but in corporate boardrooms, it’s a non-stop party. In 2013, the 100 highest-paid CEOs in Canada raked in more than $9 million a year on average. That’s 195 times the pay of the average full-time, full-year worker!

A few months back, CIBC reported that corporate profit rates in Canada were at a 27-year high and were likely to stay high for the foreseeable future. Why? Because of structural changes in the economy – most notably a reduction in the bargaining power of labour.

In union and non-union workplaces alike, the structural changes of the last three or four decades have tipped the balance of power decisively in favour of employers. High profits have come at the expense of constrained wages.

Adapting people to the economy, not the other way around

The second story we often hear is that the economy, as a whole, is something that people have to adapt to. We can’t change it, the story goes, any more than a sailboat can change the wind. So if the wind is blowing against us, we have to accept that we will move forward slowly at best.

This is nonsense, of course. The economy is an entirely human creation. The winds that have transformed our economy are the result of deliberate policies – promoted by business and facilitated by government – that have favoured business over labour. Different policies can have different effects. As a society, we can help working people succeed. We can change which way the wind blows.

Business leaders and the politicians who work for them know this, of course. That’s why they’ve been so successful.

Healthy wages, healthy economy

Another story we often hear these days is that wages are dependent on the health of the economy. This is true, as far as it goes, but it’s only half the story. The other half is that the health of the economy depends on wages.

It’s a fact that consumer demand is still the biggest driver of GDP. It’s also a fact that the wages of workers are the fuel that feeds consumer demand. So when wages are weak, so is the economy.

As of the first quarter of 2015, Canadian non-financial corporations are sitting on $686 billion in cash that they are not investing. Why aren’t they investing? Simple: their customers are broke.

This is what “income inequality” means. It is not only bad for poor people; it is a recipe for economic stagnation – which is what we’re seeing right now in Ontario, in Canada, and abroad.

If we want a healthy economy, both at home and globally, we need to put more money in the pockets of people who will spend it. And that means working people.

The myth of productivity

The last story I want to touch on is the productivity story.

As the Conference Board has pointed out, a lot of people are talking about productivity these days. And a lot of people in business and government are saying that if only we were more productive, wages would rise and we’d all earn thousands of dollars more per year.

I wish it were true. At one time in Canada, it was. In the postwar era, productivity gains and wage gains for average workers were tightly linked. But since the late 1970s, productivity growth and wage gains have been decoupled.

Working people today are more productive than they used to be. They’re just not getting anything for it.

The Parliamentary Budget Office put it this way a few years ago:

Labour productivity growth has outpaced the growth in the real total compensation rate, on average, over the past three decades. This is particularly true since the mid-1990s, suggesting that productivity gains over this time have not led to equivalent increases in compensation.

In a paper published this year, researchers Mathieu Dufour and Ellen Russell found that:

While the real wage/productivity linkage is often asserted as an economic truism, there is no necessity that real wages must rise in tandem with productivity.

Dufour and Russell calculate that, between 1961 and 2011, average labour income per hour, in 2011 dollars, was $4.77 less than it would have been if wage gains had kept up with productivity gains.

In other words, based on his or her productivity, the average Canadian worker should be making nearly 15 per cent an hour more. That’s about $8,000 a year more.

So this is a question that our leaders in business and government should be grappling with: Why should working people be interested in productivity when all of its benefits go to employers?

The “productivity agenda” that business leaders are pushing today is no different than it has been for the last 40 years. Since the 1970s, Canadians have been told that if we were more productive, if we were more competitive, then we would be richly rewarded with more jobs, better jobs, and better-paid jobs.

We’ve heard this about free trade.

We’ve heard this about corporate tax cuts.

We’ve heard this about privatization of public services and “public-private partnerships” for major public infrastructure projects.

We’ve heard this about cuts to employment insurance.

We’ve heard this about all the measures that were supposed to increase “labour market flexibility” by weakening employment standards and weakening unions.

All of these measures have failed, and failed dismally.

We don’t have better jobs, or better-paid jobs. We have entered the age of “precarious work.”

All of these changes have come about at the request of, and at the behest of, corporate interests who have attained a greater level of influence over governments, both federal and provincial, than they ever had before.

What’s the result? Our manufacturing sector, which has always been a source of high-productivity employment and good union wages, has been hit hard. The jobs lost in manufacturing have been replaced by low-productivity, low-wage service jobs.

In the current environment, no round of collective bargaining takes place without the threat of job loss. The result isn’t greater prosperity. It’s a race to the bottom.

Political involvement

Given the role that politics has played in changing the policies that govern work and wages, it shouldn’t be surprising that union activity at the bargaining table is increasingly being supplemented by union activity in the political realm.

This only makes sense. What is at issue here is not the way economic value is shared between one employer and one group of unionized workers. What is at issue is the way economic value is shared between owners and workers across the economy. This is a society-wide conflict, as it always has been.

So in the years ahead, you can expect to see unions more involved in politics than ever before.

In the Conference Board’s Industrial Relations Outlook for 2015, one sentence jumped out at me: “Labour must balance the short- and long-term interests of its members.”

It’s not hard to figure out what this means. It means that workers should take pay cuts if they want to keep their jobs. It means that employers should get more of the value that workers create.

Quite frankly, I’m sick of it.

Turning things around

Productivity gains are good, but the fruits of those gains must be shared fairly with the workers who produce them.

This calls for a total re-think of the way we organize not only labour-management relations, but our society as a whole. This is a political question.

We need to realize that in a democracy, the purpose of the economy must be to create a good life for as many people as possible, not obscene accumulation of wealth for a privileged few.

Making things better will take a number of steps.

First, we need to revamp our labour laws and employment standards with the deliberate intention of restoring the bargaining power of workers, both union and non-union. Doing so will be good for workers and it will be good for business as well.

We need jobs that allow people to live decently, bring their kids up the way they want to, and retire with dignity. Work doesn’t have to be precarious.

Second, we need to recognize the vital role that the public sector plays in our economy and our society.

The public sector provides the physical, human, and legal infrastructure that makes a prosperous and fair society possible.

The public sector is an economic stabilizer in times of crisis. (And believe me, we have many more crises ahead of us.)

The public sector is the way we take care of each other and provide the things people need whether they can afford them or not.

The public sector knits our communities together and keeps them strong.

Thirdly, we have to stop thinking that the economy will be better for people if we just let the market decide everything.

Since the start of the free trade era in 1989, Canada’s productivity relative to the United States has fallen.

Since governments began to get excited about corporate tax cuts, business investment has fallen.

Since tax cuts and privatization came along, government balance sheets have grown weaker, and so have our public services.

Since we started kicking unions, working people have gotten poorer.

The policies of the last three decades are not working for Canada. We need to turn things around.

What this country needs is a smart, active plan for an industrial strategy that manages trade and investment, provides government with the revenue it needs to be effective, and creates the good jobs people must have.

Industrial relations don’t exist in a vacuum. To truly understand them – and to try to make them fairer – demands that we understand the larger context that shapes industrial relations.

I hope this is just the beginning of a larger conversation that goes far beyond the bread-and-butter issues that most of us talk about at the bargaining table.

Thank you very much.

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