Things are starting to heat up with the McGuinty governments’ threat to freeze public sector wages until 2014. Last week, several major unions representing public sector workers walked out of talks with the government claiming that the government was not “bargaining” at all. The lead story in the Toronto Star today had the CAW leadership threatening that work stoppages could be the result if the government insists on the freeze.
McGuinty says simply that the government has no money: “For the next two years, there’s no additional money available for compensation.”
Of course, anyone involved in labour relations knows that employers often cry poverty at the outset of collective bargaining. Unions take those claims with a grain of salt. On the other hand, occasionally employers mean it. Everyone knows that the Ontario economy took a big economic hit during in the past few years, and that the government had to inject a lot of money into the system. So finances are tight, no doubt.
But there is an age old debate in public sector labour relations about whether government employees should be expected to absorb a financial hit every time a government’s policies leave it in financial difficulty. Critics of public sector wage freezes point out that a government is not in the business of making a profit. It’s job is to provide services. And governments make choices about how to balance revenue collection (taxes) and service provision. So, for example, the Liberal government has introduced corporate tax cuts in recent years and brags about those cuts and Ontario’s relatively low corporate tax rate in its advertising materials. (see website ad here and t.v. commercial here), and it pushed through a 25% salary increase for MPPs.
These are choices the government makes about what to do with its revenues, and they lead to less revenues in the government coffers to pay employee wages. The point is that the government’s financial situation is largely the result of government policies and choices, and not the act of God. The point was made very clearly a while back by one of Canada’s leading labour relations neutrals, Martin Teplisky, who refused to be restrcited in setting public sector wages in interest arbitrations by the governments’ persistent claims of poverty.
Tepliksy observed: “The reality is it is not a question of ability to pay. It is a question of unwillingness to pay”
[M. Tepliksy, “Ability to Pay and the Independence of Arbitration: An Arbitrator’s Perspective” Labour Arbitration Yearbook]
You may or not agree with the government’s choices (granting tax cuts and MPP raises while demanding wage freezes by unionized public sector workers), and that is what politics and public debate is all about. But it is easy to see why public sector unions do not accept the governments’ claims that “there is no money”. Their retort is that, if there is no money, it is because you opted to spend the money in other places, or to reduce your revenues by giving out corporate tax cuts…but don’t expect public sector workers to fund MPP raises and corporate tax cuts by simply accepting your request for less money for them and their families.
Whose position do you find most convincing: the governments’ or the unions’?