Province giving that freezing feeling

COLIN CORNEAU/BRANDON SUN Enlarge Image

Colin Corneau/Brandon Sun Archives Manitoba Finance Minister Stan Struthers hasn�t said it in so many words, but expect the province to ask those union workers whose contracts expire in 2012 to accept a wage freeze.

Finance Minister Stan Struthers won't come right out and say it, but it looks like he'll be asking more provincial government workers to accept wage freezes.

The province saved somewhere in the neighbourhood of $120 million in 2010 and 2011 by negotiating wage freezes with tens of thousands of provincial employees. This included the more than 13,000 provincial civil servants covered by the Government Employees Master Agreement (GEMA) and the 14,000 members of the Manitoba Nurses Union. The province also won a freeze on doctors' fees for two years.

The approach was fairly straightforward: two years of wage freezes in exchange for improvements in pay and benefits in the third and fourth year of contracts. In the case of GEMA, the province agreed to no-layoff provisions in exchange for wage concessions. The province did not impose the freezes, but instead negotiated with those unions whose contracts expired in 2010. Those still under contract were spared.

But most of those wage freezes end this spring. All eyes now turn to a new group of provincial employees who have the misfortune of seeing their contracts expire in 2012. These include thousands of workers in hospitals, personal care homes and the province's regional health authorities, along with thousands more employees of Crown corporations such as Manitoba Hydro and Manitoba Public Insurance.

Will Struthers ask those workers to accept the same concessions the doctors, nurses and GEMA members accepted over the past two years? He won't say, but he certainly sounds as if he's going once more to that well. "I'm not going to short-circuit the collective bargaining process," Struthers said in an interview. "But I'm going to make it very clear that some of the economic challenges we faced a couple of years ago are still there and in some cases, worse than they were two years ago."

Indeed. Thanks to $800 million in costs to fight the spring floods last year, the province is stuck between a boulder and a hard place. Even after Ottawa helps with part of the tab, the province booked $350 million in unanticipated costs in 2011. The deficit for this fiscal year is now expected to be $646 million, about 50 per cent higher than budgeted. A dry spring is certainly welcome, but it won't provide Struthers with any real respite.

The first wage freeze was a risky strategy for the NDP government, given there was then a looming provincial election. Premier Greg Selinger did not suffer at the hands of public-sector unions, who continued to show up at the ballot box and on the street during that campaign. There is no guarantee, however, labour will continue to embrace delayed gratification.

Perhaps that's why Struthers is taking a different tack than his predecessor, Rosann Wowchuk, who announced very clearly in advance that her government was seeking wage concessions. This time, all the cards are being held close to the vest. Will it save Struthers and the pro-labour NDP government from a backlash from within their own ranks? Only time will tell.

We will also have to wait to see whether the negotiated wage-freeze strategy makes any significant impact on the burgeoning deficit. It has become fashionable among the anti-tax lobbyists to demand public servants be sacrificed on the altar of deficit reduction. But a more thoughtful analysis would show anything more than modest cuts in government spending, including wages, does more harm than good to the economy. This point was made in eloquent fashion by BMO Nesbitt Burns deputy chief economist Doug Porter, who told the Globe and Mail this week Ottawa should refrain from cutting too deeply or too quickly in its spring budget. The economy, Porter noted, "hardly needs another downward shove from even deeper restraint."

It is too early to tell whether Manitoba's limited wage freeze is a prudent tactic or an example of Porter's downward shoves. However, trading one or two years of wage increases in exchange for concessions, as opposed to rollbacks or mass layoffs, is probably good labour-market policy. The provinces laid off nurses and trained fewer doctors in the early 1990s as a way of moderating health-care inflation. All that did was drive doctors and nurses from Canada and give those who remained the bargaining power to extract enormous wage hikes ever since.

So for now, it appears provincial employees will likely face increased demands for concessions to help ease Struthers' burden. They can refuse; the province can only impose wage freezes through legislation, something this government is almost certain not to do. So, it will be up to the NDP government to convince the unions through the strength of their argument.

And on that note, as the deficit for this year grows larger and larger, it looks as if the province will have a very compelling case to make.

dan.lett@freepress.mb.ca

Contracts up

SOME of the larger bargaining groups that need new contracts, and may face demands for wage increases this year:

Health Sciences Centre (CUPE Local 1550) 2,847 employees

Brandon Regional Health Authority (CUPE Local 4242) 1,143 employees

Assiniboine Regional Health Authority (CUPE Local 4593) 1,400 employees

Manitoba Public Insurance (MGEU) 1,609 employees

Manitoba Hydro (CUPE and CEP) 1,490 employees

Central Manitoba Regional Health Authority (CUPE Local 4270) 1,100 employees.

Republished from the Winnipeg Free Press print edition February 3, 2012 A5