Former finance minister Rosann Wowchuk's tough talk of wage freezes for civil servants in 2010 was refreshing, a sign of fiscal restraint from a spendthrift government. Now that the two-year "pause" is up, the government can say money was "saved." But for two years of zero, the taxpayer will be underwriting the future costs of extraordinary concessions made at the bargaining table.
The biggest of the concessions was the awarding of cost-of-living increases on pensions to health-care workers. Some 14,000 nurses demanded and got their pension payments indexed to inflation. That will mean, starting in 2014, the government will make additional contributions of 0.8 per cent of the pension fund's value in order to pay indexed pensions to retirees as of 2018. In 2015, the additional payments rise to one per cent.
The nurses are a fraction of the employees under the newly indexed health employees pension plan, which covers everyone under the regional health authorities. That's 40,000 people. The pensionable payroll is $1.65 billion; in 2014 the government will top up its annual contributions by $13.2 million.
Further, the 11,000 nurses who bargained a 31/2-year collective agreement in May 2010, won a two per cent lump sum to cover a contract post-dated to September 2009. That alone was worth $21.1 million. In the last year of the agreement, nurses will get a four per cent wage raise, and those with 20 years-plus of service will get an additional two per cent. The deal will cost $71 million.
The government also settled a four-year agreement with 13,500 civil servants under the MGEU, and an increase to the fee schedules for doctors and chiropractors. All the deals included a two-year freeze, but the MGEU negotiated a no-layoff promise for four years. Further, civil servants with 20 years service will get a two per cent wage raise, late in the third year of the deal, in addition to the 2.75 per cent general increase in each of the last two years.
The doctors' four-year agreement, covering 2,400 physicians, gave a total 10.6 per cent increase in fees in the last two years. More significantly, the deal tied the physicians' fees to those earned by doctors in Canada's richest provinces. It also dramatically hiked the "retention" payouts made to doctors who continue to practice here.
In all, the agreements settled in 2010 and 2011, which amount to $3 billion in wage costs for 42,000 public-sector workers, saved $122 million based on two per cent increases for two years. But indexing pensions to the cost of living, and salaries of those paid by much-richer provinces, both carry extraordinary expense into the future. Further, the government is making deals that reward long service, which makes sense for retaining specialist physicians who are highly mobile, especially in their 30s and 40s. For civil servants or nurses? It clearly was simply an enticement to take a wage freeze.
Contract negotiations, in typical years, are give-and-take exercises. But in tough financial times, it is incumbent upon governments to get tough, as does the private sector, to manage the straitened revenues. Instead, the provincial government rewarded public-sector workers -- members of the NDP's loyalty-card club -- with lucrative concessions that will load huge expense onto the ledger through improved benefits, the costs of which never take a "pause."