Announcements: 20021120

1
Announcements 2002-11-20

• Arbitration Assign. Due W Nov 27, 2002
• Arbitration TA Scott Walsworth
• Office hours 430-530 p.m, Nov 20 27.
• Location Centre for Industrial Relations,
  121 St. George Street, Room 202
• Email s.walsworth_at_utoronto.ca
• Final exam
• Thursday Dec 12, 2002, 7 pm to 9 pm.
• Check exam schedule to confirm!

2

• WDW244H Labour Relations
• Fall 2002
• PART 6
• The Collective Bargaining Process
• Public Sector Bargaining
• Professor Frank Reid
• Centre for Industrial Relations

3
Outline

• Reference GPT Chapter 14
• Size of the Public sector
• Evolution of Bargaining in Public Sector
• Features of Public Sector Bargaining
• Strikes in the Public Sector
• Dispute Resolution Procedures
• Strikes in Essential Services
• Public-Private Sector Wage Differentials

4
The Public Sector

• The Public Sector includes
• The federal provincial civil service
• The municipalities
• The health sector, education, police, etc.
• Federal provincial crown corporations (eg. CBC,
  LCBO)
• Often regulated by specific legislation
• e.g. Police Act, Education Act, Crown Employees
  Collective Bargaining Act (CECBA)
• Unionized rapidly following enactment of the
  federal Public Service Staff Relations Act
  (PSSRA) in 1967.

5
Importance of the Public Sector

• Labour market significance
• Large fraction of Canadian workforce (20-25.)
• Higher union density than private sector.
• Restructuring of public sector has implications
  for labour market / union movement.
• Gender equality issues
• High proportion of women in public sector.
• Especially in the education and health sectors.
• Public sector took the lead in pursuing equity /
  benefits for women.

6
Size of the Public Sector

• Steady growth in the public sector from WWII to
  1970s to the early 1990s.
• From mid-1990s on, political trend has been to
  smaller government, privatization
  de-regulation.
• Government share of total employment declined
  from 25.0 in 1994 to 22.4 in 1999 through
• Privatization
• Contracting out
• Reduction in level of public services.
• Ontario public service employment fell by 20
  after 1995

7
Size of the Public Sector

• of total employment
• Total public sector (1999) 22.4
• Education 6.3
• Health 10.3
• Local government 2.2
• Provincial government 1.8
• Federal government 1.9

8
The Public Sector

• Unionization Rate
• Provincial Government 75
• Health Social Services 50
• Overall Workforce 32
• Private Sector 22

9
Public Sector Bargaining (PSB)

• Up until 1960s public sector was generally not
  unionized in Canada.
• AssociationConsultation model proved
  unsatisfactory in addressing employees concerns.
• Public Service Staff Relations Act (PSSRA) gave
  collective bargaining rights to federal employees
  in 1967.
• Most provinces followed suit in next few years.
• Exceptions Saskatchewan and Quebec.

10
Features of PSB

• Employer Differences
• Political versus profit motive.
• May suffer no financial hardships during strike.
• Dual role as legislator and employer.
• Employee Differences
• Higher proportion of professionals, white-collar
  and female employees.
• Policy and Legislative Differences
• Determination of bargaining unit
• Scope of bargaining
• Variety of dispute resolution procedures

11
Dispute Resolution Procedures

• Right to Strike (e.g. TTC, Toronto outside
  workers)
• Conventional Interest Arbitration
• Final Offer Selection (FOS) Arbitration
• The Controlled Strike
• Back-to-Work Legislation
• Public Sector Wage Controls

12
Right to Strike Assessment

• Arguments against public sector strikes
• Inconvenience to public.
• No substitutes for public services.
• Strike gives public sector unions too much
  power.
• Arguments for public sector strikes
• Not all public sector employees essential.
• Essential services can be maintained.
• Alternatives to strike are problematic.

13
Conventional Interest Arbitration

• Most common substitute for strikes in the
  Canadian public sector.
• When parties are unable to reach a settlement,
  arbitrator is charged with issuing a binding
  award based on the parties arguments.
• Arbitrators decision becomes the new collective
  agreement.

14
Interest Arbitration assessment

• Violates Principle of Voluntarism
• Chilling Effect on Bargaining
• Arbitration encourages parties to take extreme
  positions in bargaining
• Results in lower settlement rate in direct
  negotiations.
• Empirical evidence
• 90 settle in right-to-strike systems
• 65-70 settle under conventional arbitration
  systems.
• Narcotic Effect
• Lower settlement rate because parties become
  addicted to letting arbitrator make an award
  rather than making the tough compromises
  necessary to reach a settlement.

15
Interest Arbitration assessment

• Pre-emptive Effect
• If arbitrators award is predictable by the
  parties, then it may induce a voluntarily
  settlement at the predicted award.
• Still violates Principle of Voluntarism because
  arbitrators award is pre-empting actual
  bargaining.
• No widely accepted Principle for decision
• Replicate the outcome with right to strike?
• Match equivalent employees in private sector?
• Equity (i.e. normative judgment of arbitrator)?

16
Final Offer Selection (FOS)

• Devised to avoid the Chilling Effect of
  conventional arbitration.
• Arbitrator forced to choose the final position of
  the union or the management, without any
  alteration.
• Encourages parties to adopt moderate positions,
  or the arbitrator will choose the other parties
  position.
• Rarely used in Canada

17
FOS Assessment

• Advantages of FOS
• higher rate of negotiated settlements than under
  conventional interest arbitration.
• Disadvantages of FOS
• can lead to poor collective agreements
• produces a damaging win-lose mentality in the
  labour-management relationship.
• Can result in inter-temporal compromise
  (alternate wins)
• FOS is strongly disliked by both the unions,
  management and arbitrators.

18
The Controlled Strike

• Controlled strike is also known as the
  designation model.
• The Crown Employees Collective Bargaining Act
  (1993) requires unions and the provincial
  government to negotiate an essential services
  agreement to guarantee the continued delivery of
  essential services during a strike.
• A fraction of employees in the bargaining unit
  are designated as essential. Employees in
  positions designated as essential are not
  permitted to strike.
• Objective To try to balance right to strike with
  need to provide essential services.

19
Controlled Strike assessment

• Problems with the Designation Model
• If designation too high then strike is too weak
  if designation is too low and public is not
  protected.
• Very time consuming for parties to negotiate
  designation.
• No right to strike for employees in some other
  services
• Definition of essential service is not consistent
  across jurisdictions or over time.
• Equity issues between EEs working and not working
  during a controlled strike

20
Controlled Strike CECBA

• Crown Employees Collective Bargaining Act
• 1993 NDP gives public servants right to strike
• 1996 maintained by Conservatives
• strike preferred by both the left right

21
Back to Work Legislation

• Legal strikes are sometimes terminated by
  emergency legislation, e.g. Toronto outside
  workers (CUPE 416) in July 2002.
• Sometimes arbitration is specified and sometimes
  wages are set by legislation.
• Worst of both worlds inconvenience of a strike
  and many of the problems of arbitration
  (violation of Principle of Voluntarism, etc.).

22
Public Sector Wage Controls

• The federal Anti-Inflation Board (AIB) (1975
  1978) imposed guidelines (10, 8 6) for
  maximum wage settlements in public and private
  sectors.
• The federal 6 5 program (1982-1984) imposed 6
  and 5 increase in wages. Ontario followed with
  the 9 5 program.
• The Social Contract in Ontario (1993) imposed a
  5 reduction in income through unpaid reduction
  in work time (an average of one day per month).

23
Public Sector Wage Differential

• Fundamental question Do public sector employees
  earn more or less than workers in the private
  sector with equivalent qualifications?
• Wages?
• Total compensation?
• Job security?

24
Public Sector Wage Differential

• Factors leading to higher public sector wages
• Public sector not subjected to profit constraint.
• Unionization rate is higher.
• Demand for government services is inelastic.
• Ability to defer costs to the public.
• Pressure on government to be the model employer.
• Competitive floor but no ceiling.

25
Public Sector Wage Differential

• Factors leading to lower public sector wages
• Public sector compensation is subjected to higher
  public scrutiny.
• Better and more generous non-wage benefits.
• More prone to be subject to special wage
  restraint that depresses wages.
• Government intervention in public sector strikes
  Monopsony power of the Public Sector.
• Employer has legislative power (dual role)

26
Public Sector Diff Evidence

• In general, public sector workers earned about 5
  to 10 more than private sector worker with
  similar qualifications.
• Differential is declining but greatest at
  provincial and local levels, for females and
  lower wage workers.
• At senior levels public sector employees earn
  less than equivalent private sector workers.
• Wage freezes and employment cutbacks have
  probably eroded much of this differential.

27
Public Sector Wage Premium

• Potential Measurement Problem
• Research using Census data may not have
  controlled for differences in union density
  between public and private sector.
• What appears to be a public sector differential
  in some studies may be a union-nonunion
  differential.

28
Public Sector Wage Premium

• Empirical Evidence
• Gross Premium
• Gunderson (1979)
• Using the 1971 Census Male 9.3 8.6
• Female 22.3 6.2
• Shapiro Stelcner (1989)
• Using the 1981 Census Men 19.1 4.2
• Women 27.2 12.2
• Mueller (2001)
• Using 1988-1990 LMAS Men 27.9 0.1
• Women 53.7 10.4

29
Public Sector Wage Premium

• Empirical Evidence (Gunderson, Hyatt Riddell
  2000)
• All Male Female
• Federal 7.0 5.5 8.8
• Provincial 11.4 12.8 11.2
• Local 10.3 12.2 5.9
• Education 6.9 4.9 7.8
• Health 0.8 -14.2 4.9
• Based on the November 1997 Labour Force Survey