Premier John Horgan was given a rousing welcome by delegates at the annual Canadian Union of Public Employees convention last week, but I have to wonder whether that’s going to be as good as it gets for the premier and his government when it comes to dealing with public sector unions.
That’s because the NDP government will this year open contract negotiations with a vast array of those unions.
There are more than 310,000 unionized public employees in B.C. whose collective agreements (about 180 of them) expire next spring, and there are another 75,000 managers in the public sector.
Everyone from teachers, college faculty, health-care workers and school custodians to doctors and nurses will be at the bargaining table in the coming months.
There is no question public sector union leadership and the membership will be looking for substantially more money at the negotiating table than they received from a series of B.C. Liberal administrations in recent years.
There’s just one problem: there is not a lot of money in the public treasury to fund significant wage hikes for those public sector employees.
Already, financial compensation costs consume 56 per cent of the entire provincial budget. That works out to about $26.7 billion ($22 billion of that is for unionized workers). Of those costs, health takes up almost half the total, followed by education at 18 per cent.
A rule of thumb in the finance ministry is that a tiny one per cent wage hike across the public sector costs the government close to $300 million. A two per cent bump costs $600 million, and so on. Keep in mind that any increase in compensation becomes “embedded” in the annual budget.
So, let’s say the unions come looking for a two per cent hike a year over three or four years. That kind of seemingly modest compensation package would cost the government nearly $3.6 billion over three years.
Finance Minister Carole James does not have a lot of flexibility at her disposal, and already she is pleading for everyone to “manage” their expectations of what will flow from the negotiating table.
Over the next two years, her fiscal plan shows she has $2.6 billion in unallocated spending. Presumably, the budget three years from now will have the usual $1.3 billion in unallocated spending, which brings the total to $3.9 billion.
That modest scenario of the two per cent annual increase would consume almost all that money, leaving little to fund new programs and services (to say nothing of the huge costs incurred by another aggressive wildfire season).
So if James remains committed to delivering balanced budgets – and there is every sign that she is – she is likely going to hold the line at lower wage hikes, which may infuriate public sector workers.
And that’s why the premier may not get that prolonged standing ovation when he attends those union conferences next year. He won’t be booed, but by then the relationship between his party and its staunchest allies will likely have become decidedly strained.
– Keith Baldrey is chief political reporter for Global BC
