A 10-year collective agreement may seem like a good idea, but the constraint on business isn’t worth the price
More than a rule of thumb, it’s become very nearly standard practice in Canadian collective bargaining for agreements to run three or four years.
There is good reason for this, but from time to time someone, or some party, will raise the idea of a longer contract. Earlier this year, the Alberta government suggested that teachers and school boards should sign a 10-year collective agreement.
While the objective of the government was never clearly articulated, it appeared to flow from two parallel principles. First, governments like labour peace and in this instance seem to have equated a 10-year agreement with peace. Second, as the ultimate employer responsible for signing the teachers’ cheques, the government would obviously prefer to be able to accurately predict what labour will cost the educational system in future years.
Generally speaking, however, an agreement containing such a lengthy term flies in the face of what is considered good industrial relations practice from the perspective of both the employer and the union.
The fast pace of change in our social and economic conditions has also complicated the process. It is more difficult to maintain stable working relationships between parties because agreements need to reflect those changing conditions to the satisfaction of both labour and management. The simplest example might be a difference of opinion regarding what constitutes a fair wage.
Collective agreements lock two sides into a package of terms and conditions covering everything from work rules and working conditions to wages and benefits. In periods of high inflation, this has frequently meant that over the life of a collective agreement, wages have eroded or costs have spiraled out of control. This results in particularly difficult bargaining during the next round of negotiations as parties try to recoup losses or place a cap on rising costs.
On the other hand, during periods of economic downturn employers have frequently had to bear terms and conditions that put the business in jeopardy. Consequently, it is generally accepted that agreements seldom run more than five years. Agreements of one year are generally considered too short to enable the parties to achieve a degree of stability before they have to engage again in the often disruptive bargaining process.
In the recently concluded round of bargaining between Alberta teachers and school boards, agreement on a 10-year term had the potential to generate further strain on already difficult relationships. In these circumstances, an agreement as long as 10 years could have exacerbated both current and future problems. Rather than allowing the parties to resolve their own differences using the available tools in a shorter time frame, and one less fraught with potential difficulty, peace would have to be secured through the use of arbitrators — neutral third parties.
While the third-party process can and does work effectively in many circumstances, using it to resolve the types of issues that will likely arise during a 10-year period is a concern.
When the decision-making authority is handed to a neutral third party — someone not affected by workplace terms and conditions — settlements frequently meet neither the needs of the employer or the union. Imagine the impact of a series of these decisions over a 10-year period.
For those who wish to control their own destiny, it is essential that full control remains in the hands of the negotiators.
A 10-year agreement requires some means of responding to the social and economic changes. It is important that employers be able to develop and implement new strategies to take advantage of changes in operating environments.
Long agreements can restrict the employer’s ability to make these changes in a timely basis. This occurs because change often requires that the union be familiar with the need for such changes and their impact over more than one round of negotiations before they are prepared to accept them.
The agreement term is a strategic element that can be used by either party to achieve objectives crucial to their economic success. Signing a 10-year agreement negates the ability to use the term in that manner. Surely we can find a more creative solution to resolve the tensions between labour and management.
In the end, it is worth noting that the parties signed a four-year collective agreement.
David Wartman is a principal with Delta Strategy Group Ltd. He may be contacted at [email protected].
There is good reason for this, but from time to time someone, or some party, will raise the idea of a longer contract. Earlier this year, the Alberta government suggested that teachers and school boards should sign a 10-year collective agreement.
While the objective of the government was never clearly articulated, it appeared to flow from two parallel principles. First, governments like labour peace and in this instance seem to have equated a 10-year agreement with peace. Second, as the ultimate employer responsible for signing the teachers’ cheques, the government would obviously prefer to be able to accurately predict what labour will cost the educational system in future years.
Generally speaking, however, an agreement containing such a lengthy term flies in the face of what is considered good industrial relations practice from the perspective of both the employer and the union.
The fast pace of change in our social and economic conditions has also complicated the process. It is more difficult to maintain stable working relationships between parties because agreements need to reflect those changing conditions to the satisfaction of both labour and management. The simplest example might be a difference of opinion regarding what constitutes a fair wage.
Collective agreements lock two sides into a package of terms and conditions covering everything from work rules and working conditions to wages and benefits. In periods of high inflation, this has frequently meant that over the life of a collective agreement, wages have eroded or costs have spiraled out of control. This results in particularly difficult bargaining during the next round of negotiations as parties try to recoup losses or place a cap on rising costs.
On the other hand, during periods of economic downturn employers have frequently had to bear terms and conditions that put the business in jeopardy. Consequently, it is generally accepted that agreements seldom run more than five years. Agreements of one year are generally considered too short to enable the parties to achieve a degree of stability before they have to engage again in the often disruptive bargaining process.
In the recently concluded round of bargaining between Alberta teachers and school boards, agreement on a 10-year term had the potential to generate further strain on already difficult relationships. In these circumstances, an agreement as long as 10 years could have exacerbated both current and future problems. Rather than allowing the parties to resolve their own differences using the available tools in a shorter time frame, and one less fraught with potential difficulty, peace would have to be secured through the use of arbitrators — neutral third parties.
While the third-party process can and does work effectively in many circumstances, using it to resolve the types of issues that will likely arise during a 10-year period is a concern.
When the decision-making authority is handed to a neutral third party — someone not affected by workplace terms and conditions — settlements frequently meet neither the needs of the employer or the union. Imagine the impact of a series of these decisions over a 10-year period.
For those who wish to control their own destiny, it is essential that full control remains in the hands of the negotiators.
A 10-year agreement requires some means of responding to the social and economic changes. It is important that employers be able to develop and implement new strategies to take advantage of changes in operating environments.
Long agreements can restrict the employer’s ability to make these changes in a timely basis. This occurs because change often requires that the union be familiar with the need for such changes and their impact over more than one round of negotiations before they are prepared to accept them.
The agreement term is a strategic element that can be used by either party to achieve objectives crucial to their economic success. Signing a 10-year agreement negates the ability to use the term in that manner. Surely we can find a more creative solution to resolve the tensions between labour and management.
In the end, it is worth noting that the parties signed a four-year collective agreement.
David Wartman is a principal with Delta Strategy Group Ltd. He may be contacted at [email protected].
