A strong dollar, pension concerns and work-life balance issues will dominate the labour scene in 2005, say employment lawyers
As seasoned labour relations experts can attest, what’s hot and what’s not in collective bargaining will vary a great deal region to region. In Ontario, the repercussions of a rising Canadian dollar loom large in the minds of export-oriented employers. Whereas in the rural communities of Nova Scotia, it’s getting workers to agree to Saturday night shifts that’s causing headaches.
Overall, the positive outlook for the Canadian economy this year means that employers have to work on managing workers’ expectations, said Toronto-based employment lawyer Jamie Knight.
“First of all, we all have to watch the Canadian dollar. It’s going to put a lot of pressure on companies trying to hold down rates on the one hand. On the other hand, employees see a generally favourable economy in Canada. We have relatively low unemployment, and there appears to be high CEO and business confidence,” said Knight, partner at Filion Wakely Thorup Angeletti.
“So employees are going to continue pushing for higher-than-inflation wage increases.” The result may be some “potentially interesting battles ahead, at least in some sectors.”
The same goes for British Columbia, where an improving economy will likely release some pent-up demand for wage increases, said Robert Sider, partner at Vancouver-based employment law firm Lawson Lundell.
“There is a definite concern among employers that with increased competition from everywhere, they have to keep their wage increases in line. And yet there’s a belief among unions that they’ve been through many years of cost-containment. ‘You’ve been saying for years that you need to keep wages down. At some point, we need a break,’” said Sider.
How badly do they want this break? “In a collective agreement I negotiated last fall, we had 1.5 per cent on the table and the union wanted two per cent. We got right to the edge of a strike — over half a percentage point a year.”
In Alberta, the pace of growth means considerable pressure from unions for inflationary protection, said Michael Ford, employment lawyer at the Calgary office of Fraser Milner Casgrain. “When you’ve got a relatively robust economy, you want to protect yourself from increases due to inflation maybe over a three-year time frame. And you’re trying to project out into 2007 or 2008. So inflationary protection has been one of the bargaining issues, loudly and clearly.”
Many employers, pressured by a constrained labour supply, are putting signing bonuses into the collective agreement, added Ford. These signing bonuses, which tend to equal half a percentage point over the life of the collective agreement, are a way of getting around a pay raise.
“I think part of it is in a robust economy. You want to clinch the deal so you want some money on the table, but you don’t want to do it in such a way that sets a precedent for the next round of bargaining. Or you just don’t want to go over that magic three-per-cent-per-year increase. But you need the money to get the deal done,” said Ford.
Pension penchants
When it comes to pensions and benefits, Ford finds unions in Alberta taking a pragmatic view in terms of understanding the business problem and trying to work out a solution to the potential liabilities due to underfunded pension plans.
“Most employers in Alberta have been trying to get out of defined benefit plans. And typically what happens depends on the age of the workforce. If you’re 35 and you’re looking at a pension plan that kicks in during your late 50s, it’s so far away. So I have not seen it become a strike issue in and of itself.”
In Toronto, Jamie Knight sees the pension issue looming large on the horizon, especially as employers react to the Supreme Court of Canada’s Monsanto decision, which requires the distribution of a surplus at the time of a partial pension plan windup. Specifically, many employers are looking at ways to convert defined benefit plans into defined contribution plans. (For more on the Supreme Court ruling, search on keyword “Monsanto.”)
Knight said he has had some success containing the current plan, or what he calls “nibbling away at the edges.” But when it comes to DB-to-DC conversion, which is the ultimate goal of some employers, said Knight, “the only way you can achieve that is if you can convince the union that failing to make the transition is essentially going to kill the plant. And even then, I think you’re going to get a lot of unions that will say that’s the chance they’ll take.”
In Quebec, the debate over DB or DC is muted because many employers offer defined contribution plans, with investments managed by union-run retirement funds, said Claude Le Corré of Le Corré and Associates. The two largest union-run funds are the Fonds de Solidarité held by the Quebec Federation of Labour and the Fonds d’Action managed by the Confederation of National Trade Unions. As a result, pension issues at the negotiating table revolve more around increases in the employer’s contribution and less so around the big questions grappled elsewhere.
In Halifax, employment lawyer Don McDougall said the pension issue that he sees surfacing from the union side in negotiations around Nova Scotia have more to do with early retirement.
“In some cases, they’re looking for bridging, where people get a certain amount — if early retirement is too expensive — to carry them over from the time they leave to age 65 when they might retire,” said McDougall, partner at Stewart McKelvey Stirling Scales. “The problem with bridging is it doesn’t improve the pension benefit at all. It just gives an opportunity to retire earlier.” The employer clients that he works with tend to be more interested in improving pension benefits, such as upgrading career average earnings by using a more recent year — 2000 instead of 1999, for example — as a baseline.
“Now that’s a major improvement in the pension plan. It costs quite a bit of money to do, but it’s much more substantive than bridging benefit. And employers are trying to get those kinds of improvements because, particularly in areas like this, a lot of owners live in the community where their employees work and retire. They are especially sensitive that their employees not be underfunded in their pensions.”
Benefits bane
If there’s one common concern coast to coast, it would be over the issues around containing the costs of benefits. Employees are placing an increasing importance on benefits, both for them and for their family members, said McDougall. While unions are pushing for an expansion of existing plans, employers are more interested in containing the cost of approved medical services or the list of covered pharmaceuticals.
As Knight summed up, “for HR professionals, this means they’ve got to become experts on the full benefit plan, they’ve got to identify where the costs can be saved, and they’d have to try to develop the negotiating skill or fortitude to bring unions on side with the cost-containment strategies.”
Quality of life
One issue that keeps coming up at bargaining tables in some parts of the country is quality of life. Employers facing increased pressure to stay competitive are increasingly eyeing round-the-clock production processes as a way of boosting productivity.
“With the change in the dollar, a lot of our employers try to compete by producing on a seven-day basis rather than five,” said Le Corré, adding that they sometimes face resistance from unions on that question.
In Nova Scotia as well, employees aren’t at all keen on Sunday work, an attitude exemplified by last year’s vote to reject Sunday shopping, said McDougall. The issue can be important enough to bring people to the picket line, he added.
“I think the unions themselves are in a conundrum. There are unions across the country that have signed collective agreements based on 24/7. They come into this region and their members tell them, ‘We don’t care what you signed elsewhere,’” said McDougall.
“Not only do a number of unionized employees not want to work on Sunday, they don’t want to work on Saturday nights. Saturday nights are big in most of the communities here, in small-town Nova Scotia. We’ll hear more about this issue I think.”
Negotiated wage hikes
Wage increases for major settlements, 2000 - 2004 (percentage change in base rates)
Overall, the positive outlook for the Canadian economy this year means that employers have to work on managing workers’ expectations, said Toronto-based employment lawyer Jamie Knight.
“First of all, we all have to watch the Canadian dollar. It’s going to put a lot of pressure on companies trying to hold down rates on the one hand. On the other hand, employees see a generally favourable economy in Canada. We have relatively low unemployment, and there appears to be high CEO and business confidence,” said Knight, partner at Filion Wakely Thorup Angeletti.
“So employees are going to continue pushing for higher-than-inflation wage increases.” The result may be some “potentially interesting battles ahead, at least in some sectors.”
The same goes for British Columbia, where an improving economy will likely release some pent-up demand for wage increases, said Robert Sider, partner at Vancouver-based employment law firm Lawson Lundell.
“There is a definite concern among employers that with increased competition from everywhere, they have to keep their wage increases in line. And yet there’s a belief among unions that they’ve been through many years of cost-containment. ‘You’ve been saying for years that you need to keep wages down. At some point, we need a break,’” said Sider.
How badly do they want this break? “In a collective agreement I negotiated last fall, we had 1.5 per cent on the table and the union wanted two per cent. We got right to the edge of a strike — over half a percentage point a year.”
In Alberta, the pace of growth means considerable pressure from unions for inflationary protection, said Michael Ford, employment lawyer at the Calgary office of Fraser Milner Casgrain. “When you’ve got a relatively robust economy, you want to protect yourself from increases due to inflation maybe over a three-year time frame. And you’re trying to project out into 2007 or 2008. So inflationary protection has been one of the bargaining issues, loudly and clearly.”
Many employers, pressured by a constrained labour supply, are putting signing bonuses into the collective agreement, added Ford. These signing bonuses, which tend to equal half a percentage point over the life of the collective agreement, are a way of getting around a pay raise.
“I think part of it is in a robust economy. You want to clinch the deal so you want some money on the table, but you don’t want to do it in such a way that sets a precedent for the next round of bargaining. Or you just don’t want to go over that magic three-per-cent-per-year increase. But you need the money to get the deal done,” said Ford.
Pension penchants
When it comes to pensions and benefits, Ford finds unions in Alberta taking a pragmatic view in terms of understanding the business problem and trying to work out a solution to the potential liabilities due to underfunded pension plans.
“Most employers in Alberta have been trying to get out of defined benefit plans. And typically what happens depends on the age of the workforce. If you’re 35 and you’re looking at a pension plan that kicks in during your late 50s, it’s so far away. So I have not seen it become a strike issue in and of itself.”
In Toronto, Jamie Knight sees the pension issue looming large on the horizon, especially as employers react to the Supreme Court of Canada’s Monsanto decision, which requires the distribution of a surplus at the time of a partial pension plan windup. Specifically, many employers are looking at ways to convert defined benefit plans into defined contribution plans. (For more on the Supreme Court ruling, search on keyword “Monsanto.”)
Knight said he has had some success containing the current plan, or what he calls “nibbling away at the edges.” But when it comes to DB-to-DC conversion, which is the ultimate goal of some employers, said Knight, “the only way you can achieve that is if you can convince the union that failing to make the transition is essentially going to kill the plant. And even then, I think you’re going to get a lot of unions that will say that’s the chance they’ll take.”
In Quebec, the debate over DB or DC is muted because many employers offer defined contribution plans, with investments managed by union-run retirement funds, said Claude Le Corré of Le Corré and Associates. The two largest union-run funds are the Fonds de Solidarité held by the Quebec Federation of Labour and the Fonds d’Action managed by the Confederation of National Trade Unions. As a result, pension issues at the negotiating table revolve more around increases in the employer’s contribution and less so around the big questions grappled elsewhere.
In Halifax, employment lawyer Don McDougall said the pension issue that he sees surfacing from the union side in negotiations around Nova Scotia have more to do with early retirement.
“In some cases, they’re looking for bridging, where people get a certain amount — if early retirement is too expensive — to carry them over from the time they leave to age 65 when they might retire,” said McDougall, partner at Stewart McKelvey Stirling Scales. “The problem with bridging is it doesn’t improve the pension benefit at all. It just gives an opportunity to retire earlier.” The employer clients that he works with tend to be more interested in improving pension benefits, such as upgrading career average earnings by using a more recent year — 2000 instead of 1999, for example — as a baseline.
“Now that’s a major improvement in the pension plan. It costs quite a bit of money to do, but it’s much more substantive than bridging benefit. And employers are trying to get those kinds of improvements because, particularly in areas like this, a lot of owners live in the community where their employees work and retire. They are especially sensitive that their employees not be underfunded in their pensions.”
Benefits bane
If there’s one common concern coast to coast, it would be over the issues around containing the costs of benefits. Employees are placing an increasing importance on benefits, both for them and for their family members, said McDougall. While unions are pushing for an expansion of existing plans, employers are more interested in containing the cost of approved medical services or the list of covered pharmaceuticals.
As Knight summed up, “for HR professionals, this means they’ve got to become experts on the full benefit plan, they’ve got to identify where the costs can be saved, and they’d have to try to develop the negotiating skill or fortitude to bring unions on side with the cost-containment strategies.”
Quality of life
One issue that keeps coming up at bargaining tables in some parts of the country is quality of life. Employers facing increased pressure to stay competitive are increasingly eyeing round-the-clock production processes as a way of boosting productivity.
“With the change in the dollar, a lot of our employers try to compete by producing on a seven-day basis rather than five,” said Le Corré, adding that they sometimes face resistance from unions on that question.
In Nova Scotia as well, employees aren’t at all keen on Sunday work, an attitude exemplified by last year’s vote to reject Sunday shopping, said McDougall. The issue can be important enough to bring people to the picket line, he added.
“I think the unions themselves are in a conundrum. There are unions across the country that have signed collective agreements based on 24/7. They come into this region and their members tell them, ‘We don’t care what you signed elsewhere,’” said McDougall.
“Not only do a number of unionized employees not want to work on Sunday, they don’t want to work on Saturday nights. Saturday nights are big in most of the communities here, in small-town Nova Scotia. We’ll hear more about this issue I think.”
Negotiated wage hikes
Wage increases for major settlements, 2000 - 2004 (percentage change in base rates)
| Industry | 2000 | 2001 | 2002 | 2003 | 2004* |
| Primary industries | 1.8 | 2.6 | 1.7 | 2.7 | 3 |
| Manufacturing | 2.6 | 2.5 | 3.5 | 2.4 | 2.1 |
| Construction | 3.6 | 3.2 | 1.1 | 2.7 | 2.7 |
| Transportation | 2.4 | 2.8 | 2.7 | 1.6 | 0.2 |
| Wholesale and retail trade | 1.7 | 1.6 | 1.9 | 1.3 | 1.6 |
| Education, health and social services | 2.6 | 3.3 | 2.9 | 3.4 | 0.2 |
| Public administration | 2.3 | 3 | 2.6 | 2.3 | 2.8 |
| Sector | 2000 | 2001 | 2002 | 2003 | 2004* |
| Public sector | 2.5 | 3.2 | 2.8 | 2.9 | 0.9 |
| Private sector | 2.4 | 3 | 2.6 | 1.2 | 2.1 |
| Source: Workplace Information Directorate, Human Resources and Skills Development Canada | |||||
| * Partial data to July 2004 | |||||
