Proceedings of the Standing Senate Committee on
National Finance
Issue 11 - Evidence
Ottawa, Thursday, June 13, 1996
The Standing Senate Committee on National Finance, to which was referred Bill C-31, to implement certain provisions of the budget tabled in Parliament on March 6, 1996, met this day at 11:00 a.m. to give consideration to the bill.
Senator David Tkachuk (Chairman) in the Chair.
[English]
The Chairman: This is the third meeting of the committee to examine Bill C-31. We have representatives today from three public service unions: The Professional Institute of the Public Service; the Social Science Employees' Association; and the Public Service Alliance of Canada.
Our first witnesses are from the Professional Institute of the Public Service of Canada. Please proceed.
Mr. Steve Hindle, President, Professional Institute of the Public Service of Canada: On May 6, 1996, representatives of the professional institute appeared before the House of Commons Standing Committee on Finance on the subject matter of Bill C-31, the budget implementation legislation, which affects mainly the public service. We naively expected that at least some of the concerns brought forward by the public service unions and other interest groups would be reflected in the proposed amendments to this piece of legislation. However, the report to the House of Commons contained absolutely no amendments and no reference to the submissions. It recommended minor technical changes only.
We are concerned with the unwillingness of Parliament to address problems raised by the institute and other witnesses. Our submissions on this bill address human resource management issues of the public service that ultimately affect the delivery of service to Canadians. In the case of Bill C-31, it is difficult to fathom that none of the issues presented constituted a valid amendment. We are here today to reiterate our position vis-à-vis Bill C-31 in the hope that you will be a more responsive ear and restore our faith in this process.
Our brief centres on the need for the government to remove the suspension of binding arbitration from Bill C-31. The removal of this option under the Public Service Staff Relations Act will cause unnecessary confrontation and undermine balance and fairness in the collective bargaining system. Binding arbitration is a process by which an impasse at the bargaining table can be resolved. It involves allowing either party to submit a dispute on a restricted list of subject matter to a three-person arbitration board for a binding decision.
By denying the legal option to resolve a bargaining impasse before an impartial third party, the legislation forces management and employees into potential confrontation. In fact, the bill implies that a partnership cannot be trusted to work if both sides have equal rights before a third party. It insinuates, without proof, that collective bargaining under the existing Public Service Staff Relations Act and fiscal responsibility cannot co-exist. It says the government believes only in partnership and in collective bargaining where it can ensure that the rules of the game are stacked against the other side.
By suspending binding arbitration, all public service groups will be compelled to negotiate on the conciliation/strike route, including many groups that have never chosen this route in the past. Traditionally, many institute groups have chosen binding arbitration as the method of choice for resolving an impasse at the bargaining table. In other cases, the government has used the public safety and security designation process under the Public Service Staff Relations Act to prohibit all or most of the employees in a group from participating in a strike. In these cases, there is no ability to conduct a successful strike.
The institute strongly supports the right to strike as one of the available dispute resolution options, but this option is credible and effective only where there is a reasonable prospect of balance between the parties -- and risks for both. Balance and risk compel both sides to negotiate seriously in order to avoid a failure of negotiations and an undesired work stoppage. Because of the size and history of some groups, and because of the ability of the employer to negate the possibility of effective strike action through the safety and security designation process, there is no balance between the parties and no risk for the employer. The rules completely favour the government and open the door to abuse of the bargaining process, which could lead to an unfair outcome.
Binding arbitration is a necessary option to retain balance in the system and an equitable distribution of risk between the parties. For some groups, it is the only possible option for fairness in the bargaining process. This government wants to prevent employees from using binding arbitration because it wants to control the outcome and ensure strict adherence with its fiscal policies. It wants to be seen as supporting free collective gathering on the one hand, while enforcing its own interests on the other.
Underlying this approach is an unfounded fear that arbitrators will ignore fiscal considerations when they make decisions about appropriate wage increases for the public service. The record of public service arbitral awards provides no evidence that it is an undisciplined process which fails to take into account the fiscal conditions of the government. Indeed, data for the period immediately preceding the current round of wage control suggests, if anything, that wage increases were slightly lower for groups which have consistently chosen the arbitration process rather than conciliation/strike.
According to a recent academic analysis of settlement trends:
Bargaining units which selected the conciliation-strike route between 1985 and 1990 received annual wage increases of 3.88 per cent compared to annual increases of 3.84 per cent for groups selecting arbitration.
For most groups choosing arbitration, arbitral increases have consistently trailed inflation, settlement levels outside the public service, and increases in average weekly wages as measured by Statistics Canada. By law, arbitration boards must consider a range of factors in rendering their decisions and have never been hesitant to give government fiscal policy weight in their decisions. At a time when cooperation and partnership is essential, this proposal will not contribute to the restoration of fair and effective labour relations.
For many reasons, the institute contends that there is no good public policy purpose to be served by eliminating binding arbitration as an option in public service collective bargaining. It is an organization that continues to be available under other public sector labour statutes. For example, the Alberta Public Service Employee Relations Act, the Manitoba Civil Service Act, the Northwest Territories Act and the Nova Scotia Civil Service Collective Bargaining Act all permit one party to a dispute to refer an impasse to binding arbitration.
If the government insists on suspending the arbitration option, other alternatives short of elimination should be considered. These alternatives include inserting ability-to-pay criterion into the mandate of arbitration boards, or adopting final-offer selection process for arbitration. Both of these options are explained on pages 9 and 10 of our brief, so I will not go into detail here.
Another important factor to take into consideration is the fact that clause 19 may impose a potentially greater penalty on some bargaining units than others. Depending on the exit date from the wage controls program and on developments at bargaining table, this may mean for some groups one round of negotiations under the altered rules, and for others, two or more rounds of negotiations without access to arbitration.
For example, the institute's law group returns to bargaining on March 1, 1997 and might face at least two rounds of negotiations before the three-year suspension of arbitration ends. The patent group, on the other hand, will begin to negotiate in May of 1998 and would likely experience a single negotiation cycle without access to arbitration.
The government may have intended the three-year suspension of arbitration to have equal impact on all, but the reality is that employees will be differently treated. This will inevitably lead to unfair bargaining outcomes for some bargaining units.
A further note must be made concerning bargaining units covered by the Parliamentary Employment and Staff Relations Act, including two groups represented by the professional institute. Clause 11 of the bill retains arbitration as the only dispute resolution option for parliamentary employees but provides that an arbitral award for these employees must
...limit the aggregate amount of any increase in pay and other benefits...to that concluded through collective bargaining or otherwise by a comparable bargaining unit in the Public Service...
This provision is clearly impractical, if not unworkable. In the case of both parliamentary bargaining units represented by the institute, employees perform duties unique to the legislative environment. There are no comparable bargaining units in the public service.
The current arbitration option under the Parliamentary Employment and Staff Relations Act should remain untouched.
Should the government choose to proceed with the removal of binding arbitration, the remaining conciliation/strike route option should be made more equitable by revising the process for determining essential services and by expanding the scope of subjects which may be negotiated.
One of the most significant sources of imbalance in the conciliation/strike route is the operation of the safety and security designation process. Historically, the government has succeeded through the courts in greatly expanding the scope of the designation provision to prohibit ever larger numbers of employees from participating in lawful strike activity. As previously stated, for some bargaining units, most or all employees are designated as performing duties which in some part or other affect public safety. The net effect of the designation process has been to negate the conciliation/strike route as a real option. Without a fairer process for determining essential services, the government has every opportunity to make a mockery of collective bargaining on the conciliation/strike route.
The institute is committed to the concept of protecting truly essential services for the public. As occurs under the Canada Labour Code, the parties should freely negotiate an essential services agreements which defines the limited number of positions essential for public safety and security in an emergency situation.
Clause 3 of Bill C-31 proposes that the Financial Administration Act, otherwise known as the FAA, be amended to give Treasury Board the authority to enter into contracts to acquire various group insurance and benefit plans. The original explanation given by Treasury Board officials for this change suggested that it was required in order that the government be allowed to hold funds necessary for the management of an employee benefit plan in an account separate and distinct from the Consolidated Revenue Plan. Further review of the language proposed for the amendment, however, has raised a concern among employee representatives that the proposed section 7.1 of the FAA creates a more sweeping authority, permitting the employer to establish and implement benefit plans unilaterally without the involvement of bargaining agents. The Financial Administration Act should not be amended to give the employer sweeping authority to establish and implement benefit plans unilaterally without involving the bargaining agents.
Revitalizing labour relations in the public service extends far beyond the issues of restoring binding arbitration or changing the designation process. In fact, a total revamping of the Public Service Staff Relations Act, as described in our brief, is required. We ask that the government undertake this overhaul to achieve a modern and effective relationship in the public service.
Thank you for your time.
Senator Bolduc: I was involved a little in the past with matters of labours relations in the public service. Since the beginning of the 1960s, various governments and unions have tried to make a deal on the best system. In those days, at least in our province, unions asked for the right to strike, and they argued quite a bit about that. I remember Mr. Marchand, who was then the head of the CTCC, as we used to call it --
Senator De Bané: He promised no strikes if he got unions.
Senator Bolduc: He got it in 1964, and in 1965 we had a nurses' strike at Ste Justine's Hospital in Montreal. The next year, we had a general strike of the nurses throughout all of Montreal. I saw 8,000 of them in the park just in front of Notre-Dame Hospital.
You are now pleading for a binding arbitration system. That is what we offered at the time.
Mr. Hindle: We have a binding arbitration system.
Senator Bolduc: I do not understand the change of values in the last 30 years.
Mr. Hindle: With all due respect, senator, we are not asking to have one; we already have one. It has been in the Public Service Staff Relations Act since 1967.
Senator Bolduc: You lost the benefit of it by that legislation.
Mr. Hindle: If Bill C-31 passes in its current form, yes, we will lose it for three years. It has provided, over the years, an alternative to conciliation with the right to strike. There are a number of public service employees who are important for safety and security reasons, and they should continue to be working. When a significant portion of the bargaining unit to which they belong is designated, they cannot conduct strike activity with any hope of having an effective impact on what is going on with negotiations. The normal economic lever that a bargaining unit has, which is withdrawal of service, is not available to those people.
What we are looking for, and what arbitration already provides, is non-confrontational access to a third party that will resolve the dispute that arises at the table. That dispute will go before a third party who will weigh and consider both sides and will actually be responsible for trying to bring the parties to a collective agreement, one that is entered into voluntarily from both sides.
Senator Bolduc: The other argument we used when we offered the arbitration at the time was that there must be some criteria to stay within the budgetary limits of the Minister of Finance. Otherwise, it could jump all over the place and no one could build a budget -- not only the government, but also the hospitals, the schools and the whole public sector.
Do you have any criteria in the legislation about various matters -- for example, that the wage settlement cannot be outside of certain parameters?
Mr. Hindle: It is contained in section 67 of the Public Service Staff Relations Act. The factors to be considered by an arbitration board or arbitral award include the needs of the public service for qualified employees; the conditions of employment in similar occupations outside the public service, including geographic, industrial, or other variations as the board may consider relevant; the need to maintain appropriate relationships in the conditions of employment as between different grade levels within an occupation and as between occupations in the public service; the need to establish terms and conditions of employment that are fair and reasonable in relation to the qualifications required; the work performed; the responsibilities assumed; the nature of the services rendered; and any other factor that appears to be relevant to the matter in dispute.
History has shown that they do consider the government's fiscal policy, if not strictly ability to pay.
Senator Bolduc: I noticed in your argument a recent academic analysis of settlement trends. We do not have the date and span of the settlements, but it indicates:
Bargaining units which selected the conciliation-strike route between 1985 and 1990 received annual wage increases of 3.88 per cent compared to annual increases of 3.84 per cent for groups selecting arbitration.
Is this a settlement trend that has covered the last 25 years or 20 years or 10 years?
Mr. Hindle: It is a snapshot of that particular five-year period. There was not much point in going to 1991, when collective bargaining itself was suspended by the Conservatives and since extended by the Liberal government. In our brief, there is a reference on page 8 to that study. It was called Dispute Resolution and Self-Selection: An Empirical Examination of the Federal Public Sector, 1971-1982, and it was written by Gene Swimmer and Stanley L. Winer. I believe they are both at Carleton University. It came through the Queen's University Industrial Relations Centre in 1995.
Senator Bolduc: Are the air traffic controllers in your group?
Mr. Hindle: No. They are a separate bargaining agent represented by the Canadian Association of Air Traffic Controllers.
Senator Bolduc: You are representing what we used to call the professionals?
Mr. Hindle: We represent approximately 30,000 employees in the federal public service: Engineers, lawyers, scientists, computer specialists, auditors, commerce officers.
Senator Bolduc: The bargaining process is not with the institute as such but with the lawyers and the engineers?
Mr. Hindle: The institute acts on behalf of those bargaining units. There are 29 of them. It is between the institute and the employer as represented by the Treasury Board.
Senator Bolduc: The main argument of the government to dispose of the arbitration process, was that a budget consideration?
Mr. Hindle: To paraphrase several sources within Treasury Board regarding budget concerns, they do not want an award that they cannot pay. They do not want an arbitrator granting a catch-up award, given the last six years of controls imposed by legislation. They admit that what they have done for the last six years has put people in the public service behind where they should be. They want to avoid an arbitrator enabling them to catch up to where they should be.
Senator Bolduc: With respect to proposed section 7.1 of the Financial Administration Act, you seem to think that they are giving a more sweeping authority and permitting the employer to establish something, but perhaps they do that for non-unionized personnel. Is that possible?
Mr. Hindle: It is for the whole of the public service.
Senator Bolduc: They do not distinguish between non- unionized and the others.
Mr. Hindle: No, there is no distinction. The unions were in support of providing the employer with the authority to hold money outside the Consolidated Revenue Fund so they could administer the plans. We did not expect to see legislation that gave them such sweeping and broad authority. They can now change plans that are discussed and agreed to through the national joint council. If this bill passes, they would be able to change it through Treasury Board without any consultation or negotiation with the unions and the bargaining agents involved. That is our concern.
Senator Bolduc: Actually, the only route you have is to strike.
Mr. Hindle: We cannot strike on a national joint council item. On page 20 of our brief, we have suggested wording along the lines of:
Nothing in subsection (1) or (2) permits the Treasury Board to implement a group insurance or benefit program in respect of employees represented by a certified bargaining agent under the Public Service Staff Relations Act without the written agreement of the bargaining agent.
That is just another level of control that they have to negotiate or receive the consent of the people who represent the employees covered by the plan.
Senator Stratton: Why are they doing this?
Mr. Hindle: There was some question as to whether the funds in the plan could be used for the administration of the plan, such as setting up the processing centre for claims and payment, the costs associated with the plan, and ensuring that the funds were properly controlled. There was a question as to the legality of doing that without the legal authority to hold the money separate from the rest of the government's money. That is the main reason it was there.
Senator Stanbury: You commented on the reason for the disappearance of binding arbitration and said that an arbitrator would not bring everyone up to where they should be after the freeze. That makes me wonder where everyone should be these days. Senators have not had a pay raise for about eight years. Most of the people in the private sector are not doing nearly as well as they used to do. I do not know how anyone could figure out where we should be. That is my only comment. Do you have any criteria whereby you could determine where you should be?
Mr. Hindle: That would be a determination for the arbitration board itself, and I am sure it would be different depending on which bargaining unit was actually before the arbitration board. We represent the law group. A comparable group of people outside the public service practises law in this country. We would be able to make comparisons as to the range of their salaries and its movement over time.
In other areas, it would be somewhat more difficult, particularly comparing, for example, research scientists. They are unionized in the public service but not unionized outside. There may be some difficulty there, but that would be a matter of argument and speculation for the arbitration board. Undoubtedly, Treasury Board would bring one set of figures and we would bring another set of figures. We would end up somewhere in between.
To get back to the earlier comment, if the honourable senator is looking for representation --
Senator Stanbury: There is a difference. If you went on strike, someone would probably notice.
Senator Kelly: I am somewhat puzzled. You have agreed that an arbitrator would be obligated to take the fiscal plan of the government into account in any judgment. In the same breath, just a moment ago, you said that you would, quite logically, seek comparisons with other enterprises and places where professionals work. That seems to go a bit beyond the very logical position of the government -- it must run its business and deal with its problems. We are seeing all across the private sector these days that successful companies are able to do certain things with their professionals. Less successful companies or companies with greater problems cannot do quite the same.
I am trying to think through how your system would work in fairness to the problems the government has of getting things into better financial shape. I do not know how that would work.
You must admit that the government's position, from its standpoint, in trying to keep some kind of control within the confines of the business it must run is quite logical.
Mr. Hindle: Certainly. An arbitration board would have to take that into consideration.
Senator Kelly: But would they necessarily do so?
Mr. Hindle: They seem to have done so in the past. There is no empirical evidence that arbitration boards ignore the government's ability to pay or their fiscal policies. They come in line very closely with what the Minister of Finance has stated in terms of the government's fiscal policy and thereby its ability to pay.
We are suggesting that this is just one more factor to be weighed in the decision of an arbitration board, the same as they must consider the outside market for people with certain skills. They must consider the government's ability to retain or recruit people with the skill they need to provide the service the government provides.
Senator Kelly: If the arbitrator makes a mistake, what does that mean? I know what you mean and I sympathize with your viewpoint, but I am trying to look at it from the standpoint of this particular business.
First, the government is not in the process of looking for a whole bunch of people these days.
Mr. Hindle: In some areas, the government is looking for specialized skills, senator.
Senator Kelly: Is the freeze and the environment into which people would enter such that people are discouraged and are just not making themselves available? Are there no applicants?
Mr. Hindle: They are having some difficulty with specific professions and some highly specialized skills. The general mood now is that the public service is not necessarily a good place to work. I read in a newspaper recently the results of a poll which indicated that the majority of public service employees, if they were making their decision now, would not work in the public service.
Senator Kelly: The reality is that they do not have much option. There is not a huge number of jobs for them anywhere.
Mr. Hindle: These are difficult times, yes. Undoubtedly, an arbitrator or arbitration board would take that into consideration. The employer is also approaching this as if the arbitral award was such that they have no recourse. We have seen arbitral awards rolled back or suspended or changed by Parliament. That is the ultimate recourse for this employer if the decision of an arbitration board is totally out of whack with reality or such that the government thinks it is totally out of whack; they can take it to Parliament.
Parliament has done so in the past, most recently in 1991 with one of the very small bargaining units on the west coast, the dockyard charge hands. Our own law group was there when the arbitral award was rendered and then rolled back by the 1991 legislation. Parliament ultimately has the final word.
Senator Forest: In your discussions with the government on the three-year suspension in arbitration, what were you given to understand was the government's rationale in this instance?
Mr. Hindle: They were afraid of a catch-up award from an arbitration board; essentially, it came down to that.
The Chairman: Will it get worse three years from now?
Mr. Hindle: Depending on how the collective bargaining process works when we get back into it, it may be worse. We may be able to make some progress toward where we think we should be. That remains to be seen.
Senator Stratton: I will give you a bit of hearsay evidence, if I may. The National Disease Control Centre is being located in Winnipeg. There are pharmaceutical firms and other research institutions located in Winnipeg who employ the same types of scientists as does the disease control centre, but in the private sector.
The real concern for the Winnipeg research companies is that salaries may escalate dramatically in the private sector because of the salary levels in the public sector, being those of the researchers employed by the disease control centre. It is still wonderful to have it; do not get me wrong. However, that is a real concern.
We hear about this fear of losing the arbitration capability. I have the sense, provable or not, from the private sector that arbitration actually gives more on the employee side than it does on the employer side. That may be just a perception; but often, perception is based in reality.
Do you care to comment on that?
Mr. Hindle: I would reinforce, senator, the existence of that perception. I would also put it to you that the pharmaceutical companies in Winnipeg who are concerned have a non-unionized workforce. That, too, is a reality. They want the government to help them keep their wage costs down.
Senator Stratton: That is how they remain competitive; it is especially necessary when competing against countries like China. They are trying build an expertise in Canada in that area while competing with the bottom-dollar wages of employees in China. Never mind union and non-union; my concern is survival in a field where the competition comes from such countries as China.
Mr. Hindle: It is quite possible for this country to remain competitive by becoming a Third World country itself. If that is the direction the government chooses for the country, then that is where we will end up going.
Senator Stratton: I do not believe that for a minute. It seems to me that we stay ahead in this country by developing new technology in the research area. Other countries are catching up on that side. Nevertheless, when it comes to the sale and the straight manufacture of a product, there must be profit to the research and development sector. Companies want to do that within Canada; that is where they get their profit dollars to support R and D in order to keep ahead on the technological level.
Those companies are concerned with holding that together in an effort to stay ahead of the Third World countries who are quickly catching up in leading-edge technologies. They are not as far behind as we would like to think and that is a real concern for companies here.
Mr. Hindle: It seems to me unusual that companies who say they are being driven by the market -- you are talking about the market in China and what is possible there -- do not view the federal government as part of the market as well.
We have seen over time that employers want it both ways. They will say that conciliation with the right to strike is the normal option for people outside the government in resolving disputes; that is the way employees should be and unions always want the right to strike. Then, since employees have the right to strike, they feel they can remove arbitration.
However, employers fail to consider the next step. In the market outside of the public service, the scope of bargaining is far different. The whole shooting match is on the table when you sit down to bargain a contract. Outside of the federal government, staffing procedures can be bargained; classification of positions can be bargained. You are not constrained by legislation such as the Public Service Staff Relations Act, which is a very restrictive and very proscriptive piece of legislation. It does not provide a framework for going about business. It provides answers for problems. It provides very strict rules as to what you can and cannot do.
It is the same with the Financial Administration Act. This employer does not want to take the logical step of becoming a real employer and facing all the issues that an employer faces at the table. In 1967, it introduced the legislation which gives it the straitjacket in which it now finds itself. It introduced legislation with arbitration as a means of dispute resolution. Now, 30 years later, it is trying to take it away.
Senator De Bané: There is no doubt that, in absolute terms, your salaries were frozen, as were those of members of Parliament, for the last five or six years. That is a worsening of the situation compared to the preceding period of five or six years.
That being said, it still remains today that in every town and city of this country, it is an immense privilege to work for the federal government. Today, as you know, contrary to the period when I graduated from university, most of the jobs are temporary. There is more and more talk about a contingent workforce. I know of lawyers applying to the Senate to become constables because they cannot find jobs. This is the reality.
Second, as you know, for the last 10 years, the tax burden on each taxpayer of this country has increased substantially.
Third, government services, pensions, payments to people, are going down.
In view of these very serious difficult circumstances, do you not think that there is some merit in saying that binding arbitration cannot apply in this period because of the major flaw that monetary financial considerations will be decided by people who are not responsible before the taxpayers of this country? This is the major flaw of binding arbitration.
I understand everything you have said, but I submit respectfully to you that to work for the federal government today is an immense privilege. We all know that because of government downsizing, the chances of getting a job in the government is nil. People are being laid off; the government is not hiring. This is a tragedy. What will happen to all our young university graduates?
I wanted to give you the other side. I understand that your salaries have been frozen for a number of years. I understand all that, but many people's entitlements are being reviewed.
Mr. Hindle: As you said, senator, fewer and fewer people are enjoying the privilege because of the government's downsizing. More and more of them are facing a very anxious period while this goes on. There is an awful lot of uncertainty associated with being a public service employee.
You talked about the increasing tax burden on the average Canadian. Public service wages are not part of that problem; government programs is where the real spending is taking place. I think you will find that public service employee wages represent a significantly smaller portion of the budget. It probably amounts to 10 per cent or 12 per cent of the federal budget, when you consider the Armed Forces and the RCMP.
Yes, services to Canadian are going down. One of the reasons for that is a demoralized public service. Any time you impose wage controls on people, such as zero for five of the last six years, that will happen.
I should like to point out that the rationale behind implementing the six-and-five program in the mid-1980s was that inflation was out of control, wage settlements were too high, the market was overheating and they had to do something to dampen the market. Which argument is it that will take precedence? Will you impose your will on the market when it is overheated or when it is down at the bottom? Why are you getting into that in the first place? Why are you trying to fiddle with what should be a free and open process of collective bargaining between an employer and its employees? Why is there a need to impose anything on the parties? Surely, the parties can come to the table, recognize the problems associated with running the organization, be they political, administrative or financial, and come to an agreement that is good for both parties and one with which both parties can live.
We are of the opinion that negotiations have a goal. That goal is to come to an agreement on a contract, a collective agreement that is negotiated between the parties. We do not want to have access to a third party. We do not want to use a third party unless it is necessary. It is the same for people on conciliation with the right to strike who do not take that route because they want to go on strike.
Senator Lavoie-Roux: On page 6 of your brief, you express concern about the possibility of the government expanding the notion of essential services. Could you tell me how the term "essential services" is being defined today?
Mr. Hindle: The process requires the employer to identify those positions which it considers to be essential to the safety and security of the Canadian public. It sits down with the bargaining agent representative of those employees to have a discussion about the positions. More often than not, there is some agreement as to what is an essential position and what is not.
For example, in 1990, the Computer Systems Administration Group was on conciliation with the right to strike. We had discussions with the employer about which positions in the public service required someone there in the event of a work stoppage. Ultimately, we came to an agreement in which approximately 10 per cent of those positions were designated. From the time we first commenced strike action on February 26, 1991 to the point of the full-blown strike in September, those people had to work even if their colleagues in the building or in that service were out on strike. They still had to report for work.
Senator Lavoie-Roux: Why do you fear it will be expanded if binding arbitration is abandoned?
Mr. Hindle: I will give you an example which involves our nursing group. The last time the nursing group went on conciliation with the right to strike, 112 per cent of the nursing group population was designated essential. The reason you can designate more than 100 per cent of a group is that they designated every single nursing position in the federal government as essential. Included in this group were positions that had not been staffed, positions which were vacant or positions in which the person was not working because they were on long term disability. They said that positions which were not staffed and with respect to which no one was doing the work were still essential. If it was so essential, why was it vacant? A number of them were not short-term vacancies; a number had been vacant for a long period of time and had not been staffed.
If you have a group that is 112 per cent designated, the people in that group cannot conduct effective strike action. They cannot withdraw their services; they have to go to work. How do you resolve a dispute if you are on conciliation with the right to strike if that is your only option and you do not have the legal right to withdraw your service? That is what we are looking at.
Our meteorology group is heavily designated; probably upward of 80 per cent of that group would be designated as essential. The weather in this country is very important. It is important to farmers, fishermen or anyone out on the Great Lakes.
The drawback with designations is that there is no effective mechanism. The normal economic clout at the bargaining table on the side of the employees is withdrawal of services. This gives the government the opportunity to say "no". It is that way because of a decision taken in the early 1980s concerning the Canadian Air Traffic Control Association, or CATCA. At that time, CATCA went before the courts to argue about designations. Essentially, the courts said that the employer -- the government -- gets to decide what is essential to the safety and security of the public.
Senator Lavoie-Roux: That is something which you fear; it is not something that will happen. Every provincial government has essential services.
I think that every nurse, other than those who are in administrative jobs answering the phones, provides an essential service.
Mr. Hindle: The essential services agreement with the province was negotiated between the provincial employer and the union. They sat down and together determined which positions were essential. That is what we are looking for.
Senator Bolduc: I am still puzzled by the same question we had 30 years ago. Perhaps I am getting too old. Your basic argument is that both parties in that bargaining process are on an equal footing. We know it is not true. The government cannot be on the same footing as anyone else. Ultimately, someone must govern the country. That is why I have always been for arbitration. I have always thought that in the public service, which is a special service, there should be arbitration, with some guidelines and parameters provided by legislation.
One of the difficulties with those parameters was how to evaluate security of employment in the public service by comparison to the law of the market, which is pretty tough sometimes in private business. We all know that. Sometimes people in the public service lose their jobs.
I have worked in both, and there is no comparison. That must be taken into account. How do you evaluate security of employment? Is it worth 10 per cent, or 12 per cent or 15 per cent? Is it worth more when the rate of unemployment in the country is at 10 per cent? Is it a little less when it is 5 per cent?
Senator De Bané: It is priceless.
Senator Bolduc: It is very tough for arbitrators.
The Government of Quebec gave the right to strike to members of the public service in the province of Quebec. That was done because an arbitrator, in 1964, decided to give employees in one hospital more than they asked for. That was the end of it; and then we gave them the right to strike. In my opinion, it was a bad decision because we had so many strikes. In the period 1964 to 1972 or 1973, we had a large number of strikes. It was an uncivilized way of working, particularly in the hospitals.
Senator Lavoie-Roux: They can no longer strike.
Senator Bolduc: I still believe that arbitration is the best way to handle these situations.
Mr. Hindle: What Senator Bolduc has said reinforces my own thoughts. I would have expected the government to take away the right to strike from public service employees instead of access to binding arbitration.
The Chairman: Thank you very much Mr. Hindle, Mr. McIntosh and Ms Lecours.
Our next witnesses are Mr. Bill Krause and Marvin Gandall. Please proceed.
Mr. Bill Krause, President, Social Science Employees' Association: On behalf of the membership of the Social Science Employees' Association, I wish to thank you for affording us this opportunity to appear before you today.
We hope that the committee will take a long, hard look at Bill C-31, particularly those areas where the government, as employer, is attempting to take authority from Parliament while seeking to restructure the collective bargaining environment to be needlessly confrontational at the expense of government employees and service to the public.
This bill is plainly a paradigm by a government and its senior bureaucrats intent upon rolling back public service benefits and wages. These ends will be accomplished through the use of Governor in Council authority and by the abolition of third-party arbitration.
Naturally, we have no illusions about the government's intentions. However, in the past, the government was forced to be specific with Parliament when it sought to roll back our benefits and freeze our wages. We always had an opportunity to be equally specific before this committee to explain our concerns. This bill, however, establishes new precedents, effectively removing Parliament from its role of overseeing the government as the employer. It would give the government the effective power to dictate wage settlements and employment conditions to its employees by suspending arbitration as a recourse mechanism. This alone would put management and labour on a needlessly confrontational footing, where service to the public can only deteriorate regardless of the outcome of negotiations.
I should like to refer now to specific provisions of this bill which support this view.
First, this bill amends section 11 of the Financial Administration Act so that the Treasury Board, through an Order in Council, may amend the workforce adjustment directive in relation to alternative service delivery. The intent of this clause is to roll back the workforce adjustment benefits for those unions who will not voluntarily surrender these rights. Subclauses 6 and 7 have been designed so that the employer may extort concessions from bargaining agents. Our members have been threatened by Treasury Board officials and by the President of the Treasury Board for not surrendering our rights in this matter. This conduct is a violation of the Public Service Staff Relations Act. Worse, Parliament is being used as an instrument of punishment for those employees who will not voluntarily surrender their rights and is being implemented through a Governor in Council authority so as to remove any future parliamentary overview on the specific details of alternative service delivery.
We recommend that both subclauses be stricken and the section be redrafted. If the employer wishes to change the workforce adjustment directive, then it should honour the process it agreed to as part of the constitution of the National Joint Council.
Second, we are concerned over the proposed change to the Canada Labour Code, specifically article 47.2. This is a new article giving the employer, through the Governor in Council, an authority to prevent successor rights where it is the employer's view that it is not in the public interest. Once again, we believe that parliamentary overview in this matter is highly desirable. Furthermore, even if Parliament wished to delegate its authority to government officials, there are no criteria or objective tests, nor is there any recourse mechanism, for an individual to challenge the employer's determination.
We recommend this proposed new section of the Canada Labour Code be deleted so that the government must deal with Parliament when it wishes to remove successor rights. Alternatively, if Parliament wishes to give this authority to senior government officials, then there should be explicit criteria or guidelines and a redress process.
Third, our most important concern is Bill C-31's suspension of arbitration as a recourse mechanism. This is the most surprising and disturbing element in this budget. By suspending arbitration, the government is in an unnecessary confrontation with labour which may lead to work stoppages or a massive strike similar to that which occurred in 1991.
The government's suggestion that it cannot run the risk of allowing independent arbitrators to award compensation increases that the fiscal framework could not accommodate is wholly misleading. For almost two decades, federal government wage increases, on average, have lagged behind their private-sector counterparts and the cost of living. Arbitration awards have always been modest and lagged behind the rate of inflation. With inflation running at a bit over 1 per cent, it is clear that increases in government employee compensation are no threat to the government's fiscal framework.
Clearly, there is a value to arbitration for both management and labour. Labour is genuinely afraid that an arbitrator will remove some benefit, while management is afraid that an arbitrator will aware a benefit with which they are not prepared to live. This joint fear keeps the bargaining process restrained, reasonable, without confrontation, and generally results in more timely agreements being reached rather than imposed. All this is accomplished without any disruption to public services.
Why, then, is the employer seeking to suspend arbitration for the next three years? The employer knows full well that arbitrators, while conservative in their awards, are generally willing to strip longstanding clauses from contracts. This government's tardy return to collective bargaining with removal of arbitration is really a confrontational attempt at contract stripping. This can only result in employee unrest, declines in productivity, and could promote another service-wide strike.
Consequently, we recommend that proposed section 62 of the Public Service Staff Relations Act be stricken from this bill. However, if limits in arbitration are needed, then certainly guidelines relative to private-sector compensation or the cost of living could easily be used.
Fourth, proposed section 7.1 of the Financial Administration Act would give the employer the unfettered right to set the terms and conditions relative to any benefit program, including benefits, premiums, contribution and management. Currently, our benefit programs remain intact when the employer and the bargaining agents are at an impasse on an issue at the National Joint Council. This amendment will allow the employer to take unilateral action to roll back any and all insurance or benefit programs. It is a parallel measure to the contract stripping and will render the National Joint Council useless.
We have recently been informed by Treasury Board officials that it was not their intent to strip benefits and undermine the National Joint Council. This amendment, they said, was needed so that administrative and management expenditures could be made directly from the various benefit plans without coming back to Parliament. If this is so, then we recommend that the proposed section 7.1(1) be amended so that the authority of the Treasury Board to act must follow a recommendation from the National Joint Council. This will maintain a joint labour/management approach on all benefit plans while providing the Treasury Board its administrative flexibility.
Finally, Bill C-31 does not suspend the arbitration process for parliamentary employees. However, the government is proposing that section 53 of the Parliamentary Employee Staff Relations Act also be amended so that arbitral awards must be comparable to pay and benefits for comparable units in the public service. This way, the contract stripping process can be extended even where there is arbitration. Consequently, we recommend that amendments proposed to section 53 of the Parliamentary Employee Staff Relations Act also be delated.
There are some areas where we have little disagreement with the way the government has proceeded in this legislation. Modifications in the area of pensions, for example, are a welcome improvement. These include increased portability, changes to the vesting period, the new transfer value benefit, flexibility for the extension of coverage, and a provision for the fund rate of interest on return of contributions. These are all welcome.
To conclude, however, despite a few areas of agreement, we have serious concerns on the most pivotal and essential elements of this legislative package. The power of government as employer should be subject to fuller parliamentary review on specific details of alternative service delivery. The use of Governor in Council authority in these matters sets a bad precedent, transferring power from Parliament and allowing the employer to coerce contract concessions to the threats of an Order in Council.
Parliament must ensure that government employees are treated fairly, reasonably and with respect, and that quality service to the public is provided without disruption. This means avoiding unnecessary confrontations and work stoppages through the possible use of binding arbitration.
Senator Stratton: When you referred to private-sector counterparts, who are those folks in the private sector?
Mr. Krause: First, I was speaking with respect to the people that we represent, namely, federal government economists, sociologists, statisticians, researchers at the Library of Parliament and the social science support group. Our experience in dealing with these people is that when we have looked at wages in the private sector, we have found that -- that is, when we have gone through the arbitration process and have prepared our briefs -- the rates of pay were higher in the private sector for the selected groups that we represent.
We have also looked at inflation. To give you an example, over the past 15 years, our members, on average, have lost 35 per cent of their purchasing power to inflation. That is how far their wages have lagged behind the rate of inflation.
Senator Stratton: Does that mean that your wages are now 35 per cent below the private sector?
Mr. Krause: They are 35 per cent less than they were 15 years ago in real terms.
Senator Stratton: I understand that. I think everyone has taken that hit. You are not unique in that instance.
Are your counterparts in the private sector all assumed to be unionized?
Mr. Krause: Not necessarily. These would be economists working in various financial institutions, senior economists working at major brokerage firms, economists working in major corporations. These would generally be salaried employees.
Senator Stratton: I agree with those, because there tends to be a shortage of highly capable people in those areas in the private sector as well.
Why was the 7.1 amendment that you have recommended we put through not adopted in the other place? Were there any reasons given for that?
Mr. Krause: We have received no reasons. We had a meeting last week with Treasury Board officials at which I raised the issue. In our original briefings on the bill, it was never highlighted to us. Frankly, our noses were out of joint on that fact alone. However, they explained to us there was nothing secretive about it and that their intent was only to pay the administrative and managements costs associated with the different programs. We asked them why, if they wanted to do that, it went so far. They said that they did not know and would have to ask their lawyers.
However, the way it is written, it gives extremely broad authority to the employer and renders useless the process of the National Joint Council. Therefore, we have suggested that the authority of the Treasury Board to act in this regard be subject to a recommendation from the National Joint Council where management and labour get together to develop solutions on the way these programs are to be run.
Senator Stratton: It reminds me of Bill C-7. The government is essentially saying, "Trust us. We do not intend to use this, but you will have to trust us on that."
Mr. Krause: The authorities are there. It is quite easy to read and interpret that.
Senator Lavoie-Roux: In the last 15 years, how many times did the government have to call upon binding arbitration to solve negotiations?
Mr. Krause: I will speak for our group. My memory does not go back a full 15 years, but I can recall two arbitral awards in the past 10 years. Since those were rendered, we somehow managed to find a solution at the table each and every time. We went through about three straight processes where we reached an agreement. We were on the arbitration route, but both management and labour avoided that and came up with solutions to our problems.
The existence of arbitration is a concern to both. We are always afraid that the arbitrator could take away some benefit we enjoy, the same way management is afraid that an arbitrator will give us something they do not want us to have. The reality is that we generally come to agreement much sooner than other groups would, and we are prepared to live with what we get. It has been a reasonable process. We have had no stoppages from our group; we have had the arbitration route for 20 years.
Mr. Marvin Gandall, Executive Director, Social Science Employees' Association: That is generally accurate. The last time we were in arbitration was 1984.
Senator Lavoie-Roux: I have been here five or six years, so I do not have the whole history. When these binding arbitrations occurred, do you recall the government suddenly saying, "It is going so much over what our fiscal plans were?"
Mr. Krause: We have never received any indication from the government that the awards we were getting in arbitration were exceeding their fiscal framework. I think their consciousness of the fiscal framework is a recent phenomenon.
Senator Lavoie-Roux: If I understood correctly, the group which preceded you said that the motivation of the government was to abolish the binding arbitration.
Mr. Krause: Contract stripping.
Senator Lavoie-Roux: They were concerned that the first binding arbitration case would make up for the loss or the backlog. How would it compare with the private sector?
Mr. Krause: If they had a genuine concern about a catch-up award being given, they could handle that and make the award subject to whatever fiscal or economic reality they wished. If they said, for example, that no arbitral award given in any year shall exceed the rate of inflation, we would know right now that we could not get an award greater than 1.4 per cent. That ends the issue. You can still have arbitration, and it can still be limited by some measure.
I think you have to ask yourself the question, "If they could limit it and do so reasonably without alarming anyone, why are they taking this route?" The answer is that arbitrators do not take away longstanding provisions that are in contracts. Let us say you had an employer who, down the road, wished to restructure the public service in such a way that they did not have to have indeterminate positions. Contracts generally give our members a right to receive an accurate and complete job description. I am very sure that the next time I go in for discussions under the collective bargaining situation under the current terms, I will see on the table some modification of that clause or something stripping it out entirely. I will lose that right.
There are other rights my members have where the employer will say, "Wait a minute, the provisions to provide a workplace free of harassment puts an onus on me. I want to water down that clause too so I can again pay less."
I also have some concerns over article 7 on benefit programs. I think they generally wish to pay less and will strip away benefits in the area of dental insurance, drug insurance, and medical.
I think they wish to get rid of arbitration for the sole purpose of attacking other areas of the collective agreement which are significant and important to them. If, in some way, they can take away a member's recourse to grievances and appeals, they can also lessen their costs and make their actions more binding. I would tend to believe that they will be looking at that too. The only reason you want to get rid of an arbitrator is so you can impose those conditions at the table.
Senator Lavoie-Roux: The official reason is only a partial truth.
Mr. Krause: You can handle the economic issues in an arbitration context. They are getting rid of arbitration for another purpose.
Senator Stanbury: Mr. Chairman, I am always a little suspicious of devil theories, so I am not sure I accept what our witness is saying.
I have always had a very high respect for our public service. I think we are extremely fortunate. I was delighted when they received the collective bargaining rights they did, and, in general, I think that they have been most responsible over the years in dealing with those rights. I am generally sympathetic and would like to be helpful.
I think you put your finger on the spot when you said that it is the recent recognition of the fiscal framework; but that goes much further than what you have been talking about. A simple limitation of awards up to inflation does not take into account all of the people who have had to give up major benefits over the last few years.
It is a matter of simple reality, the matter that Senator De Bané mentioned before, which is the security of public service employment. Circumstances now, it seems to me, are very different from what they were five or ten years ago, certainly before we started the freezes and so on, that the government must take what you feel are extreme measures to try to keep the lid on the costs of running government.
Mr. Krause: Let us take the employment costs. If my memory serves me correctly, even in downsizing, our wage bill, including benefits, will be in the area of $10 billion.
If we are faced with a massive 1 per cent increase in salaries, that would be $100 million. Government cost is approximately $160 billion dollars per year. We save multiples of those savings every time we can keep interest rates 1 per cent lower; that is about $2 billion in savings for each percentage point, considering our national debt.
We have always heard this argument, and there is only one answer. Government wages and salaries are not a significant component of government expenditures. It is approximately $10 billion out of $160 billion.
Senator Stanbury: But it sets broad patterns for the country, aside from the public service.
Mr. Krause: There is an overriding economic issue. If you want to say that the thrust of the government's duty is to slash wages and benefits and to lower the cost of labour which should be emulated by the private sector, I would see two logical outcomes: increased profits for shareholders and a recession leading probably to a major depression.
There is an extreme lack of consumer confidence in this country, confidence strained by the fact that the salaries and benefits of the middle-class person in this economy are not that hot, frankly.
Every time we take more money away from people who would otherwise spend it, we hurt job creation and employment chances. It depends how far you wish to push this ever-winding downward spiral. At some point, people will begin to wake up. The Governor of the Bank of Canada sounded the first warning less than one month ago when he said that we are in danger of spiralling into a depression if we act in this regard of a tight policy. He was also concerned to some extent about the lack of consumer confidence which is needed to build a healthy economy and create jobs.
Taking money away from people who are working hard is not the way to build consumer confidence and create an atmosphere where consumers feel good about spending money.
Senator Stanbury: This provision is not necessarily taking money away from people who are working hard. It is dealing with the process by which their pay and benefits are determined. In the circumstances, it is highly justifiable to take a pretty tight hold on those things.
Mr. Krause: I contend that the circumstances by their very nature create the tight hold. Inflation is running very low; restraint has taken hold. Look at labour settlements in those negotiations which are ongoing; annual increases are set at less than 1 per cent both in the government and in the private sector.
There is no great worry about where the process would go even with arbitration. Government has a good hold on the fiscal realities. My view is that they are taking away arbitration because they would like to reshape the public service down the road; the road blocks to doing it are the various clauses in collective agreements. Their vision is of a different public service.
I have spent some time with the president of the Public Service Commission. Her vision of the public service is one of job competency with few indeterminate positions and people coming in and out on contracts with no guarantees of employment. The only ones with a guarantee are people like herself who have 8- or 10-year contracts.
Regardless, that is her view of the public service. Clearly, our contracts are an impediment towards achieving that view. They have guarantees of processes based on positions and descriptions. That is anathema to the generation of leadership that we see in the public service because they are now thinking of a different model.
Rather than discuss that model openly, they are now putting in place the framework for what they will need later to achieve that kind of model. It is based upon removing many of our contract benefits which would stand in the way. That is why they would like to get rid of arbitration, because no arbitrator will remove those clauses.
The Chairman: For clarification, you mentioned something about consumer confidence and wages. You talked about the fact that increases in wages will lead to more consumer confidence which will in turn be good for the economy. However, if you get paid more money, putting it in its simplest terms, that money is extracted from someone else's pocket. What is the difference between the money remaining in the hands of the taxpayer to spend as he wishes or remaining in your hands with an increased benefit.
Mr. Krause: It is not that simple. There are processes called multipliers. Sometimes, when people begin to spend money, that increased demand results in businesses having to hire people who they otherwise would not hire because they must meet that demand. That is called a multiplier.
The best thing about that is the individual goes off unemployment, goes off welfare, and he starts consuming as well. He starts doing a little bit of spending. His additional expenditures would not necessarily happen had it not been for those other people. Those expenditures will also have an effect and create a little more employment. That is how an economy grows, domestically.
The Chairman: When a farmer buys a product and puts wheat in the ground, he produces something that was not there before. He goes and markets it and spends the money he has earned.
If you take money from the taxpayer, that also creates multipliers. The less tax he pays, the more confidence he has. He generates wealth, rather than providing a service such as health care. What is the difference? Would there not be a greater multiplier effect by keeping money in the taxpayers' pockets than extracting it for government expenditures?
Mr. Krause: That question is best answered by the finance officials who run the tax model and look at those issues. I tend to think that we should balance off the interests of taxpayers and workers and the general public. That is what the elected political representatives do.
It is a complex issue. I am not saying for one moment that the taxpayer should not benefit in this process. I am suggesting that arbitration is no danger to the fiscal framework. You always have the ability to put in place, with arbitration, some forms of legal limits to keep control of the process. As long as there can be such a process, and as long as the salary and wage bill of the public service forms such a small portion of government expenditures, then that bill is no threat to taxpayers and is no threat to fiscal responsibility.
Senator Stratton: This provision applies for a three-year period. It seems that we all went on a big drunk from the early 1970s to the mid 1980s and then began to dry out in the late 1980s and the 1990s. It will take us 15 or 20 years to dry out. Hopefully, by the end of this three-year period, the balanced budget will have been achieved or very close to it. That is the target.
You are being asked, as are we, to live with this for about three more years. I do not see any great to-do. That is a short term. I would be concerned if they were trying to make that a permanent condition.
I am interested in the amendment which goes back to proposed section 7.1 of the Financial Administration Act. I asked you why it was not acceptable in the other place. Do you have a copy of that amendment?
Mr. Krause: I have the bill before me. Clause 7.1 reads:
(1) The Treasury Board may establish or enter into a contract to acquire group insurance or benefit programs for the Public Service of Canada or any part thereof, may set any terms and conditions in respect of those programs, including those relating to premiums, contributions, benefits, management and control and expenditures to be made from those contributions and premiums and may audit and...pay premiums in respect of those programs.
This is an open-ended authority to administer those programs any way the Treasury Board sees fit.
Senator Stratton: Do you want that clause deleted?
Mr. Krause: If they are honest in their explanation of needing administrative flexibility to pay for such things as training costs, administration and management from the plans themselves, without having to come back to Parliament, then I would suggest adding the words, "Upon recommendation of the National Joint Council, the Treasury Board may..."
Currently, that is what happens. The National Joint Council gets together, management and labour, and agrees to certain provisions of these plans. If we have an impasse and we cannot resolve it, then the old plan stays in effect and we do not change it. We live with it. We both propose changes; when we agree, we move on them. This has been a process which has worked well. It would seem that with this particular clause. there is unilateral authority being given to one partner. In my view, it would seem that the National Joint Council, which has been around for 50 years, no longer has any purpose.
Senator Stratton: I can understand why you want the amendment. Referring to benefits, for example, you stated that there would be a potential reduction in dental and pharmaceutical benefits.
Mr. Krause: That is a possibility.
Senator Stratton: Government employees pay into that plan. Does the government contribute on an equal basis?
Mr. Krause: I do not think the contributions are equal in all cases, no. I do not think they are equal in the case of the drug plan.
Senator Stratton: Are the contributions keeping that plan in the black; or is there a fear that, as we get older, demands will increase substantially, putting it into the red? Is that, perhaps, a reason as to why they are doing this?
Mr. Krause: No. I asked them why they were doing it. They said: "We want to cover our administrative expenditures from inside the plans without having to go back to Parliament each time we have an administrative or managerial expenditure." There was a question of the legalities of making those expenditures from outside of the plans. They said that they were doing this to correct that particular legal problem. I said, "You have given yourself far more than that," to which they replied, "Oh." They have not been up front, if that was their intent.
Senator Stratton: Were they up front with the dental or drug issue?
Mr. Krause: No, they were not up front with the broad language of the clause.
The Chairman: Thank you, Mr. Krause and Mr. Gandall.
We will now hear from representatives of the Public Service Alliance of Canada.
Please proceed.
Mr. Daryl Bean, National President, Public Service Alliance of Canada: Thank you, Mr. Chairman. I should like to thank the committee for inviting our participation in your review of Bill C-31.
As members of the committee are aware, the PSAC had an opportunity to appear before the finance committee in the other place a month ago. During our appearance before that committee, we proposed 10 amendments to Bill C-31 that were designed to make the labour relations aspect of the legislation fair and to correct what we believed to be serious errors inherent in the legislation. Our voice was not heard, with the regrettable result that none of our amendments is before your committee. In fact, with one or two exceptions, the government has not even acknowledged the existence of our recommendations.
Instead of acknowledging or debating the legitimacy of our arguments, the government has used the time it takes for Bill C-31 to work its way through the House and the Senate to continue its attack on the PSAC for not voluntarily agreeing to its legislative provisions. They have used the time to spell out the penalty that the alliance and alliance members will pay because we had the fortitude to say "no".
In January, we said "no" to a government package on workforce adjustment directive changes that will see many federal public sector workers lose their employment security rights. We said "no" to a government package of workforce adjustments changes that will see many federal public sector workers take a pay cut of up to 15 per cent or lose their job without compensation. We said "no" to a government package of workforce adjustment directive changes under which benefits, including pension entitlements, can be eliminated without recourse.
In short, we said "no" to a package that was clearly and unambiguously detrimental to the employment and economic security of our members.
The government's response was swift and precise. The February 1996 budget formally announced the government's intention to legislate the package of workforce adjustment changes that had been rejected by the PSAC.
The 1996 budget and the subsequent introduction of Bill C-31 were nothing short of insidious. In our opinion, the legislation before your committee is an abuse of power that cannot and must not go unchallenged. To be clear, what the government is doing through Bill C-31 is rewriting provisions of signed collective agreements.
I might add at this time that the Senate has certainly had some concerns about what has happened with the Pearson airport agreements, which is not a lot different from what is now happening.
The fact that the current and previous governments have done this before does not make it right. Moreover, while the current government's attitude toward signed collective agreements is bad enough in its own right, the abuse of power does not end there.
The government went further and made it clear that federal unions that did not agree with the government's package of amendments would be penalized. If I am not mistaken, Bill C-31 marks the first time that a government has tried to secure support for its actions from the affected unions and consciously, deliberately and publicly penalized those unions that failed to cooperate.
Earlier this week, I provided members of your committee with a copy of the PSAC Bill C-31 submission to the House of Commons Standing Committee on Finance. Given time constraints, it is not my intention to cover all of the issues that the alliance advanced before the House committee in this statement.
That said, I am more than prepared to answer questions that you may have on the specific recommendations that we advanced and, indeed, the process that led to the introduction of the budget and enabling legislation.
My purpose in appearing today is to make it clear that the PSAC will not acquiesce. Despite the government's attempt to co-opt us and penalize our members, we will not sign on the government's package. We will continue to say "no" to the government. Instead, we will fight to ensure that all issues related to the employment and income security of PSAC members are addressed during the next upcoming round of collective bargaining.
In the remaining time available to me, I will outline the latest government actions, legislative and otherwise, that relate to employment security and spell out how the PSAC intends to deal with the situation.
As I have said during previous appearances before this committee, members of the Senate have an important role to play in the relationship between the government and its workforce. In the past, you have held the government accountable for its actions. I urge you to do so again.
The past five years have been exceedingly difficult for federal public sector workers. We started the decade preparing for collective bargaining and had a strong mandate from our members from coast to coast. PSAC members came together like never before and made it clear in 1991 that negotiations would have to deal in a substantive way with these issues.
First, our members made it clear to the government that the bargaining process had to address the decline in real wages that had been experienced over the previous decade.
Second, the government's stalling and stonewalling tactics with regard to equal pay for work of equal value had to end; pay equity had to become a reality in the federal public service.
Third, employment security had to be protected. As history will record, the government had other ideas. Rather than negotiate, the government announced a three-year wage control package as a "take-it-or-we-will-legislate" proposition.
In addition, the government refused to address pay equity during the 1991 round of negotiations. While the government agreed to discuss employment security, it refused to do so within the context of the formal collective bargaining process. Instead, it participated in extensive discussions with the PSAC that resulted in the entrenchment of the revised workforce adjustment directive in the PSAC collective agreements in December of 1991.
The agreed-upon revisions to the workforce adjustment directive were the only tangible improvements to the collective agreement achieved by the PSAC during the 1991 round of collective bargaining. Despite what quickly became a general strike by PSAC members, the government refused to negotiate and ultimately ended the strike through back-to-work legislation that imposed a two-year collective agreement.
It needs to be underscored here that the government agreed to the workforce adjustment directive changes, which included the reasonable job offer that it is currently seeking to abrogate through Bill C-31. Under normal circumstances, the workforce adjustment directive changes that were agreed to and incorporated into the collective agreements in 1991 should have remained in full force and effect until new collective agreements were negotiated or until changes were mutually agreed to. Despite this reality, Bill C-31 marks the second time the government has used its legislative power in an intrusive way to erode the rights of federal workers under the 1991 workforce adjustment directive.
Many members of my union are still reeling from the 1995 budgetary assault on their employment security. As a result of Bill C-76, federal public service workers employed in the so-called "most affected" departments will continue to face the loss of their employment security for the next two years. Under Bill C-31, countless other federal public service workers will lose their employment security as well. The difference between the two amendments is that the 1995 amendment is designed to eliminate fully 45,000 jobs over a three-year period, while the 1996 budget is designed to facilitate what is being called "alternate service delivery".
To put it another way, under the 1995 amendments, the jobs were to simply disappear; under the 1966 amendments, the jobs are being transferred to other government agencies or the private sector.
Members of the Senate must understand that, while the government has been publicly discussing alternate service delivery for fully nine months, we still do not know who will be directly affected. While the government has told the PSAC and other federal unions that it is considering the transfer of between 60 and 80 government functions, only four have been identified to date. Three of these -- namely, food inspection, revenue collection and parks -- were named in the budget, while the fourth can be inferred from the government's May 30, 1996 offer to the provinces with regards to labour market training.
Even when government does name an agency or function as a target for transfer, the level of detail that it provides is insufficient. It is insufficient for the workers who may be affected, insufficient for proper parliamentary debate, and insufficient for the public at large.
It is instructive to note as well that, while Bill C-31 provides the government with the legislative ability to transfer workers without following the procedures and processes that are contained in the collective agreements and the workforce adjustment directive, it is silent on the type of transfers arrangements that the government is contemplating. In fact, the legislation gives the government the power to transfer workers under any terms and condition that it chooses.
Initially, we suspected that the government would stick to the three types of transfers that it outlined during the meetings with PSAC prior to the March 6 budget. Type 1 transfers continue the so-called core benefits and collective agreements; type 2 transfers are the same as type 1, except that the average wage can be fully 15 per cent less than the wage bill prior to the transfer. Both type 1 and 2 transfers will be considered a reasonable job offer, essentially forcing the workers to transfer or lose their rights and entitlements under the workforce adjustment directive.
The third type of transfer, type 3, will not be a considered a reasonable job offer, but workers who transfer will receive less than 85 per cent of the current wage and a seriously reduced benefit package. All of this is to be implemented by a series of amendments to the Financial Administration Act, the Public Service Staff Relations Act and the Canada Labour Code that are contained in Part I of Bill C-31.
When considering the various options, I believe it is important for members of the committee to understand that they are permanent, interrelated, and designed to facilitate an unspecified set of alternate service delivery measures and transfers.
[Translation]
Ms Nycole Turmel, First Vice-President of the Public Service Alliance of Canada: In our submission to the House committee, we grouped the amendments under four headings, namely, Terminating Authority, Workforce Adjustment Directive Changes, Severance and Successor Rights.
Given time constraints, I cannot possibly do the issues involved justice, and so will limit my remarks to one issue, namely the legislative penalty that is being applied to members of the PSAC and other unions which refused to voluntarily agree to the government's Workforce Adjustment Directive package.
Once Bill C-31 is adopted, the Workforce Adjustment Directive will be defined as being either agreed to by the parties or legislated under Bill C-31 or any other Act. This change will fundamentally alter the nature of the WFAD, and provide Treasury Board with almost total power with regard to subsequent changes.
In short, the WFAD can be changed by agreement between the government and the unions representing its workers, or by government fiat.
Specifically, section 5(4) of Bill C-31 seeks to amend section 11 of the Financial Administration Act to allow the Treasury Board to arbitrarily change the WFAD when the government cannot secure an agreement with one or more bargaining groups. This provision is designed to carry through on the government's threat that it would penalize the PSAC for not agreeing to the government's Alternative Service Delivery employment transfers.
While the government has made it clear from day one that it is intent on penalizing the Alliance and other federal unions that refused to voluntarily accept its changes to the Workforce Adjustment Directive, it waited until late in the day before advising the House committee what the penalty would be.
In a May 14, 1996 appearance before the House of Commons Finance Committee, Jean-Claude Bouchard, Deputy Secretary, Human Resources Branch, Treasury Board Secretariat, stated that members of the PSAC who decline an offer of employment under Type 1 and Type 2 Alternative Service Delivery situations will receive three months' notice instead of the four months that will be provided to workers whose unions signed on to the WFAD package.
In addition, the salary top-up available to Alliance members who are transferred at a lower rate of pay under Type 2 transfers will be 12 months instead of the 18 months that will be paid to other workers.
There is no charitable way to describe the government's action in this regard. It is, without a doubt, mean-spirited and vindictive. Moreover, it will impose an added financial burden on some federal workers at a time when they are most vulnerable.
For these reasons, section 5, sub-section 4 of Bill C-31 should be withdrawn. But the issues involved are more fundamental than the specific attack on the PSAC and our members. This legislative provision crosses the line of what should be considered appropriate government action in a civilized society. From our perspective, it is offensive in the extreme.
If your committee and the Senate allow the government to adopt this provision, you will be implicitly endorsing a government action that is intent on intimidating the PSAC and our 150,000 members. Other organizations and individual members of society should find the provision alarming as well, because it can be used elsewhere to intimidate people into voluntarily agreeing to government initiatives that run counter to their own best interests.
Members of your committee should also understand that the blackmail continues to this day. The government has said that PSAC members will receive the enhanced notice and salary top-up under Type 2 Alternative Service Delivery situations if the PSAC accepts the government's Workforce Adjustment Directive package prior to the passage of Bill C-31.
As I have already indicated, the PSAC will not sign on to the government's Workforce Adjustment Directive package. We will, however, work to ensure that the penalty being imposed on our members is rescinded.
Later this year, PSAC members will participate in bargaining conferences at which time they will establish the issues that we will pursue during the next round of collective bargaining. I can assure members of your committee that employment security and the Workforce Adjustment Directive will be a major issue during the negotiations, and one that must be addressed, if there is to be any semblance of labour peace.
I can assure you as well, that while it is not my prerogative to set the specific demands, I will be communicating to all PSAC bargaining groups over the coming months, and I will use that opportunity to advocate on behalf of a set of demands that remove the notice and top-up penalty that is to be imposed on PSAC members who are transferred under Type 2 Alternative Service Delivery systems.
I fully expect our members to make this issue a priority during negotiations, and predict that the government's vindictive victory will be short-lived.
Before closing, I should say a couple of words with regard to some of the other issues that are addressed in Part 1 of Bill C-31.
At every opportunity since the budget was tabled on March 6, 1996, the government has gone to great lengths to congratulate itself on its announcement that the Public Sector Compensation Act will end as scheduled, when the legislatively-extended collective agreements expire over the next year or so.
While the PSAC welcomes the return to collective bargaining, we are less than happy with the way the government is proceeding. While the problems with the government's approach are numerous, two issues that make the return to collective bargaining anything but free stand out and deserve special attention.
First, the government has done nothing to remove the Public Sector Compensation Act restrictions on the negotiation of employment security and workforce adjustment provisions.
And second, the return of collective bargaining is being undermined for many workers because the government is intent on removing arbitration from the dispute settlement options available to bargaining groups.
With regard to arbitration, the government was surely aware that it has historically designated sufficient numbers of some bargaining units so as to effectively eliminate the conciliation strike option for members of those bargaining groups.
Jean-Claude Bouchard acknowledged the logic of our argument in this regard when he appeared before the House committee on May 14, 1996. Yet, despite agreeing with our assertion that high levels of designations result in strikes that "can have little effect", the only commitment that he was prepared to make, on behalf of the government, is that he will "work with the most affected groups to decide how to proceed".
By any reasonable criteria, the government should not be allowed to have it both ways. Hence, in our opinion, the government should only limit or suspend arbitration if it is prepared to simultaneously limit or suspend the designation process. No other alternative is fair or reasonable for workers in bargaining groups that are likely to face a high level of designations.
As a result, we ask your committee to take a strong stand on this point as well.
I should like to thank all of you for your patience, and welcome any questions that you may have.
Senator Lavoie-Roux: You referred to job security. I know that it was, and I'm not sure whether we can put it that way, abolished but...
Ms Turmel: ... it was suspended.
Senator Lavoie-Roux: It was suspended for three years, last year if I remember correctly. We are embarrassed to talk about the principle of job security since senators are the only ones that have it. In the real world, job security can no longer be taken for granted or it is no longer an insurance that is given to anybody entering the private sector or even the public sector and I am thinking more of the provincial level in the area of education or health care. It may take people years and years until they have job security, if they ever get it. What is your position on this regarding the public service?
Ms Turmel: As I said earlier, it would certainly be one of our priorities during the next round of bargaining. If we look across the table, it is true that the government suspended it -- with the new program they set up -- in order to provide its services differently and this will quite simply mean that there will no longer be any job security.
Our position is very clear; we want our right to job security to be given back to us and we want the plan to take us into consideration.
Senator Lavoie-Roux : Everybody is in favour of job security. We won't argue about that. In the current context of employment and with the young generations not finding any employment, can we still look at job security in the same light as we did when the public service was being built, whether it was under provincial or under federal jurisdiction?
Ms Turmel: First, if we look at the size of the public service at the present time, it has already become much smaller.
Second, this puts into question the way services should be provided and every Canadian's right to receive services in a consistent manner and to be entitled to receive the services they expect, whatever their place in society, be they disadvantaged or more privileged.
By reorienting the way it is providing these services, the government is putting into question the whole matter at hand, which means that it is also putting into question the issue of job security.
With job security, Canadians were able to some extent to grant some benefits to employees through transfers. We still consider today that it is possible to have job security, to provide services and to set up again an efficient government and an efficient service.
[English]
Mr. Bean: While we generally refer to the 1991 workforce adjustment directive we negotiated as job security, it is really employment security, which is different. I was speaking to the Minister of Treasury Board about that last week. I am not sure that people have understood that we are not suggesting that people should be able to retain their jobs for the rest of their lives. The workforce adjustment directive provided that they were to be made a reasonable job offer, normally at their substantive level, but possibly at a lower level with their salary maintained and the government working to get them into a substantive level position.
It also required that people may have to relocate. Again, that relocation had to be reasonable. For instance, as we discussed when we negotiated the workforce adjustment directive, it probably would not be reasonable to ask someone from Saskatoon to move to Toronto, given the higher housing and living costs in that city. However, to ask someone in Saskatoon to move to Regina probably is reasonable. We discussed that and decided that we would not try to put it into detailed wording, and it worked.
There were very few layoffs. I quite honestly believe that deputy ministers never understood the workforce adjustment directive and in many cases did not try to make it work.
No, it was not easy to lay someone off, but it should not be in an operation the size of the government. However, people were laid off who refused to transfer to another job.
This is unlike the original Canada Post model, which was, in fact, job security. Under that model, when you were in a job, you were going to stay in that job until you retired. This model does not do that.
I wish to emphasize that this was a negotiated agreement. Both parties agreed to it. No one was forced into it. If the government wants to change it, it should negotiate with us. We have already made a change to it with the air navigation system. We agreed that the offer the workers were getting with the air navigation system was reasonable. Technically, one could have argued that, under the workforce adjustment directive, because it was privatized, it did not meet the definition of a reasonable job offer in the public service. However, we did not have a problem with that. We negotiated that change and accepted it; there has not been a complaint about it.
Again, the workforce adjustment directive has worked. It worked before 1991, and would have worked better since. It worked reasonably well with the reduction in personnel of 45,000.
First, all these changes were not necessary. Second, if the government is going to make these changes, there is an appropriate place to do so; that is, at the negotiating table.
Senator Stratton: To carry on with the discussion about downsizing, there have been recent articles saying that downsizing could have been achieved without layoffs. Is that your position?
Mr. Bean: Yes.
Senator Stratton: You believe that that could have been done completely without lay layoffs?
Mr. Bean: Yes.
Senator Stratton: How?
Mr. Bean: When Mr. Eggleton was the minister responsible, we proposed to him a substitution process to which he did not agree until a year later. A number of roadblocks were set up to make the substitution process ineffective. Despite that, it worked with the first 18,000 of the 45,000.
Through the early retirement incentive, the early departure incentive and allowing people to substitute one job for another at a similar classification level, we have been able to deal with close to 20,000 positions to date. We believe that could continue to work.
As an example, in April, we were successful in a challenge before the staff relations board and received the names, addresses and classifications of the people whom we represent who were being declared affected or surplus, as well as those of the individuals whom we represent who wanted to substitute with them.
We had to fight the government to get this type of information in order that we could properly represent our members. Now that we are starting to get this information, I am absolutely convinced that we can do an even better job of the substitution.
One of the rules that does not make sense is that once a person is officially declared surplus, that is, at the six-month period, they cannot substitute. It does not matter whether you find someone else who would take early departure or early retirement; you still cannot substitute. That makes no sense. If you change that rule alone, we will have much less problem on the substitution process now that we are receiving the information we need.
Senator Stratton: Are you saying that of the 18,000 employees who have left, none have been laid off?
Mr. Bean: I understand that there are less than 10 employees who are on paid surplus status at this stage.
Senator Stratton: There have been virtually no layoffs with the downsizing to date, other than those 10.
Mr. Bean: That is correct.
[Translation]
Senator Lavoie-Roux: Would it be possible to get a copy of your presentation? You are raising a whole issue that I was not familiar with, the issue of your being penalized by the government should you not give up this or that clause or not accept immediately another one. Some people are being punished and some others are not.
Ms Turmel: We are going to give it to you.
[English]
Mr. Bean: We forwarded to you earlier our submission to the House of Commons. We can arrange to provide you with copies of our presentation today.
Ms Turmel: I have French copies as well.
[Translation]
Senator Lavoie-Roux: If you have a French copy, that is even better.
Ms Turmel: I will give it to you right away.
Senator Lavoie-Roux: Have you got some more in the computer?
[English]
The Chairman: Thank you very much, Mr. Bean.
Is there any other business?
Senator Stanbury: I move that the bill be reported without amendment.
The Chairman: Is it agreed?
Some Hon. Senators: Agreed.
Senator Lavoie-Roux: On division.
The Chairman: It is agreed, on division.
The committee adjourned.