Proceedings of the Standing Senate Committee on
National Finance
Issue 35 - Evidence
OTTAWA, Thursday, June 3, 1999
The Standing Senate Committee on National Finance, to which was referred Bill C-71, to implement certain provisions of the Budget tabled in Parliament on February 16, 1999, met this day at 10:50 a.m. to give consideration to the bill.
Senator Terry Stratton (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, our witnesses this morning are from the Social Science Employees Association.
Please proceed, Mr. Krause.
Mr. William Krause, President, Social Science Employees Association: First, I should like to know if the committee members received the letter I sent to Senator Stratton. I do not need to go over the contents of that letter. You can read it for yourselves.
The issue we have before us is straightforward and simple. We have recommended to the committee that in Part 3, clause 19(1) of the legislation be deleted. The purpose of the recommendation is to protect the rights of our members to decent conditions for collective bargaining, and in extension to protect collective bargaining in the federal public service. The amendment will assist in re-establishing a healthy labour relations environment in the public service, which will be conducive to both morale and productivity increases. These are a direct and substantial benefit to all Canadians.
To maintain the current bill with this provision would only add to the demise of public sector bargaining, lead to the permanent elimination of non-disruptive dispute resolution mechanisms, further reduce morale and productivity in the public service, and dissuade many individuals from pursuing a career in the public service. We risk seeing the decline of collective bargaining evolve into the end of labour relations based upon reasoned and well-informed arguments. We risk establishing as a permanent feature of our labour relations an atmosphere of mistrust and disrespect that can only lead to further battles between the government and its employees.
Finally, as we have all recently noticed in the provincial jurisdiction, there is a potential for rebellion against the law whenever an employer with legislative power seeks to impose its will to the disadvantage of its employees. Why run the risk of confrontation when there is so much more to be gained through co-operation and partnership founded on respect for the fundamental rights of employees?
I concluded my letter with the paragraph I have just read, and in a way I think that the spirit of what we have proposed to this committee is consistent with the committee's own work. I am referring specifically to the report on retention and compensation issues in the public service.
According to the report of the committee, competitive compensation is the prerequisite to the successful application of recruitment and retention strategies in the public service. The current situation with respect to compensation makes it difficult for the government to retain employees.
To begin with, private sector wage settlements increased by 15 per cent since 1991, while a public service employee received a single 3 per cent increase during the same period of time. During the wage freeze period, roughly 1991 to 1997, the compounded consumer price index rose 15.3 per cent, compounded average weekly earnings rose 18.2 per cent, and compounded private sector wage settlements rose 15.2 per cent.
These are an indication of what public servants lost against inflation and against the average weekly earnings of other employees. Furthermore, while private sector compensation is expected to increase between 2.6 and 3.6 per cent in 1999, the public sector is expected to receive increases of less than 2.5 per cent.
Another problem arising from the relatively low wage levels is that they have led to private sector raiding of the public service. There has been a strong effort on the part of the private sector to recruit the best people in the public sector. The private sector is capable of offering substantially higher salaries at a time when the government is trying to hold the line on its own wage bill.
The committee as well touched on the area of recruitment. Here again I believe that our recommendations would achieve the committee's objectives.
This negative environment might arise from increased work loads, diminished resources, and low self-esteem. More likely it is linked to the fact that wage increases have been frozen for five of the past six years. The reduction of one's standard of living has a parallel effect on self-esteem and morale, and the importance of this effect on the current malaise in the public service should not be ignored. As well, the committee noted that the inability of the government to hold on to its employees is a serious matter that has led to the loss of the most experienced employees, and to the loss of corporate knowledge and experience that will take some time and effort to replace. Those are some of the comments that the committee made in its report.
I believe that, not having access to arbitration, we will never be able to narrow the gap that exists between the private sector and government employees. Over the last two decades, the government has interfered in the bargaining process for at least a sixteen-year period. That interference has effectively created a situation in which government employees are not receiving proper compensation, and lag significantly behind the private sector. Retention and morale issues are rampant; productivity is declining; and the one group that suffers the most is clearly the Canadian public. The quality of the services they receive cannot be improved. We cannot provide Canadians with the service they expect from their public service because of the wage differentials.
That is a brief summary of our position. We believe that, if we act to delete the section that restricts access to arbitration, we will have a bill that is consistent with the committee's recommendations in so many other areas.
I would now like to answer your questions.
The Chairman: The public view of the federal civil service has changed. The public now believes that civil servants work hard. That was not always the case, but now that perception has changed. However, the public still believes, quite firmly it would appear, that civil servants have wonderful pensions. Therefore, because you have wonderful pensions, there is little sympathy for you out there on the wage side. They feel that what you give up on the one hand you collect on the other side in a fairly nice pension plan that is indexed to inflation to a degree.
How do you respond to the public? They say to you that you are getting a 2 per cent wage increase now. They know you went through a wage freeze, but many in the private sector face that, too. You still have a relatively high level of job security compared to the private sector.
These are the arguments that I hear out there. How do you respond?
Mr. Krause: First, the job security issue is bogus. Government employees have suffered severe layoffs. We lost 55,000 positions in the downsizing era alone, and there had been previous periods of minor job losses as well.
The new workforce directive has been put in place for virtually all government employees except our members and it does take away rights to job security. It makes government employees serve at the request of the deputy ministers, basically, and they can be let go with 12 months' notice. Job security is a thing of the past in the public service.
I do not wish to debate Bill C-78. We have a good pension plan. The current benefit as contained in the legislation is good. It would be disingenuous of me to say otherwise. However, private sector employees who are covered by pension plans do not pay anywhere near the premiums that our members do. Fifty per cent of employees in private plans have their entire premium paid by their employer.
In general, it is safe to say that, as a percentage of cost, people in the private sector do not pay more than 25 per cent. In the public sector, we are looking at a 40 per cent figure. Yes, we do have a good plan, but the fact is that we pay a fairly expensive premium for it. That is my response on that particular issue.
I would also acknowledge that the current plan has not cost taxpayer's one penny. Since 1996 the government has not been making its contributions into the plan as required by legislation. That is why it is before the courts at this time with a suit brought against it by members of the RCMP, our armed forces, retirees association and various labour groups, including our own.
The Chairman: I can see where you are coming from, but what about the small-business man who has no pension plan and must rely on RRSPs. You have a long haul to go on that.
Mr. Krause: When we take a contribution into our pension plan, it cuts off our RRSP room substantially.
The Chairman: We understand that. I am reporting to you, as I am quite sure you are aware, that there are two sides to this issue. To a large degree, that is why you suffer for it. You do get a 2 per cent wage increase this year and you do have a nice pension. The guy in the small manufacturing plant might be laid off tomorrow, just as you might. He can be downsized, just as you can. When they look at both sides, there is not a great deal of sympathy.
I am not trying to hammer you with this. I am just trying to have you recognize those simple facts.
Mr. Krause: I question the validity of the comparisons. Government employees who are knowledge-based workers represent a strong and substantial element of the knowledge community. We wish to compare ourselves with other professional employees working in the private sector. We do not compare ourselves to construction workers or factory workers, although their work is equally valuable to our economy. We look at the professional community and find there are significant disparities.
If the pension plan that we have is so great, then why are we still stuck with retention problems? Obviously, people make choices based upon the total compensation: what they get in wages and what they have in terms of the pension as well. However, when we look at our total package, we find ourselves not competitive with the private sector and we do have a retention problem.
We need to put in place a mechanism that will allow our wages and remuneration in total to catch up with the private sector so that we can be competitive and attract the best and the brightest. Obviously, we need to have in place a system of arbitration in which, when there are disputes with the employer over wage settlements, we can go to a neutral third party who will objectively look at the arguments raised, who will look at data and information regarding private sector settlements, who will look at the various labour shortages that exist, and who will produce a settlement that will be honest and fair to all parties.
We think, by and large, the existence of arbitration is good, because when arbitration is available to both parties it forces us to be reasonable at the table.
We noted in our letter to the committee that when arbitration was available in those brief periods in the last two decades, those employees who took advantage of it and went for a national arbitration award represented only 2 per cent of those who could have done so. As a tool it is not used that frequently. However, having arbitration forces both sides to be reasonable lest they suffer the wrath of an imposed decision from an arbitrator.
Our experience has been quite the opposite. Having arbitration makes for peaceful negotiations. No side perceives the other as being a bully imposing its will, and each is concerned about the reasoned, rational arguments to put before an arbitrator and neutral third party. In that kind of framework, we can come up with settlements at the table in which there is goodwill and in which neither side goes away with bad feelings. That has a positive impact on morale and productivity when we communicate that experience to our members.
The Chairman: They are talking about this extension to 2001. The government representative here yesterday explained to us that until this phase of recategorization of employees, et cetera, is completed, they do not want arbitration hanging over their heads. At least, that was my understanding. I may be wrong in that.
Has anyone from government sat down with you and stated that, once this reclassification is completed, they could then offer those in the high-knowledge end more reasonable compensation?
When we studied the Revenue Canada bill, Minister Dhaliwal gave that exact reason. They wanted to hold back on negotiating with staff until they could get out from under the umbrella so that they were not restricted insofar as salaries were concerned. They could then get more competitive with the industry.
Has any one approached you on that basis?
Mr. Krause: We have not had that explanation in exactly those words, but the issue is this: Why would we believe them? Over two decades now, the government has repeatedly interfered in the bargaining process. Each period of controls is followed by a further period of controls.
We can go back to the 1980s or to 1991 when they imposed a two-year control period of "three and zero." When that legislation expired, we had another "zero and zero," then another "zero and zero." Then we had the suspension of arbitration. Lo and behold, as that is set to lapse, we have another extension.
Our experience, based upon the actions of the employer, is that there will always be a reason to suspend arbitration so it can impose its will at the table.
What we are talking about now is a system of no bargaining. They tell us on the one hand that we will not have arbitration but we may strike. However, if we strike, they will order us back to work with a settlement in law that will be worse than that offered at the table. That is not bargaining. That is bullying, plain and simple.
Frankly, the state of labour relations in the public service over the past decades, compounded by pay equity and so many other issues, shows a basic mistrust of the employer. Collective bargaining has broken down. We should recognize that. We no longer believe the employer. We hear the rhetoric. It is a rhetoric which they themselves do not follow. We see it as disingenuous. Even if we did hear those kinds of words that you just used, namely, that there will be money later on, I would have no reason to believe them.
Senator Mahovlich: In your mind, who would be the arbitrator?
Mr. Krause: We would make application to the Public Service Staff Relations Board and they would appoint an arbitrator. However, both parties could agree to an arbitrator and it sometimes happens that the parties are in agreement. It is a question of having availability to the process. Once you say that there will be a process of arbitration, people begin to think , "If we are unreasonable at the table, the employer might ask for the arbitrator and our position will be exposed; so we had better temper our demands.
We have had the experience in the past that the employer has offered a negative settlement. We had a "minus two and zero" offer once.
Senator Mahovlich: How could you lose with an arbitrator?
Mr. Krause: We could lose. If we are unreasonable, we will lose. I believe the employers know that if they are unreasonable they will lose. If they do good work, and they do by and large, the arbitrators will look at comparable settlements. They will look at groups in the private sector, they will look at the retention issues and they will come down with something that sometimes neither party is happy with. Faced with that, we choose to try to settle at the table. We each make compromises.
In the current scheme, the compromises come from one party, the bargaining agent. The employer has no incentive to bargain. They think, "Why bother, since they will go on strike and hurt their members and the public? Then we will impose something worse."
Senator Mahovlich: The Senate could be a neutral kind of arbitrator, then? Have you thought of that?
The Chairman: I doubt that.
Mr. Krause: I have not thought of that, but we would obviously have an easy time accepting any reasoned approach to the process and any neutral party that was well informed and well intentioned.
Senator Lavoie-Roux: More precisely, what clause do you wish to have modified?
Mr. Krause: We would like clause 19(1) in Part 3 deleted. That clause extends the prohibition on the binding arbitration for a further two years. We would like to have that clause of the bill deleted.
The Chairman: As you are aware, we will do the bill here in committee and take it, if there is a fight, to the floor of the Senate.
Senator Cools: I move that we proceed to clause-by-clause study. This will be seconded by Senator Joan Fraser.
The Chairman: All right.
Senator Lavoie-Roux: Is there not another witness?
The Chairman: No. There were three witnesses and then we were to do the clause-by-clause study. We are right on schedule.
Senator Lavoie-Roux: All right, fine.
The Chairman: Honourable senators, Senator Cools has moved that we proceed to clause-by clause consideration of the bill. Is it agreed?
Hon. Senators: Agreed.
The Chairman: Shall the title be postponed?
Hon. Senators: Agreed.
The Chairman: Shall clause 1 be postponed?
Hon. Senators: Agreed.
The Chairman: Do you now wish to proceed clause by clause? How would you like to proceed?
Senator Cools: The bill is quite short. There are only 50 clauses to the bill. I suppose that we could shorten the process by moving the bill along in groups of clauses, or in parts, perhaps 10 clauses at a time, so long as we are pronouncing on individual clauses.
The Chairman: The clauses are not repeated. If you said simply, "Clause 2 to clause 50, inclusive," would that not do?
Senator Cools: No, I would prefer that we pronounce on smaller groupings of clauses. We could, for instance, talk about clauses 2 to 10.
The Chairman: Do you wish to move that?
Senator Cools: I move that we adopt clauses 2 through to the end of Part 1.
The Chairman: You mean Part 1, clause 2 to clause 13.
Senator Cools: All right, clauses 2 to 13.
The Chairman: Will someone make that motion?
Senator Cools: I so move.
Senator Moore: I second the motion.
The Chairman: All those in favour? Those against? Carried.
The next group, then, would be Part 2, clauses 14 to 16. Is there a motion to adopt these clauses?
Senator Cools: I so move.
Senator Moore: I second that.
The Chairman: All those in favour?
Hon. Senators: Agreed.
The Chairman: Those against? Carried.
We come now to Part 3.
Senator Lavoie-Roux: All those people came to present their concerns and complaints about this bill, and here we are just pushing it through.
The Chairman: Senator Lavoie-Roux, we will take the argument and discussion to the floor of the Senate.
Senator Lavoie-Roux: All right.
The Chairman: That is the best way.
Senator Lavoie-Roux: So long as this is not seen as passing the bill.
Senator Cools: We are into the clause-by-clause study, Senator Lavoie-Roux; you can raise your concerns when we speak to the bill. That is your time to raise your concerns, particularly about every clause.
The Chairman: We have voted on Parts 1 and 2. We are now at Part 3, clauses 17, 18 and 19. Is there a motion to adopt these three clauses?
Senator Cools: I move the adoption of clauses 17 to 19, inclusive.
The Chairman: Clauses 17 to 19. Those in favour? Those opposed?
Senator Moore: On division.
The Chairman: Carried on division.
Part 4, clauses 20 to 24. Is there a motion for adoption?
Senator Cools: I so move.
The Chairman: On division?
Senator Moore: On division.
The Chairman: Carried on division.
Part 5, clauses 25 to 35. Is there a motion for adoption?
Senator Cools: I so move.
The Chairman: Those in favour? Those opposed? Carried on division.
Part 6, clause 36.
Senator Lavoie-Roux: Just a minute. I am not with you there.
Senator Cools: This is clause 36 to what clause?
Senator Moore: It is clause 36 only.
The Chairman: Part 6 has only the one clause.
Senator Cools: I move the adoption of clause 36.
Senator Moore: I second the motion.
The Chairman: Those in favour? Against? Carried on division.
Part 7, clause 37.
Senator Cools: I so move the adoption.
Senator Moore: I second that.
The Chairman: Carried on division.
Part 8, clauses 38 to 41.
Senator Cools: I so move the adoption.
Senator Moore: Seconded.
The Chairman: Carried on division.
Part 9, clauses 42 to 50.
Senator Cools: I so move.
Senator Moore: Seconded.
The Chairman: Carried on division.
Honourable senators, shall clause 1 carry?
Senator Cools: I so move.
Senator Moore: Seconded.
The Chairman: Carried.
Shall the title carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall the bill carry?
Senator Cools: In total? Agreed.
Senator Moore: Agreed.
The Chairman: Carried.
Shall I report the bill to the Senate?
Senator Cools: I so move.
Senator Moore: Seconded.
The Chairman: You can just say "agreed." We do not need a seconder.
Senator Moore: Agreed.
Senator Cools: My understanding is that to report the bill you do need a motion.
The Chairman: Yes, you need a motion; however, you do not need a seconder.
Senator Cools: I was making sure that we had a seconder so that the record of today could show that the meeting was well attended by Liberal senators.
Senator Lavoie-Roux: It is only so that we can go through it like this.
Senator Cools: The record should show clearly today that the meeting was attended by six Liberals and two Conservatives.
Senator Lavoie-Roux: We should have a motion of congratulation for that this afternoon.
The Chairman: Senator Cools, if you do that, then I should like it noted that I urged you to do that.
The committee adjourned.