Prospects for Industrial Relations in the Broader Public Sector John O’Grady 1

Four Questions: 1.What are the underlying changes in economic conditions and the fiscal situation of the Ontario government? Are they structural or cyclical? 2

Four Questions: 1.What are the underlying changes in economic conditions and the fiscal situation of the Ontario government? Are they structural or cyclical? 2.If those changes are structural, what are their likely implications for the employment environment in the Broader Public Sector? 3

Four Questions: 1.What are the underlying changes in economic conditions and the fiscal situation of the Ontario government? Are they structural or cyclical? 2.If those changes are structural, what are their likely implications for the employment environment in the Broader Public Sector? 3.Can the expected changes in the employment environment be addressed by the existing labour relations system? 4

Four Questions: 1.What are the underlying changes in economic conditions and the fiscal situation of the Ontario government? Are they structural or cyclical? 2.If those changes are structural, what are their likely implications for the employment environment in the Broader Public Sector? 3.Can those changes in the employment environment be addressed by the existing labour relations system? 4.If changes in the labour relations system are needed, what are the options? 5

Ontario Government: Fiscal Situation 6

Ontario: Real GDP – Manufacturing,

Ontario: Real GDP – Manufacturing,

Ontario: Real GDP –Manufacturing C$ Exchange Rate,

Average Annual Increases in Government Spending: to InterestProgramTotal Budget7.9%1.4%2.0% Drummond7.1%0.8%1.4% 10

Implications for the BPS Employment Environment 1.Employment reductions. 11

Implications for the BPS Employment Environment 1.Employment reductions. 2.Increased public sector employer opposition to restrictions on redeployment rights of public sector managers (seniority, posting). 12

Implications for the BPS Employment Environment 1.Employment reductions. 2.Increased public sector employer opposition to restrictions on redeployment rights of public sector managers (seniority, posting). 3.Increased public sector employer resistance to open-ended pensions and liabilities. 13

Implications for the BPS Employment Environment 1.Employment reductions. 2.Increased public sector employer opposition to restrictions on redeployment rights of public sector managers (seniority, posting). 3.Increased public sector employer resistance to open-ended pensions and liabilities. 4.Increased public sector employer resistance to pattern-based wage determination. 14

Implications for the BPS Employment Environment 1.Employment reductions. 2.Increased public sector employer opposition to restrictions on redeployment rights of public sector managers (seniority, posting). 3.Increased public sector employer resistance to open-ended pensions and liabilities. 4.Increased public sector employer resistance to pattern-based wage determination. 5.Increased attraction to contracting out and divestment and increased opposition to restrictions that impede these. 15

Eras of Restraint 1975 – 1978: Wage and Price Controls 1981 – 1982: Public Sector Wage Controls (‘6 and 5’) 1993 – 1995: Social Contract wage freeze / 12 ‘Rae Days’ : 2.3% cut : 0.8% increase 1995 – 1999: Harris Cuts: : 3.3% cut : 0.3% increase 16

Changes in the System 1.More centralized bargaining. 17

Changes in the System 1.More centralized bargaining. 2.Addressing the self-referential bias of public sector arbitration. 18

Changes in the System 1.More centralized bargaining. 2.Addressing the self-referential bias of public sector arbitration. 3.Limited liability for benefits and pensions. 19

Changes in the System 1.More centralized bargaining. 2.Addressing the self-referential bias of public sector arbitration. 3.Limited liability for benefits and pensions. 4.Integration of pension bargaining with wage bargaining. 20

Changes in the System 1.More centralized bargaining. 2.Addressing the self-referential bias of public sector arbitration. 3.Limited liability for benefits and pensions. 4.Integration of pension bargaining with wage bargaining. 5.Greater flexibility on re-deployment (overriding seniority and posting) 6.Fewer impediments to contracting out and divesting. 21

Nominal GDP and Government Fiscal Position: Average Annual Growth Rate Nominal GDP3.5% Government Revenues5.0% Government Expenditures6.7% 22