1

Prospects for Industrial Relations

in the Broader Public Sector

John O’Grady

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?

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?

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 the expected changes in the employment environment be addressed by the existing labour relations system?

5

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?

6

Ontario Government: Fiscal Situation

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

$110,000

$120,000

$130,000

$140,000

Expenditures

Revenues

Sm

illio

ns

7

Ontario: Real GDP – Manufacturing, 1997-2011

19971999

20012003

20052007

20092011

$60,000

$65,000

$70,000

$75,000

$80,000

$85,000

$90,000

$95,000

$100,000

$105,000

Re

al G

DP

(C

ha

ine

d $

20

02

) -

$M

illio

ns

8

Ontario: Real GDP – Manufacturing,1997-2011

19971999

20012003

20052007

20092011

$60,000

$65,000

$70,000

$75,000

$80,000

$85,000

$90,000

$95,000

$100,000

$105,000

Re

al G

DP

(C

ha

ine

d $

20

02

) -

$M

illio

ns

9

19971998

19992000

20012002

20032004

20052006

20072008

20092010

2011$60,000

$65,000

$70,000

$75,000

$80,000

$85,000

$90,000

$95,000

$100,000

$105,000

$0.600

$0.650

$0.700

$0.750

$0.800

$0.850

$0.900

$0.950

$1.000

$1.050

Re

al G

DP

(C

ha

ine

d $

20

02

) -

$M

illio

ns E

xc

ha

ng

e R

ate

: C$

/ US

$Ontario: Real GDP –Manufacturing C$ Exchange Rate,1997-2011

10

Average Annual Increases in Government Spending: 2010-11 to 2017-18

Interest Program Total

Budget 7.9% 1.4% 2.0%

Drummond 7.1% 0.8% 1.4%

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Implications for the BPS Employment Environment

1. Employment reductions.

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).

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.

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.

15

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.

16

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’

1993-94: 2.3% cut

1994-95: 0.8% increase

1995 – 1999: Harris Cuts:

1996-97: 3.3% cut

1997-98: 0.3% increase

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Changes in the System

1. More centralized bargaining.

18

Changes in the System

1. More centralized bargaining.

2. Addressing the self-referential bias of public sector arbitration.

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.

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.

21

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.

22

Nominal GDP and Government Fiscal Position: 2001-2011

Average Annual Growth Rate

Nominal GDP 3.5%

Government Revenues 5.0%

Government Expenditures 6.7%