Reining in public unions

Au moins, c’est un début, les journaux canadiens commencent à discuter de la problématique des retraites.

Extrait: Reining in public unions, Paul Vieira, Financial Post, Mar. 4, 2011

OTTAWA — As the showdown with public-sector unions escalates in the U.S. Midwest, no one is likely more nervous than Ontario Premier Dalton McGuinty, who will seek re-election in the fall.

Ontario and the other provinces are nowhere close to being in the fiscal straits that Wisconsin, Ohio and Illinois are stuck in. Nevertheless, the same sense of public resentment that’s given U.S. politicians the impetus to try to roll back public-sector labour costs is beginning to simmer in Canada as well.

For evidence, look no further than Toronto — Ontario’s largest city and long considered sympathetic to the public-sector labour movement. Rob Ford won the mayoral race last year in large part fuelled by voters still angry over a 39-day garbage strike in the summer of 2009.

That strike ended with trash collectors still keeping some perks, such as banking sick days, and winning pay increases of 6% over thee years — just as a number of private-sector workers had to take pay cuts or unpaid leaves to deal with the fallout from the global financial crisis.

Toronto voters sent a message in the mayoral election, analysts say:

No more Mr. Nice Guy when it comes to dealing
with the public sector and their pay.

Early signs indicate Mr. McGuinty is paying attention, as he now tries to push through a bill that takes away the right to strike from public transit workers in Toronto.

Expect more moves and promises like this from him, and his main opponents, as Ontario’s provincial election nears.

“The atmosphere for public sector workers is going to be unpromising,” says Brian Lee Crowley, managing director of the Macdonald-Laurier Institute, an Ottawa think tank, of the coming vote in Ontario. “You are going to find parties will make political hay out of the fiscal decline and point to the growth and the size and cost of public sector as a key factor. We will see if the electorate will go for that. But given the current context, I can’t imagine this will not be part of the campaign.”

Il faut être réaliste, ils ont des conditions de travail et de retraite que tous employés du secteur privé voudraient avoir, mais on sait que c'est totalement irréaliste financièrement, alors si c'est irréaliste pour le privé, pourquoi ça devient une réalité pour le secteur public?

Réponse : Copinage entre le pouvoir politique et syndical pour gagner leurs appuis, malheureusement au détriment de la santé financière de l'État,
c’est -à dire vous, M. le peuple.

Public sector workers won’t feel the crunch this year, as there could be as many as seven provincial elections, and maybe a federal vote, before 2011 comes to a close. Don’t expect measures as extreme as what U.S. state legislators are trying to push through, such as the repeal of collective-bargaining rights. In fact, such a move can’t be contemplated here because of a 2007 Supreme Court of Canada ruling that enshrined collective bargaining rights in the Charter of Rights and Freedoms.

Par contre, il n’y a rien qui empêche de casser la formule Rand.

But a series of factors will ultimately force Canadian policymakers’ hands in early 2012:

1)      stretched balanced sheets,

2)      a coming wave of retiring civil servants set to start collecting lucrative pensions and benefits and, most important,

3)      a growing feeling of unfairness among the electorate whose wallets took a hit in the recession.

These factors will force legislators to “redefine the norms” of public service compensation, says Maurice Mazerolle, Ryerson University’s director of the centre for labour management relations. Whether that translates into increased wages but less lucrative benefits and pension plans remains to be seen.

One of the enduring symbols of the recession just passed was how unionized auto workers in Detroit and Windsor, Ont., were pushed to accept wage freezes, cuts to holiday time and higher contributions for benefits to keep their employers afloat.

Mark Thoma, economics professor at the University of Oregon, says public-sector unions used to set an important benchmark for private-sector unions and their members.

But as private-sector unions are forced to take less to maintain employment, “the idea that the typical household is helped indirectly by public-sector unions has been harder to swallow,” Mr. Thoma writes in The Fiscal Times on recent developments in Wisconsin and Ohio. “That has made it much easier to pit workers in the private sector — workers who are also voters — against unionized workers in the public sector.” (Read Mr Thoma's blog here).

Canadian governments already have taken measures to rein in costs, with federal labour data indicating public-sector contract talks netted an average gain of 1.6% for all of 2010, lagging private-sector raises for the first time since 2005.

Among the initiatives to date:

1)      Ontario has tried to impose a two-year wage freeze;

2)      the federal government took away free parking for employees in Ottawa;

3)      and Saskatchewan plans to “rebalance” the ratio between unionized and non-unionized government employees.

4)      In Quebec, municipal leaders in Montreal and its suburbs plan to push the provincial government to pass legislation that would curtail pension benefits paid out to city workers.

Des «pensions en or»


Selon M. Trent, qui préside l'Association des municipalités de banlieue de l'île de Montréal, le problème particulier du Québec c'est le déséquilibre marqué entre les fonctionnaires municipaux et ceux des autres niveaux de gouvernement.


Résultat ? Les fonctionnaires municipaux ont un traitement salarial global (salaire + avantages sociaux) 30 % plus élevé que le reste du secteur public. Et la majeure partie de cette différence provient de leurs généreux régimes de pensions.


«Sur l'île de Montréal, les coûts de ces régimes ont augmenté de 126 % depuis 2002. On ne peut pas supporter ça», croit-il.


«Le deux tiers de vos lecteurs n'ont probablement même pas de fonds de pension. Ils paient des taxes et les taxes, elles vont où ? Elles vont à payer des employés qui peuvent prendre leur retraite à l'âge de 50, 55 ans. C'est le propriétaire, c'est le payeur de taxes qui paie pour ces pensions en or. Il y a quelque chose qui n'est pas juste dans ça», dit-il.


D'ici 10 ans


Le maire Trent compte donc demander, avec l'appui du maire de Montréal, Gérald Tremblay, au gouvernement du Québec d'adopter des mesures pour ramener les salaires et les pensions des employés municipaux au niveau de ceux du provincial «d'ici 10 ans».


Source : Des «pensions en or», Mathieu Turbide, Le Journal de Montréal, 01/03/2011

Data compiled from the Frontier Centre for Public Policy, a Winnipeg think-tank, indicate wage growth for federal and provincial employees increased 59% and 55%, respectively, during a 10-year period ending in 2009. Municipal government wages, meanwhile, advanced 33%. For the entire economy, wages grew, on average, 30% during that time period.

Research from the Canadian Federation of Independent Business suggests public-sector employers have a combined wage bill — pay and benefits — that is roughly $20-billion higher than if they had kept to private-sector norms.

Analysts say workers can’t be blamed for pocketing such rich raises — the onus falls on the politicians who failed to toe the line in terms of restraining public-sector growth.

Perhaps more contentious, though, are the pension packages, which are richer than private-sector schemes, with the option of retiring early with full benefits mostly intact. Under the terms of the federal government defined-benefit scheme, for instance,

1)      pension benefits generally accrue up to a maximum period of 35 years at a rate of 2% per year of service,

2)      multiplied by the average of the best five consecutive years of earnings,

3)      indexed to inflation.

By comparison, two-thirds of private-sector workers don’t have employer-sponsored pension plans. Most companies that do offer pensions do so under the defined-contribution model, in which the benefit paid is at the mercy of the market returns.

“The bigger issue is the appropriateness of generous defined-benefit plans and other retiree benefits for people in the public sector versus the disappearance of defined-benefit in most of the private sector,” said Jock Finlayson, executive vice-president of policy at the Business Council of British Columbia.

“It is not so much an issue of fiscal affordability, it is an equity issue, which has not surfaced in Canada to the extent it has south of the border — but it is lurking, as more and more private-sector workers are left on their own to look after their retirement.”

Équity issue :

En fait, le problème majeur est l'iniquité de distribution de richesse entre le secteur privé et public, comment peut-on donner une retraite dorée au secteur public, quand le moitié du secteur privé va être sous le seuil de pauvreté.

On départ, c’est totalement inacceptable, de plus, ça va être
totalement insoutenable politiquement.

Fiscal affordability:

Il est totalement dans l’erreur, c’est un puits sans fonds, on le constate très bien avec les municipalités qui sont obligées d’augmenter les taxes continuellement pour compenser le manque à gagner des fonds de retraite.

 Malheureusement, ils n'ont pas le même privilège de camoufler ce manque de fonds comme les provinces en cumulant des déficits structurels sur la dette, on oblige les générations futures à payer pour ce manque de fonds, qui crée cette fois-ci
une deuxième iniquité, qui est une iniquité intergénérationnelle.

The problem, he adds, is the taxpayer bears all the risk if the public-sector pension plan runs into trouble. To that extent, the C.D. Howe Institute recently warned the federal government’s unfunded liability is actually $65-billion larger than what Ottawa has accounted for in its books.

Employee contribution rates for this plan “are not high enough to fund it properly and the unfunded gap is growing over time,” the Ottawa-based think-tank said in an analysis in November.

Politicians who play on this theme of unfairness could win the public backing to shepherd through changes to public-sector compensation. “Canadians are very sensitive to unfairness,” says Herbert Grubel, economics professor emeritus at Vancouver’s Simon Fraser University and a former Reform Party MP. “Politicians have to decide what is the best strategy. I would say the best strategy would be to appeal to a sense of fairness to Canadians.”

Exacte: iniquité veut dire injustice sur le dos des créateurs de richesse et des générations futures, quand le bateau coule, les vraies questions se posent.

Poor public finances have pushed governments before to take on the public service, as witnessed in the 1990s at the federal and provincial levels, in particular Ontario.

Still, count Dan Kelly, CFIB’s senior vice-president of legislative affairs, as a skeptic that governments are prepared to act this time, even though years of deficit financing looms. He cites the federal Conservative government, which has talked about restraining growth of the public sector but yet granted last fall pay raises of 5.3% over three years with some major unions.

Mr. Kelly says when he meets with politicians in private they acknowledge the frustration posed by public sector unions and the impediment they are to reform.

“But it seems that for whatever reason there is an absolute unwillingness to look at any form major public sector reform, whether on the size of public service, salaries, benefits and pensions,” he says.

“For the federal Conservatives, this is one of their won’t-touch-with-a-10-foot-pole issues, and I am not seeing any great lights at the provincial level either.”

Indeed, in Wisconsin some of the radical actions taken by governor Scott Walker, who threatened Friday to issue layoff notices to 1,500 workers as his measures run into political opposition, aren’t sitting well with the U.S. electorate. A poll conducted for The Wall Street Journal and NBC suggested Americans strongly oppose efforts to strip unionized government workers of their rights to collectively bargain. However, two-thirds of people polled indicated they want public employees to contribute more money to their retirement and health-care benefits.

La pression n’est même pas atteinte, beaucoup d’États sont techniquement en faillite, on ne peut continuer éternellement à imprimer de l’argent ou faire des déficits pour faire semblant que tous aille bien.

La réalité tôt ou tard va nous rattraper, et l’on devra assumer notre responsabilité que ces fonds de pension sont de vrais trous noirs.

In Ottawa, as part of its drive to curb program spending, the federal Conservative government has frozen departmental budgets, and ordered deputy ministers — the head bureaucrat for each division — to find savings within their group to finance pay increases employees are due. The belief is that Ottawa stands to save billions — up to $8-billion as outlined in the 2010 budget — as thousands of public servants retire but their positions won’t get filled.

The problem with this approach, Mr. Kelly argues, is the level of pay, benefits and pensions remain as is.

Exacte, enfin quelqu’un le dit, c’est incroyable les aberrations que j’entends venant des politiciens, remarquez c’est normal !

Mais pas un foutu journaliste québécois n’a émis une réserve sur cette affirmation, «remplacer deux fonctionnaires à la retraite par un fonctionnaire, la solution».

Ding, ding,  on se réveille même si les deux fonctionnaires sont à la retraite, ils sont toujours sur le ‘payroll', sauf qu'ils ne sont pas sur la même colonne de dépense.

Actuellement on a un ratio de 2 pour 1, deux cotisants par prestataires, pour avoir un minimum d'équilibre, il faudrait avoir au moins cinq cotisants par prestataire.

 “We are not as bad as U.S. so we don’t have to deal with this now,” Mr. Kelly says.

Par pire, M. Kelly, 1.1 trillion de dettes avec un sérieux problème de démographie et de compétitivité sur le dos.

Savez-vous le problème majeur de ces analystes, ils ont rarement la vue d'ensemble de la situation, ils sont experts dans un champ d'activité.

Mais la vraie économie réelle est un écosystème ayant des milliers de facteurs qui sont interreliés, il faudrait avoir des spécialistes en synthèse, pour avoir des déclarations plus crédibles.

 “But our day is coming. It will happen because of the pensions and benefits of the public service. And when we see large blocs of bureaucrats retire, governments will be unprepared to deal with it and their only avenue will be to go back to the taxpayer.”

And it is assumed the taxpayer won’t be amused.

Et là ! les vraies questions vont se poser.