The Allure of Shortcuts

This article was originally published on October 6th, 2012, by the Pembroke Daily Observer

The announcement last week that the Ontario government is to introduce legislation imposing a two-year pay freeze on public sector workers as their union contracts come up for renewal seems, on the surface, to be an admirably straightforward way to address the province’s budget deficit. On reflection, though, this is a dangerous shortcut that is both inadequate and a threat to our fundamental rights.

While I am not a big fan of Ontario’s public sector unions, they are correct in saying that the proposed ‘pay-freeze law’ is unconstitutional. More importantly, it is also wrong in principle.

In a free society, governments are expected to, at a minimum, serve two functions. First, they must protect people’s lives and second, they must protect people’s property. Any government that fails to protect the lives and property of its citizens is not fit to govern.

For example, in a well-governed country such as Canada I trust that the government will, through the police and the courts, protect me from violence and from theft. In a failed state such as Somalia, on the other hand, people have no such trust and thus need to personally ensure the security of their persons and their property. While in Canada we can trust the law to protect us (and grant the state a monopoly on the use of force in order to enforce the law), people living in failed states need to be ever-vigilant and prepared to personally fight to protect what is theirs.

Protecting people’s property rights also involves protecting contracts. At base, a contract contains the conditions under which property is to be exchanged. Thus, if one party to an agreement is able to unilaterally change the conditions governing an exchange, it is seen as theft by the other party. For instance, if I agree to buy your car for $5000 and then, on the day of the sale, tell you that I am only going to pay you $4000, you quite rightly may feel that I am trying to rob you of $1000.

Extending this reasoning, Ontario’s public employees are absolutely correct to object to the proposed law as by denying them the ability to negotiate the conditions of their employment the law is violating their property rights. A person’s labour is their property and as such people have the right to negotiate the terms by which they will provide it to others.?

Of course, public sector employment is exceptional in a couple of ways that are important and which make contract negotiations difficult. On the one hand, many public sector employees have no alternative employers. While in a private company workers who are underpaid will migrate to better-paying firms, for many public service workers there is nowhere else to go. In the past, this has resulted in (mainly female) nurses and primary school teachers being paid very low salaries. On the other hand, the government is not allowed to hire non-unionized employees and cannot move operations elsewhere in search of lower wages. In the present, this likely leads to the government paying more than is necessary to attract and retain some of its workers. The absence of these competitive pressures that influence private sector wage talks results in both governments and public service unions having difficulty establishing ‘fair’ wage and benefit benchmarks to inform and guide their own negotiations.

However, the prospect of difficult negotiations does not give the government permission to erode fundamental property rights. So why is the Ontario government (like the B.C. and Federal governments before it) nonetheless choosing to do so, thereby abandoning one of the central responsibilities of government in a free society? The short answer would appear to be cowardice. What seems to be happening here is something akin to what happens when a lover decides to leave his or her partner but lacks the courage to tell them so in person. In such cases, the lover will often choose to inform the partner by email or text message. In our own case, the provincial government has had a 9-year love affair with the public sector unions that in the face of growing deficits needs to change. However, rather than renegotiate the relationship through open dialogue, the government is choosing to change the relationship by decree.?

This is wrong. Workers have a right to negotiations that do not involve predetermined outcomes. Perhaps through negotiations the government would even be able to make a good case for deep wage and benefit cuts that would be acceptable to workers given the current economic climate. Ontario’s teachers readily agreed to a wage freeze in their recent contract talks, which is evidence that public sector workers do appreciate the government’s precarious fiscal position and are willing to negotiate in good faith. However, while engaging in meaningful negotiations would indicate respect for the dignity of its employees, this government appears more interested in being seen humiliating public servants than in engaging in meaningful structural reforms that would reduce spending now and in the future.

The adoption of this law will, like most bad decisions, undeniably provide some short-term benefits to the government. First, they will appear ‘tough’ in the eyes of voters who envy the relatively good pay and benefits enjoyed by some public sector employees. Second, such labour strife as does occur as a result of the law may serve to distract people from some of the government’s expensive economic policy and implementation failures (as outlined in the Drummond Report last year). Lastly, and most directly, the government should, armed with this legislation, be able to more quickly negotiate favorable agreements with its workers.

However, and again like most bad decisions, those short-term benefits are more than offset by the potential long-term costs. Most directly, imposed settlements erode the morale and goodwill of public sector workers and will likely lead to more difficult labour relations in the future. As well, by imposing a simple wage freeze, the government is unlikely to explore other more fundamental changes to how services are delivered and administered that could potentially result in much greater savings. Most importantly, though, an imposed settlement establishes a dangerous precedent that directly weakens one of the pillars of a free society. While it may be expedient for the government to pursue this course at this time, any shortcut that threatens people’s fundamental property rights is simply not worth taking.