Wage Restraint –Ontario Government Impact on Municipal Bargaining

The Provincial Government has tabled legislation to restrain public sector wages and compensation for 3 years to 1% per year. If Bill 124 passes all Ontario Government, its Crown agencies, boards and commissions will be covered. All universities, colleges, hospitals, school boards, Long Care Homes, not for profit receiving +$1,000,000.00 from the Government will be restricted. 

The express purpose is to provide for modest, reasonable and sustainable compensation growth. By definition that means no more than a 1% increase per year. 

The preamble to the legislation indicates that the provincial debt is among the largest subnational debts in the world. It indicates that the interest on debt payments is the 4th highest line item in the 2019 budget, only surpassed by expenditures on healthcare, education and social services. The goal is to ensure compensation increases reflect the challenging fiscal situation in the Province to protect the sustainability of public services.

These are very ominous declarations. They dictate attention to responsible fiscal management. In hard terms, if this legislation is implemented as drafted, all the compensation in collective agreements and arbitration awards commencing after June 5, 2019 will be limited. The limit will be 1% a year. The restriction extends to cover all other forms of compensation.  

The total increase per year must not exceed 1% of wages so if any benefits were improved that cost forms part of the 1% total. In other words, any other forms of compensation increase will reduce possible wage increases to less than 1%. This is because the total is limited to 1% increase.  

WOW! Perhaps the professional bargainers will spend more time on non-monetary items. Class size jumps to mind in the education field.

But, municipalities are not covered. How should they consider this legislation? Is it a powerful and compelling precedent? Does it mean no more than 3% over 3 years? Will it encourage agreements for more than 3 years to allow more compensation? 

Since municipalities are not covered, Fire Interest Arbitrations will be exempt. However, the legislation makes arbitration awards after June 5, 2019, in applicable sectors, subject to the 1% rule.  

Any increase beyond the legislation is deemed void. Arbitrators are prohibited from considering agreements about constitutionality of the legislation. Their awards must comply with Bill 124. 

One of the unions covered is the Ontario Provincial Police Association. This means the OPP Agreement will be restricted to 3% over 3 years when the next negotiations occur. Since the Big 12 Regional Police Forces have traditionally considered the OPP an important comparable, will the limitations in the next OPP Agreement moderate all the other Police Agreements? 

For years, fire unions have expressed the proposition that fire and police living and working in the same municipality should be compensated similarly. Police-Fire comparisons are used in every Fire Interest Arbitration. Will the OPP situation cascade into fire and produce moderate increases in the municipal fire field over the next 3 years?

Under Bill 57, the criteria for fire interest arbitration were amended in 2018. Now, arbitrators must compare the treatment of other employees in the public sector. Once Bill 124 is in effect, many will be at 1% a year. The Arbitrators must also consider the economic health of Ontario which the preamble to Bill 124 suggests is bad. Will these considerations and the impact of Bill 124 be enough to draw the net of wage restrain over municipal bargaining? Will the Municipalities bargain down? 

Unless municipalities have found lots of extra cash, it seems opportune to follow the Provincial Government lead. Modest, and reasonable compensation is the way to go. 1% a year seems about right. At least, for 3 years. That would be a responsible approach.

Time will tell.

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