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Three Valley Gap

Rob Shaw: BC’s government and largest public sector union are far, far apart on contract talks. Like, really far.

BC’s largest public sector union this week warned negotiations for a new contract with the provincial government had “stalled” over the issue of wage hikes during a time of record high inflation.

“We came to the table carrying a clear message from our members to their employer—cost of living protection is the price of admission for a deal this round,” BC General Employees’ Union president Stephanie Smith said in a release.

“When we exchanged monetary packages last week there was a gaping chasm between what our members need and what the PSA (Public Service Agency) was offering so we’re stalled.”

It’s a worrying, but not surprising, start to a new round of collective bargaining with dozens of unions representing almost 400,000 public sector workers.

Canada’s inflation hit 5.7 per cent on March 16 – a 30-year high. Part of that is energy price increases caused by Russia’s invasion of Ukraine, which are translating into record-high gas prices at the pump. But food prices also jumped 7.4 per cent, and shelter costs were up 6.6 per cent as well.

Those cost pressures are top-of-mind for BC unions, because they don’t want to sign deals for wage increases that are lower than cost of living increases.

That means the two sides are discussing “protection” against inflation – potentially something like a whatever-is-higher clause between a base annual raise and the rate of inflation. No collective agreement in the last 20 years in BC has contained such wording.

The problem though is how the BC government defines inflation. It has developed crafty ways to lowball the amount, to its benefit.

When BC announced it was linking the minimum wage to inflation this week, it pegged inflation at only 2.8 per cent – a figure that surprised many because, according to Statistics Canada, the true figure in BC in February was 4.7 per cent.

Turns out, BC used the “average” of inflation in 2021, which was convenient because the year started at only 1.1 per cent in January and 0.9 per cent in February, pulling the average way down below our current reality.

That kind of creative calculus is no doubt being considered by BC in contract talks as well, in part because every 1 per cent increase in compensation for the public sector costs the province $370 million.

From the province’s side, handing over a five per cent wage increase to keep the public sector at pace with inflation would cost $7.4 billion over the course of a typical four-year collective agreement. That’s a major hit to the treasury.

Outside of public sector contract talks, inflation is a major problem for the larger BC budget as well. It drives up the cost of multi-billion capital projects, contributes to higher health care caseload costs, increases education costs, raises interest rates on borrowing and drives down consumer spending, costing the province both economic growth and taxation revenue from things like the provincial sales tax on retail sales.

The most recent budget described inflation as a major risk to the economic forecast.

There’s still a lot of time to go in the traditional bargaining framework, and several other major unions representing teachers, nurses and other professionals haven’t even started yet.

But all of these swirling and competing factors are making this year’s contract negotiations particularly challenging for everyone involved.

Rob Shaw has spent more than 13 years covering BC politics, now reporting for CHEK News and writing for The Orca. He is the co-author of the national best-selling book A Matter of Confidence, and a regular guest on CBC Radio.

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