Canada has settled into a “new normal” of collective bargaining, characterized by modest economic prospects matched by modest expectations, according to a report released this morning by the Conference Board of Canada.
“We have been living in the ‘new normal’ since 2009, but we are only now realizing that we will not soon return to the buoyant growth enjoyed before the recession,” said Karla Thorpe, the conference board’s director of leadership and human resources leadership.
“The bargaining climate has fundamentally changed, and modest economic prospects matched by modest expectations may encourage pragmatism rather than rhetoric at the bargaining table,” she added.
According to the conference board, both Canada and world economies are facing slow near-term growth. It added that Canada’s outlook is made worse by a strong currency, tepid productivity improvement and demographic changes “that will challenge government spending and revenue capacity over the long term.”
The report projected that average base wage increases for unionized employees in 2013 will be 1.8% in the public sector and 2.1% in the private sector. The report argues that, in the current climate, the labour movement may find it counterproductive to focus squarely on increasing union wages.
“Improving working conditions for workers and influencing public policy may prove to be a more fruitful approach,” the conference board argues.
The report argues that, as all governments focus on reducing deficits and controlling public spending, public sector employment and compensation “will be subject to increasing restraint.”
“Some of this pressure will come from scrutiny into public sector pensions and benefits, which are often seen to be generous compared to the private sector,” it said.
