Alberta’s decision to limit striking by public employees – a critique of Bill 45

The government recently passed Bill 45, which in effect limits the ability of Public Sector Employees to strike.  The bill states…

  1. No employee and no trade union or officer or representative of a trade union shall cause or consent to a strike.
  2. No employee and no officer or representative of a trade union shall engage in or continue to engage in any conduct that
    constitutes a strike threat or a strike.
  3. No trade union shall engage in or continue to engage in any conduct that constitutes a strike threat.

You can read the full bill here.

This struck me as odd.  I would have thought that, as a Canadian, the right to strike would be part and parcel of the full rights granted to citizens of this country.  Now, I know that sometimes, with our over-consumption of US television, I get my Canadian and American rights mixed up, and since I don’t want to base my education on a show like Law and Order, I did my own investigation.

I started first by looking up the Canadian Charter of Rights and Freedoms, and was startled to see that the right to strike was not a fundamental right.  I know that charters and constitutions are written vaguely so as to apply as broadly as possible to the many nuances and complexities that arise in life, so perhaps it is not as surprising as I thought.

Canadian law is based on British law, which is a common-law type system, meaning that the law is developed through decisions of courts and tribunals, but include statues enacted by legislative bodies*.  With this in mind, I performed a quick search of the Canadian Supreme court archives to determine whether this Bill was in violation of the Charter and the Constitution.

I only read a couple of judgements but I picked one that, coincidentally enough, was brought forward by the AUPE against the Attorney General of Alberta in 1987.  This also was regarding the right to strike.  The court ruled that the right to strike is not a fundamental right and is not supported by the Charter of Rights and Freedoms.**

4 justices ruled against the AUPE, and 2 dissented.  Justices Beetz, Le Dain and La Forest claimed that the charter does not guarantee the right to strike, and while it does guarantee the right to association, this right cannot be extrapolated to include the right to strike.  I felt their argument pretty weak.

McIntyre had a better argument, I felt.  He stated that the Freedom of association under the Charter means the freedom to engage collectively in those activities which are constitutionally protected for each individual.** He goes on to say that charter allows for the freedom to associate in certain activities that are also protected for individuals acting alone.  The charter does not confer greater rights to groups than it does to individuals.  So, if the right to strike is not granted to an individual, it can be granted to a group either.

Dickson and Wilson dissented.  They argue, that throughout history, the role of association has always been vital as a means of protecting the essential needs and interests of working people and workers have associated to overcome their vulnerability as individuals to the strength of their employers** 

Furthermore, they add that the prohibition of the right to strike of all hospital workers and public service employees was too drastic a measure for achieving the object of protecting essential services. Indeed, without some evidentiary basis, it was neither obvious nor self‑evident that all those employees performed services “whose interruption would endanger the life, personal safety or health of the whole or part of the population”.**

In case you couldn’t tell, I agree with Justices Dickson and Wilson.

The Supreme Court has argued that the right to strike is not a fundamental right.  I can accept this. What I can’t accept though is the blatant conflict of interest that the Government of Alberta (GoA) is working under.  The GoA is both an employer and a legislative authority in this case.  The government should not be making laws that are grant it power as an employer.  If the right to strike is not a fundamental right as the GoA argues, then the government should back legislation that prohibits the right to strike for all employees in the province.  That will never happen, because it would be political suicide.  So, the government limits the rights of its employees, those it has power over, and wins the approval of the electorate so it can claim it is saving money.

But, it is not an impossibility that some large corporation will, in the near future, seek help from the government to limit strikes of its employees (happened with Air Canada), and it can be an easy extension to suggest that we are all essential workers.

Down with BIll 45.

*http://en.wikipedia.org/wiki/Common_law

**http://scc-csc.lexum.com/decisia-scc-csc/scc-csc/scc-csc/en/item/205/index.do?r=AAAAAQAPcmlnaHQgdG8gc3RyaWtlAAAAAAE

The old eat the young

I recently attended an AUPE union meeting, with a friend of mine who is an AUPE member.  In case you didn’t know, the AUPE is the Alberta Union of Public Employees, the largest union in Alberta and it represents 80,000** workers, mostly public employees (as the name would suggest).

At this union meeting, the union leaders talked about how the government is making changes that affect the ability of employees to strike, which is quite abhorrent, but I haven’t read the bill so I’ll get to that in a later post.  What really set everyone off, though, was that the provincial government is planning to limit the amount it contributes to an employee’s pension.  The pension contribution is currently a percentage of the person’s salary and is split between the employee and the employer (in this case, the provincial government).  What this would do would limit the ability of the union to improve the health of the pension plan by increasing this percentage.

A lot of those who have retired were angry regarding the perception that their pensions might be in jeopardy and asked for solidarity. The union leaders tried to persuade us that the pension was in good fiscal shape and was sustainable and they had a video to prove it.  I was all ears…

… Well, this video just showed a guy (who was actually at the meeting) talking about how the pension is sustainable.  No facts, no figures.  I decided to investigate for myself.

My friend’s pension plan is Public Service Pension Plan (PSPP).  I jumped over there and started to investigate.

The pension was performing well before the market nose dived in 2008.  See the following charts.

pension1For much of the 21st century, assets have remained higher than obligations, but there is an extremely large deficit to overcome now.  Meanwhile, the growth in assets minus the growth in obligations has only recently turned positive and there is no clear trend that it will continue to remain that way.  You would at least want the red line (growth in assets minus growth in obligations) to average around zero, meaning your assets are growing as fast as your obligations.  Since 2000, it has averaged -$181.9 million, a worrying trend.

Using the year 2000 as a base line, it is clear that obligations have grown much faster than assets, and continue to do so on a yearly basis. (see chart below)

pension2PSPP has historically achieved 73%* of its funding from investment returns.  It seems to me that those in the past have under-contributed to their pensions and are expecting those working to make up for the deficit.  The old eat the young.  If solidarity is desired, then it makes sense that those retired would see their pensions reduced (when their investments take a hit) as well as current employees seeing their contributions increase.  After all, we are all in this together.

The PSPP needs 6.3%* in investment gains yearly to achieve their goal, which its master’s have achieved over the last 4 years but not over the last 8.  I think they will be hard pressed to meet that target.  This all assumes that their assessment of life expectancy and age of retirement is correct as well.

Historically there were 4:1 employees to every pensioner in this plan.  Now the ratio is 1:1  That doesn’t sound very sustainable to me.

What are my friend’s options?

a) listen to the AUPE leaders and increase pension contributions and hope that a pension exists when he/she retires

b) quit and pull their money out which endangers the pension even more

c) save and invest and don’t rely on this pension

d) ???

I am not advocating that defined benefit pensions should be abolished.  I think that employers should honor the commitments made to their employees.  However, it is clear to me that the AUPE is not being forthcoming and honest with its current working members, those who it purports to represent.  Rather it appears that they are somewhat deluded by trying to save their own skin, which is not what people are giving them union dues for.

*PSPP 2012 Annual Report

** AUPE website

***All data taken from PSPP 2012 annual report