THE BLOG

Could a B.C. Government Worker Actually Grow the Economy?

12/02/2013 03:32 EST | Updated 02/01/2014 05:59 EST
It's an all-too-regular occurrence in this province. Government employees, whipped up by their union leaders, marching against whatever economic development opportunity is being proposed.

Pipelines to the coast? Opposed. Gas exploration? Opposed. Companies creating investment revenue for pensions? Opposed. New mine? Opposed. Coal exports? Opposed.

But what if government employees had a direct financial stake in the economy doing better than expected? Would they be more willing to consider ways to grow the economy? It's an interesting premise, and one the B.C. government will test in the next round of collective bargaining.

Earlier this week, Finance Minister Michael de Jong laid out the government's "economic stability" mandate for the next round of bargaining. Unions who settle contracts of at least four years would be eligible, in 2016, to start taking an "economic stability dividend."

If the provincial economy, measured by real GDP, outperforms the predictions of the government's economic forecast council, union members would be eligible for a pay increase. For example, if the experts predict a 1.5 per cent growth in B.C.'s economy, but B.C. hits 2.5 per cent, the unions would get a share of the difference -- an economic stability dividend translating into a half-point pay increase.

The first tentative agreement has already been reached under this new mandate. Health sciences professionals will vote on a five-year deal that includes total raises of 5.5 per cent raise -- and the chance for dividends in 2017, 2018 and 2019.

The deal is not flawless. There is no pay reduction for years when B.C. doesn't meet the economic growth forecast; if taxpayers are taking the risk of paying employees more, so should the union. After all, in the past 12 years, growth has surpassed predictions six times, and missed six times -- why only pay out in the good years?

For that same reason, any dividend should be in the form of a one-off bonus -- not added to the base pay rate, as de Jong proposes.

There is also a potential hiccup in calculating the dividend. Contract language ties it to a specific number produced by Statistics Canada. Alberta taxpayers got burnt when that province tied Alberta Teachers' Association raises to StatsCan's average weekly earnings chart. When StatsCan changed the way that chart was calculated, and taxpayers had to foot the bill for a big pay hike.

But de Jong and the BC Liberals should be commended for their leadership on government union contracts over the past several years. Following the economic downturn in 2008, the BC Liberals pushed two years of net zero -- meaning no raises -- on to employees, saving taxpayers an estimated $3 billion.

Then came two years of cooperative gains -- where all raises had to be funded by corresponding savings within the same contract -- saving taxpayers even more money. 

Many taxpayers have been rightly critical of the BC Liberals' record on executive pay and bonuses and the massive, gold-plated labour deals Gordon Campbell handed out before the Olympic Games, but there are few governments in Canada that have performed as well on union negotiations over the past few years.

Net zero, cooperative gains, and economic stability, are innovative ways for a government to deal with its labour costs -- now $24 billion in B.C. Put together, they will have created nearly a decade of controllable, stable and predictable labour costs.

If only Ottawa, other provinces, regional districts and municipalities would follow B.C.'s lead, starting with net zero.