Canada faces relatively slow economic growth over the next three to five years, the Conference Board's Karla Thorpe said Friday.
The climate for bargaining has fundamentally changed and that means unions need to approach negotiations more modestly with reduced expectations on wage increases and even on some benefits or pension improvements, Thorpe said.
"So the new normal is really an acknowledgment that the economy is in a period of slow growth that's going to continue over the medium term," said Thorpe, director, leadership and human resources at the board.
As a result, the board expects average base wage increases for unionized workers next year will rise just 1.8 per cent in the public sector and 2.1 per cent in the private sector.
Dave Coles, president of the Communications, Energy and Paperworkers Union, said the board's wage increases for 2013 are "bang on" and in line with the cost of living.
But Coles doesn't accept the term the "new normal."
"We're in a world austerity program that we're opposed to," he said. "Canadian workers are getting choked."
Thorpe said given the economic climate, she expects a lot of restraint particularly in the public sector, which will put "downward pressure" on wages for public servants, regardless of which political party is in power.
The board said in its Industrial Relations Outlook 2013 report that Alberta and Newfoundland and Labrador are growing faster than other parts of Canada.
There were a number of strikes and lockouts in 2012 and that was fuelled by differing views on the state of the economic recovery, Thorpe said from Ottawa.
The federal government threatened to prevent strikes by Air Canada workers and imposed arbitrated settlements that mostly ended up favouring the airline. The government also intervened with Canada Post.
U.S. heavy equipment giant Caterpillar Inc. (NYSE:CAT) closed the Electro-Motive plant earlier this year in London, Ont. It relocated to Indiana after workers refused to accept a 55 per cent cut in wages and benefits.
Thorpe also said Canada actually has been in what she calls the "new normal" since 2009.
"There has been a lot of denial that we're in this period of slow growth," she said.
"So it has taken a few years for, I think, employers and labour to acknowledge and recognize that we're not going to be back to that pre-recession level for still a number of years to come."
Wages will be a bit higher in the private sector, Thorpe said, because there's some economic growth in industries such as oil and gas.
Coles said the economic climate will put downward pressure on union wages, particularly in the public sector.
But he said other sectors of the economy, such as oil and gas and telecom, are doing quite well. Coles noted that bargaining begins shortly with energy workers.
"I think we're also heading into a period of significant unrest because of the austerity measures that are being forced by some where they're not necessary and by government interference in collective bargaining."
Coles said he doesn't want the federal Conservative government to meddle in collective bargaining rights in 2013.
"It's none of their business. It should not be worrying about how unions operate. If they keep messing with it, they're heading for a problem."
The roughly 114,000-member Communications, Energy and Paperworkers Union of Canada will merge with the Canadian Auto Workers in 2013, partly as a way to strengthen union clout in Canada.
The new union will initially have more than 300,000 members across roughly 20 sectors of the economy.