In the CTF’s op-ed, Derek Fildebrandt argues that the government should amend the legislation governing public-sector labour relations to compel arbitrators to:
…to reflect the fiscal realities of the province.
Arbiters in the private sector generally do not award raises when a company is hemorrhaging money or is unprofitable. Similarly, arbiters should be required to reduce pay or at least hold the line when the current revenue and spending framework is leading to a growing debt.The problem with Fildebrandt’s prescription is that it obfuscates a fundamental difference between public- and private-sector employers.
In the private-sector, an employer’s ability to pay is (more or less) determined by revenue, something that is largely outside of the employer’s control. In short, ability to pay is a real and significant constraint on a final settlement in the private-sector.
The public-sector is different. In the public-sector, the employer’s ability to pay is determined by the employer when the employer decided what level of taxes to levy on individuals and corporations. In short, ability to pay is within the control of the employer.
Arbitrators are loathed to apply “ability to pay” in public-sector arbitrations because politicians have an electoral incentive to minimize taxes and maximize programming. They have their cake and eat it too only if they underpay their workers.
That is to say, accepting ability to pay arguments in the public sector would allow politicians to force public-sector workers to subsidize public services via substandard wages.
(Yes, yes, no one wants to pay more taxes. But, if taxpayers want adequate public-sector services, it stands to reason they have to pay for them, no?)
Externalizing costs via mandating substandard public-sector wages likely sounds good if your interest is minimizing corporate taxes. But, to fair-minded people, mandating public-sector arbitrators consider a government’s ability to pay (which is, in truth, unlimited) is simply another way to screw public-sector workers.
Attacking public-sector workers has (happily) proven to be political suicide for the Tories. No party with ambitions to actually form government is likely to adopt this strategem.
-- Bob Barnetson