Watching the Rob Ford saga unfold in Canada’s largest city must make Canadians elsewhere wonder: How did he ever get elected?
Elections are never one-dimensional, so there were obviously many reasons, but principal among them was a contract signed by the previous mayor, David Miller, with the powerful Canadian Union of Public Employees ending a garbage strike.
That deal was the last straw for many citizens who came to believe that the inmates, namely public-sector employees, were running the asylum. They wanted someone who would keep taxes down and unionized employees in their place. Hello, Rob Ford.
Today in Ottawa, the federal Conservatives are making threatening noises about public employees and the management of Crown corporations. No longer, say the Conservatives, will they keep hands-off negotiations between Crowns and unionized employees. “Hard-working taxpayers” (the Conservatives’ favourite cliché) deserve to have their money better protected.
Whether politicians campaign against public-sector unions or not, the battle with them is now a constant across Canada. The gap within the trade union movement itself is wide and growing; and the gap between the degree of unionization in the public and private sectors has never been wider. These gaps explain a number of tensions that play themselves out across Canada.
Nationally, about 31 per cent of workers are unionized. Union density is highest in Quebec (40 per cent) and Newfoundland (39 per cent) and lowest in Alberta (23.5 per cent) and Ontario (28 per cent). Overall union density has dropped from 34 per cent 15 years ago to 31 per cent today.
The biggest gap, however, is between the 70 per cent union density in the broad public sector and 18 per cent in the private sector. As Jock Finlayson of the Business Council of British Columbia notes in a recent paper, “the probability that an employee in B.C. belongs to a union is almost four times higher in the public sector than in the private sector.”
In the private sector today, only 9 per cent of workers have defined benefit pension plans. The rest have defined contribution plans, hybrid plans or no plans. No wonder some taxpayers without defined benefit plans note grumpily that more than 50 per cent of workers in the public sector still have them. And these workers are fighting hard to keep these plans that employers have abandoned as unaffordable throughout the private sector.
A few private-sector areas (transportation and utilities) still experience high rates of unionization. Construction at 31 per cent and manufacturing at 27 per cent hover near the national average. The rest of the private sector has very low rates, and small business has the lowest rate of all.
By contrast, labour’s big battalions are teachers, university staff and professors, health-care employees, civil servants and social-service employees. These public sectors have rates of unionization that far exceed private-sector unionization. That sets up potential political conflicts within the union movement when private-sector union members, whose industries have been buffeted by economic downturn, watch public-sector employees protect their pensions and remuneration.
It was always a myth that unionized employees supported in a majority the political party, the NDP, backed by the union movement. In the recent B.C. election, Liberal Premier Christy Clark’s party carried interior and northern ridings where forestry and mining industries experience a 37 per cent unionization rate. Many prominent public-sector union figures backed the NDP, to no avail in the final results.
One challenge for all governments is getting productivity gains in the public sector. Baumol’s cost disease – an economic theorem often proven empirically and named after the economist William Baumol – shows that wage gains always outstrip productivity improvements in the public sector. Baumol’s cost disease poses a huge challenge for provincial governments, whose services – health, education, social services – are very labour-intensive.
That is certainly what happened in recent years in health care; productivity did not improve despite bigger paycheques for doctors and nurses. In universities, pedagogy goes on much as it has for decades, although incomes rise within the institutions such that they have an built-in (and unsustainable) inflation rate of 4 to 4.5 per cent. Prof. Baumol would understand.