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(David Parkins for The Globe and Mail/David Parkins for The Globe and Mail)
(David Parkins for The Globe and Mail/David Parkins for The Globe and Mail)

LABOUR COSTS

Out-of-control salaries the stuff of nightmares for health ministers Add to ...

An arbitration ruling last October involving Nova Scotia nurses is a real page-turner, guaranteed to keep you awake at night – if you happen to be one of Canada's 13 provincial and territorial health ministers.

The Nova Scotia government’s successful run with restraint – capping public-sector wage increases at one1 per cent annually – ended with that ruling. The arbitrators decided that nurses’ salaries in Nova Scotia ought to keep pace with those of nurses in other, richer provinces.

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“These nurses have always been the highest paid in Atlantic Canada and in the middle of the Canadian pack,” the arbitrators ruled. So the public in have-not Nova Scotia must pay to keep up with the “have” province of Newfoundland, which could afford to give its nurses double-digit salary increases.

Here’s the cliffhanger: Another bargaining unit representing health workers ranging from psychologists to porters is heading into contract talks next month. That group – represented by the same union as Nova Scotia's nurses – is threatening to strike if they don't get the same 5.1-per-cent increase in the first year. If they win, the rest of the 23,000-member Nova Scotia Government and General Employees Union will doubtless demand the same raise.

Such whip-sawing by health-care workers is an old story. As the reality of the new Canada Health Transfers sinks in – a redistribution announced by Ottawa last month that cuts the rate of growth over the coming decade – the provinces are suddenly keen to craft a strategy to curb the interprovincial competition for health-care workers.

Labour costs are the single biggest factor in health-care budgets. In B.C. they make up 62 per cent of the $12.6-billion annual budget. In Nova Scotia, they make up 70 per cent of the health budget.

This week, Saskatchewan Premier Brad Wall and Prince Edward Island Premier Robert Ghiz agreed to take a stab at the health human-resources challenge as part of their countrywide innovation working group. Every province has a stake in this question. Nurses in B.C. got around government wage controls in 2009 with a “labour market adjustment” because they argued B.C. couldn't recruit and retain nurses here when other provinces offered better pay.

The trick will be convincing wealthier provinces to abandon the practice of buying their way out of labour shortages. And B.C. ritish Columbia is one of the predatory provinces. Between 2006 and 2010, according to the Canadian Institute for Health Information (CIHI), this province had the highest in-migration of physicians in the country. Hundreds of doctors have moved here from other provinces.

Doctors – in fact all health-care workers in B.C. – are in contract negotiations this year. It’s unlikely the premiers will be able to concoct a plan before the province settles, but the other provinces would welcome a firm hand to set the tone.

Premiers Wall and Ghiz have six months to draft standards to ensure innovations are shared between the country’s 13 separate health-care systems. But don’t be misled by the “innovation” label – there is a heavy focus on labour costs. Not only will they try to forge a pact to limit competition for unionized health workers, they are kicking around the idea of a Canadian fee structure for services, which would take aim at doctors.

Most doctors negotiate fees for service rather than salaries, and as a group they been successful in bucking the restraint trends in public-sector salaries. The cost of paying physicians has been among the fastest-growing health categories in Canada in recent years, another CIHI finding. Between 1998 and 2008, their pay has been increasing at an annual rate of 6.8 per cent each year.

Robert Evans, an economics professor at the University of B.C.’s Centre for Health Services and Policy Research, is skeptical about the ability of the provinces to tackle the problem so long as the Harper government refuses to get involved. “What you need to do is develop interprovincial agreements about how much you are going to pay - it has to be binding, with financial teeth.”

And it won’t be easy to break old habits.

“They can try that all they want, it’s not going to work,” vowed Joan Jessome, president of the Nova Scotia Government and General Employees Union. “There will be labour unrest from one end of the country to the other.”



$1,670: The difference in per-capita health-care spending across Canada

The premiers have launched a health-care working group to trade “innovation” tips, in response to the Harper government’s move to a new funding formula that will provide the same amount of cash for every Canadian.

But that formula doesn’t produce comparable health care, because the cost of delivering service depends on a variety of factors, including demographics and regional realities. Seniors require more costly health care, while rural and remote populations are more expensive to serve.

Here’s the current per-capita health-care spending across the provinces:

Newfoundland and Labrador: $5,077

Alberta: $4,528

Saskatchewan: $4,348

Manitoba: $4,266

PEI: $4,058

New Brunswick: $4,033

Nova Scotia: $3,972

Ontario: $3,645

B.C.: $3,604

Quebec: $3,407

Source: Canadian Institute for Health Information, 2011 forecast

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