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Locked out Canada Post workers walk a picket line in Ottawa on June 15, 2011. (ADRIAN WYLD/THE CANADIAN PRESS)
Locked out Canada Post workers walk a picket line in Ottawa on June 15, 2011. (ADRIAN WYLD/THE CANADIAN PRESS)

Strike two: Ottawa steps in to end Canada Post labour dispute Add to ...

The Harper government is proceeding with back-to-work legislation to end the Canada Post strike, the second major labour stoppage that it's targeted this week using its Commons majority.

Economists predict more management-labour strife ahead for Canada, especially in the public sector, as companies and governments remain in austerity mode and seek to cut costs and lighten their pension obligations.

The Conservatives served 48 hours' notice Wednesday that they would introduce a bill ending the labour disruption at Canada's state mail carrier. It will take until next week to pass into law.

The move came one day after the Tories set the wheels in motion to shut down the Air Canada strike as well - a dispute triggered by the carrier's efforts to scale back its pension costs.

In both cases, Labour Minister Lisa Raitt has justified stepping into the labour spats by citing the damage that work stoppages could do to the economic recovery.

The Canada Post legislation will be designed to end the postal carrier's lockout of unionized workers and mandate an arbitrated settlement to the dispute, sources say.

Ms. Raitt sounded a note of exasperation at both sides in the postal disruption, just as she did Tuesday when announcing Ottawa will force an end to the Air Canada strike.

"They are unable to reach that agreement by themselves, even though they have had ample opportunity to do so and much support from this government and from Labour Canada," the Labour Minister saidof Canada Post and the Canadian Union of Postal Workers.

Notice of the bill serves as a warning to Canada Post and its union to try one last time to reach a deal before the legislation becomes law.

Parliament is scheduled to sit as late as June 23 before a summer break - but legislation to end the Air Canada dispute and the Canada Post dispute could require an extension of the Commons calendar if the NDP, which opposes the bills, slows things down.

The New Democrats said they'll fight both bills. "I'll take the side of the worker before I take the side of business that make millions of dollars," NDP labour critic Yvon Godin said.

Canada has undergone a moderate recovery, but it is slowing and companies still face challenges from fierce global competitors and a Canadian dollar worth more than its U.S. counterpart.

Governments, meanwhile, are shifting from outright stimulus to serious restraint.

Canada's been largely spared the mass protests and strikes that have plagued other countries in the face of austerity measures, but experts say tensions could still rise in the months ahead.

"We've had a fair bit of [labour]peace over the last year and that may well be coming to an end," BMO's deputy chief economist Douglas Porter said.

Pension costs are a flashpoint, particularly employers' push to move from a defined benefit plan - which guarantees a certain payout upon retirement - to defined contribution plans, where returns depend on the success of investments.

Canada Post went into contract talks determined to create a two-tier wage and pension system - one for existing workers and another less generous one for new hires. It's since backed off the most controversial provision but still wants to raise the retirement age for receiving a full pension to 60 from 55 for future employees.

Effective next January, Air Canada wants to place new hires on defined-contribution plans, which don't provide a guaranteed level of payout upon retirement. The airline argues that it can no longer afford to maintain an overly generous retirement system, so it's also seeking to reduce payments to future retirees already on defined-benefit plans.

Labour negotiators say workers have made enough sacrifices over the past decade. About 3,200 airport customer-service agents and 600 call-centre staff are entering the third day of their strike.

The combination of an aging population, rock-bottom interest rates and sluggish economic growth are putting pensions on a collision course - in Canada and throughout the developed world.

Employers are in an awkward spot, particularly those offering retirees a guaranteed income when they retire. Many companies, including Air Canada and Canada Post, now have more retirees than workers, leaving them with massive long-term financial commitments and pension shortfalls.

"We're going to see more of these labour conflicts over the issue of pensions," predicted Ian Lee, MBA director at Carleton University's Sprott business school.

"The economics of pensions have changed. There are a lot fewer people under us Baby Boomers than ahead of us."

And yet defined pensions remain the norm in Canada, at least for those workers lucky enough to have pensions. More than 90 per cent of registered pension assets are in plans that offer set benefits at retirement.

In recent years, companies have been steadily moving new employees to defined contribution plans, essentially shifting pension risks to employees. Experts predict defined contributions will eventually be the standard.

Roughly half of Canadian workers have no pensions at all, beyond any money they have socked away in RRSPs or their home.

And that's ratcheting up pressure on Ottawa.

Public sectors workers enjoy generous defined pensions, with early retirement provisions that allow retirees to collect a full pension when they're still in their fifties. Canada Post workers, for example, can retire with a full pension at age 55.

"When the private sector is moving company by company to transform defined benefit to define contribution pensions I can't see the federal government sailing on in majestic isolation," Mr. Lee argued. "They've got to move on it."

The two sides in the Air Canada dispute broke off formal bargaining late Monday night, but carrier spokesman Peter Fitzpatrick said Wednesday that management is staying in touch with union negotiators. "We are in communication. There is a dialogue," he said.

CAW spokeswoman Shannon Devine said it would be a stretch to characterize any exchange as progress.

The Canadian Auto Workers union, representing striking Air Canada workers, said it won't budge on contentious pension reforms being proposed by management, leaving the two sides at an impasse even as Ottawa threatens to end the walkout.

"Future employees will be exploited," CAW national president Ken Lewenza told union members Wednesday at Toronto's Pearson International Airport.

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