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Royal Alexandra Hospital front-line workers walk a picket line after walking off the job in a wildcat strike in Edmonton, on Oct. 26, 2020.JASON FRANSON/The Canadian Press

Alberta’s recent provincial budget included hundreds of millions of dollars in cuts to public-sector compensation, setting up a contentious year of negotiations and potential labour unrest.

Unions representing tens of thousands of government workers will be negotiating their collective agreements as a significant number of contracts are about to expire. In the health care sector, bargaining was put on hold in 2020 because of the pandemic and will resume in the spring.

The scale of those negotiations combined with the government’s plan to take a hard line on spending have set the stage for a particularly heated round of bargaining, with the government pushing for wage cuts as union leaders warn that strikes are inevitable.

The budget, tabled in late February, aims to freeze expenses over the next three years to fulfill a United Conservative Party election pledge to bring down Alberta’s per-capita spending. Part of that plan will see public-sector compensation reduced by $1.7-billion by 2023-24 compared with the current fiscal year – a drop of 8.4 per cent. Those totals do not include doctor compensation, which is not part of the union bargaining process and is governed by a separate agreement with the province that has also been a source of contention.

The reduction will come from job cuts, partly through attrition, as well as wage cutbacks. The government hasn’t said precisely what it will be seeking from its employees this year but offered a preview last fall when it asked for a 4-per-cent wage cut followed by three years of zeroes.

Unionized workers offered a preview of their own in October. In response to plans to replace as many as 11,000 health care jobs in areas such as food and laundry services with private contracts, hundreds of workers walked off the job. The province’s labour board said the walkouts amounted to an illegal strike, and Alberta Health Services reprimanded the workers.

Guy Smith, president of the Alberta Union of Public Employees, the province’s largest, said many unions agreed to wage freezes in the last round of bargaining – with the previous, NDP government – in exchange for job security. He said there is little appetite for wage cuts.

“Our members have made it very clear that, especially after the last few years of wage restraint, there’s no interest at all in taking concessions,” he said.

“If anything, I would say they’re even angrier now than they have been because they have been there on the front lines of this pandemic, and this is the thanks they get.”

He said the union has warned its members that it’s unlikely contracts will be reached through negotiations. He expects many of those collective agreements to head to mediation and said strikes are “very likely.” He also said the sheer number of contracts up for negotiation this year raises the possibility that multiple bargaining units could be on strike at the same time.

The UCP came to power in 2019 on a platform to rein in Alberta’s deficits through spending cuts. The government argues that the province’s main problem is overspending – and public-sector wages in particular – and has promised to bring costs down to levels in other large provinces.

The government struck a panel in 2019 to look at the province’s expenses. The panel, led by former Saskatchewan finance minister Janice MacKinnon, concluded that while the size of the public sector is comparable to those of other large provinces, per-capita compensation is higher in Alberta than in B.C. and Ontario. The report also showed that compensation in all three of those provinces is considerably lower than in Quebec.

The panel recommended the province bring wages in line with those of B.C. and Ontario and legislate salaries.

Critics have attacked the report for ignoring the fact that Alberta, B.C. and Ontario have lower per-capita spending than other Canadian provinces and accused the government of setting up the panel to reach a predetermined conclusion.

Alberta’s Finance Minister and Premier have both argued that the province needs to reduce the overall size of the public sector – the 2019 budget called for a 7-per-cent cut in staff over several years – and have asked government employees to share in the pain of an economic downturn that began when oil prices collapsed in late 2014.

Finance Minister Travis Toews declined to say what the government would be asking for in negotiations but asked the unions to help get the province’s finances – which included deep deficits even before the turmoil of the pandemic – under control.

“We simply can no longer afford to be an outlier,” he said at a recent news conference.

“I would suggest that our mandate is eminently reasonable, relative to the tens of thousands of Albertans in the private sector who’ve either taken a wage cut or even lost their job over the last year or so. … I’m hopeful that we can avert job action.”

He said the government is grateful for the work of front-line workers during the pandemic but argued that must be balanced against the difficult financial realities facing the province.

Shannon Phillips, the NDP finance critic, said layoffs and significant cuts to public-sector wages will leave those workers with less disposable income and only hurt the economy.

“The consequences of that will be felt by ordinary people,” she said.

Ms. Phillips said spreading the economic pain around to include public-sector workers does nothing to help people who have been laid off or have seen their wages fall because of the oil downturn or the pandemic. She said the government should instead be focusing on rebuilding the economy to help those people.

“The fact is that, yes, the private sector is hurting. So what are we going to do to recover that? Why don’t we raise the prospects for people working in the private sector?”

Richard Mueller, a University of Lethbridge economist who has studied wages in Alberta, said his research found the province is not an outlier in Canada.

Dr. Mueller said Alberta has higher wages than the rest of the country across its economy. That lifts up public-sector wages, which are typically higher than in the private sector everywhere. He said the difference between the two is in line with other jurisdictions.

“Our private sector is really well compensated in this province, and that kind of filters over to the public sector,” he said.

“Alberta really doesn’t stand out.”

He published a paper in 2019 that found the province could cut public-sector wages by 3.7 per cent, which would save about $800-million a year, without seeing a significant decrease in government services. However, he also argued that such a cut would cause “ripple effects,” particularly at the higher end of the pay scale, that could prompt high-skilled public-sector workers to leave the province or seek employment in the private sector.

“You want to be surgical about any cuts right now,” he said.

Gil McGowan, president of the Alberta Federation of Labour, argued the scale of the reductions contemplated in the budget makes widespread strikes a certainty.

He said public-sector workers in Alberta have been through this before and don’t want a repeat. In the early 1990s, then-premier Ralph Klein’s government negotiated contracts that included significant wage cuts in exchange for job security, only to lay off thousands of workers anyway.

“Confrontation and strife and disruption are written into this budget,” Mr. McGowan said. “All of our public-sector unions will do everything they can to reach an agreement without resorting to a strike, but at some point, the clock will run out.”

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