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Canada's Finance Minister Jim Flaherty (C) shakes hands with Ontario Finance Minister Charles Sousa (R) and British Columbia Finance Minister Mike de Jong after signing an agreement to set up a cooperative capital markets regulator, on Parliament Hill in Ottawa September 19, 2013.CHRIS WATTIE/Reuters

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Last month, officials from Ontario Premier Kathleen Wynne's government paid a visit to a little-known institution in Victoria – the B.C. Public Sector Employers' Council.

They were searching for British Columbia's formula for public sector labour peace.

The B.C. government is one of just three provinces posting a balanced budget this year. It has done so amid dire warnings of tough fiscal choices and lean times. Yet it has signed contracts with most of its public sector with average wage hikes between 3.5 and 4 per cent over two years. (A settlement with the province's public school teachers remains elusive.)

Lee Doney, the council's president and CEO, walked the Ontario crew through the trick: His agency was tasked with imposing a provincial bargaining mandate across the entire public sector. The mandate, dubbed "co-operative gains," allows unions to negotiate wage hikes, if they find operational or productivity savings somewhere in their sector to offset the costs. A 1-per-cent wage increase across the board costs $200-million, yet under co-operative gains, the province's $24-billion budget for compensation doesn't grow.

The savings were found in small changes – by using envelopes with windows, bureaucrats avoided time spent duplicating addresses, for example – and larger shifts, such as changes to the PharmaCare plan so that low-cost generics can be used instead of brand name drugs.

The employers' council was created 20 years ago under the B.C. New Democratic Party government as a way to co-ordinate bargaining in the public sector. Mostly it was designed to derail the practise of "whip-sawing" by different bargaining units. It is this model that both Ontario and the federal government are especially interested in.

In the fall of 2012, both Ontario and B.C. appeared to be on the same track of labour unrest fuelled by spending restraints. While teachers' unions in Ontario threatened to withdraw from extracurricular activities, the B.C. Government and Service Employees' Union held a one-day strike – the first job action by the direct civil service in decades.

At that time, B.C. public servants were already well into a government-imposed wage freeze – something Ontario is still working its way through. The B.C. Liberal government had vowed to get back to a balanced budget and in 2010 gave the employers' council a "net zero" bargaining mandate.

But Premier Christy Clark was heading into a provincial election in May of 2013, and rather than risk labour strife that might help the opposition B.C. New Democratic Party, the premier approved the proposal that gave the province's 300,000 unionized public sector workers the chance to bring home wage increases.

To date, more than 250,000 workers in B.C. have tentative or ratified agreements within the framework. The largest union still holding out is the B.C. Teachers' Federation, which is in court seeking to restore rights that were stripped from its contract more than a decade ago.

Overall, the B.C. Liberals view co-operative gains as a success. However, there is a new challenge ahead.

Having soaked up whatever savings could be found, there isn't much hope that it can extend co-operative gains for another round of bargaining.

B.C. Finance Minister Mike de Jong says his government is working on a new bargaining mandate that promises benefits – at some point. "What I am hoping we can develop is, first of all, a longer-term agreement so that everyone has the certainty of going forward," he said in an Oct. 15 interview on CHNL radio.

"Secondly, we see good things ahead for the B.C. economy, and I'd like to look at developing some kind of mechanism where public sector workers can share in that or, as the province succeeds, that benefits flow to the women and men that work on behalf of British Columbians. I'm not sure exactly what that mechanism looks like just yet, but it's something we're working on."

Justine Hunter reports on the B.C. legislature in Victoria.