'Confidential' Manual Admits It's Tough Finding Savings for Union Raises

Many parts of the public sector will have a hard time finding the budget cuts needed to pay for wage increases, acknowledges a "strictly confidential" guide for employers in the current round of bargaining in British Columbia.

"Many employers will not be able to find savings needed to generate funding for a modest wage increase," says the provincial government guide The Tyee obtained. "This may be an opportunity to work with unions to find other, non-monetary improvements to collective agreements."

The statement is included in the "Frequently Asked Questions" section of the Employers' Guide to 2012 Co-operative Gains Mandate, a 32-page document marked "Prepared for Collective Bargaining -- Strictly Confidential."

Even for employers who can find the money in their budgets, the government will not allow them to pass as much as they might like on in wage increases to their employees.

"There is no set wage increase determined for the mandate, but we will limit maximum average increases in the deals to reduce the variability of potential outcomes," it said. "Some employers will have difficulties finding savings to fund increases and we want all groups to be treated fairly ... Employers are facing a difficult task to find any savings at all."

So far several unions have reached tentative agreements under the mandate, some of which members have ratified, but none so far has received a wage increase greater than four per cent over two years. Some 370,000 British Columbians work in the public sector, with compensation costing nearly $24 billion a year.

Savings plans required

The government's guide explains to public sector employers -- which include things like school boards, universities, Crown corporations and health authorities as well as direct government employees -- what the province expects under the co-operative gains mandate round of bargaining.

Employers were required to submit savings plans and bargaining plans to the government for approval before beginning negotiations on anything substantive.

"The Province will not provide additional funding for increases to compensation negotiated in collective bargaining," the guide said. "Employers are directed to work with responsible ministries and employer bargaining agents to develop savings plans to free up funding from within existing budgets to provide modest compensation increases."

Savings could come from operational cost reductions, increased efficiency, service redesign, increases in revenue, and other initiatives, it said. "Identified savings must be real, measurable, and incremental to savings identified by employers to meet Provincial Budget and deficit reduction targets for 2012/13 and beyond."

It added, "Savings proposals must be supported by the best possible evidence available." The costing of the savings would have to use "realistic and conservative assumptions," it said. There also had to be a way to measure whether they had actually been achieved.

The money could not, however, be found by reducing service to the public or by transferring the cost of existing services to the public, it said, which is also what the government has said publicly about the mandate.

"The 2012 Co-operative Gains Mandate will be highly sector and employer dependent," the guide said. Factors in the outcome will include the "ability to generate savings and the willingness of unions to co-operate in bargaining."

Government ministries would be closely involved in developing savings plans, it said. "Ministries will be responsible for ensuring the accuracy, commitment and ability to track savings in savings plans and that bargaining strategies align with the province policy goals."

Bargaining strategy secret

Government ministries have for the most part declined to share the details of the savings plans it has approved under the co-operative gains mandate.

"We are still negotiating with other unions where savings may be directed and so sharing the savings plan details would be the same as disclosing our bargaining strategy to those unions," said Health Ministry spokesperson Ryan Jabs in an email about the agreement medical residents ratified last week.

"Just like in any negotiation these savings plans have to remain confidential to protect the bargaining position of the employer," he said. "In addition, the savings plans connect to government's overall bargaining strategy. Revealing them may affect government's overarching strategy for this round of bargaining and jeopardize the success we are starting to see in reaching agreements under this mandate."

Residents are employees of the province's six health authorities. The four-year agreement includes two years with no increases, followed by a 1.5 per cent raise in January 2013 and a 1.3 per cent increase in April of 2013.

"High level" examples of where health authorities might save money included things like bulk buying, reducing the cost to the employer of benefit plans and reducing administrative expenses, said Jabs.

"By making changes to the benefit plans the savings can be put in employees' pockets as wage increases," he said. "Employees can then choose how they use their wage to support themselves and their families."

The total budget for the health authorities is over $13 billion, he said, so "making small changes can result in significant savings to contribute to the agreement."

Productivity and efficiency

The response from the Advanced Education Ministry's spokesperson was similar when asked about the savings plan Royal Roads University had used to fund wage increases of two per cent in each of two years for CUPE 3886 members.

"Negotiations across the public sector are underway and the savings plans are part of each employer's bargaining mandate and strategy," he said on background. "These savings plans have to remain confidential to protect the bargaining position of the employer."

Savings plans may span several tables in a sector and are connected to the government's overall bargaining strategy, he said. "Revealing them may affect government's overarching strategy for this round of bargaining and jeopardize the success we are starting to see in reaching agreements under this mandate."

The Tyee has previously reported on the savings plans related to a few tentative agreements. A University of Victoria spokesperson said the school is paying for raises by trimming $10 million out of departmental budgets over the next two years. BC Nurses' Union president Deb McPherson said increases to her union were to be paid for through the productivity gains and reduced overtime from increasing the work week to 37.5 hours from 36 hours.

The BCGEU's chief negotiator David Vipond has said the government's savings plan to pay for raises to union members included using an Internet tool expected to improve employee health and implementing a form of the Japanese efficiency system "Kaizen" known as "Lean."

The government's press release on the ratification of the BCGEU agreement provided more detail on the latter. "Lean is a process improvement method that focuses on saving time by removing unnecessary steps in processes and on delivering value to clients," it said. "Although the focus is not solely on cost, Lean is a proven technique and by saving time in a process, quality improvements and cost savings are often a result."

Across government there are 47 Lean projects underway, most in their initial stages, it said. For example, the Public Service Agency is working to reduce the time it takes to process long-term disability applications by 20 per cent, it said. "Early results are promising."

The raises to BCGEU members should cost less than $60 million a year before any savings are taken into account, a Finance Ministry spokesperson said.

ICBC union 'suspicious' of mandate

A tentative agreement announced Nov. 2 gives some 4,600 employees at the Insurance Corporation of BC (ICBC) four raises of one per cent each spread over two years. "It's a relief to finally have something we can recommend to our members," said David Black, the president of COPE 378.

The co-operative gains mandate was a minor factor at the negotiating table as far as the union was concerned, he said.

"We were suspicious about what 'co-operative gains' meant in the first place," he said. By the time his union started negotiating, they'd already seen the government quash the BCGEU's "very creative suggestions" for things like opening liquor stores on Sunday, he said.

In its negotiations with ICBC, COPE 378 suggested ways to raise revenue including selling auto insurance outside of B.C. and offering other types of insurance, such as home insurance, to people inside the province, said Black. "The government had no appetite for that."

The lack of interest from the government took the issue of co-operative gains off the table, he said. "We just decided we weren't going to play that game."

A spokesperson for ICBC, Adam Grossman, said he couldn't provide any further details until the agreement is ratified.

Many negotiations remain underway, and in at least some cases employers are asking unions to reduce their members' benefits to generate the savings for any wage increases, something they are loathe to do after two years without a raise under the government's previous bargaining mandate.