A few months back, I wrote about how the American battle between public sector unions and the taxpayers was poised to spill across the border into Canada.
The unions and their sympathizers were diligently portraying government efforts to curtail unaffordable contract provisions as an “assault on the middle class.”
That battle has officially moved into Canada.
Last week, the federal government enacted legislation that forced striking Air Canada workers back to work. Admittedly, the reasoning was as lame as a three-legged horse, because anyone who believes air travel is extremely crucial to our economy is as thick as a plank.
Some time this week, the feds will also likely force the postal workers back to work.
The key issue in these labor disputes is pensions. In both cases, the unions are striking to keep in place pension benefits that are neither realistic nor affordable. There is also a principle at stake, and if that principle is not held to, taxpayers will face a wholesale assault on their personal finances at the direct benefit of public sector workers.
Let’s look at Air Canada. Currently, with an unfunded pension liability of $2 billion, more employees collecting on a defined benefit pension than are currently on the payroll, and the stock at a whopping 10 per cent of the 2007 price, Air Canada’s future looks as grim as the Christmas goose.
Back when Air Canada had the taxpayer by the tail, the kind of pension plans offered by Crown corporations were seen as a model that the private sector was to emulate, thus enriching the citizenry via enlightened workplace economics.
Fast forward into 2011 and, in a remarkable fit of lucidity, the managers of Air Canada come to the realization that they need to rethink the pension plan by suggesting that new employees will not be offered a defined benefit plan and will instead be offered the real-world alternative of a defined contribution plan.
Air Canada is now a private corporation. But it holds a strangely special place in the hearts and minds of many an Ottawa apparatchik.
The Air Canada union’s strategy was clearly aimed at tugging on those old heart strings and prying federal cash out of the kitty in order to prop up pension plans that were pie-in-the-sky back when I still had hair.
I will guarantee you this battle ain’t over yet.
Over at Canada Post, the issue is the same, but different. Even after dropping the offer of a defined-contribution plan in favour of full pension as early as 60, instead of 55, the union remains intransigent in opposition.
This additional burden of five years before pension applies to new hires only, so the real effects don’t come into play for years. The posties (as with the Air Canada workers) claim that this creates a two-tier system that is simply unacceptable.
Let’s get down to brass tacks here. Defined benefit pensions cannot work and therefore don’t. Or they only work if one of the two or three participating parties gets ripped off. There can be no fairness.
In order to provide a defined benefit, the pension plan has to do one of two things: It either requires the shareholders of a corporation to forego a far greater share of their profits than they rightly should in order to assure a rigidly specified outcome, or the employees have to contribute far more than they should and invest in very low-return instruments that entail almost zero risk.
In the case of public sector pensions, it is the taxpayers who have to make up the shortfalls and often at the very times when their own personal finances are at their weakest.
Interestingly, you will never hear a public union spokesperson refer to the growing public-private pension divide as a two-tier system, or as the assault on public wealth that it very definitely is.
Instead, you will hear how trimming the extravagance of the public sector is somehow an assault on the “middle class” or that asking public workers to accept financial rewards that are more in line with private sector employment (with none of the inherent risks, I might add) is an “attack on working families.”
Funny, but you’ll never hear a public union spokesperson admit that extravagant government pay and pensions do the same to the people actually paying the tab.
The solution is simple and principled: Remove the right to strike from all public sector union contracts.
Do it now — and then change the pensions.
Bill Greenwood is a local freelance columnist.