Teacher union ‘me too’ clause would make Alberta fiscal situation even worse

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Appeared in National Newswatch, May 8, 2017

Premier Rachel Notley’s government recently reached a tentative short-term agreement with the Alberta Teachers’ Association, ending phase one of the collective bargaining process. The agreement must be ratified to be finalized.

According to news reports, the teachers’ union accepted a salary freeze, which may leave some Albertans thinking that schoolteachers won’t be getting any raises. But it’s not quite that simple.

Firstly, teachers will still move up the existing salary grid as they gain years of experience. That means that many teachers, especially those in the first half of their careers, will make more as they gain seniority.

Secondly, it’s been reported that the agreement contains a not terribly common “me too” clause, which would entitle teachers to matching pay bumps if other public-sector unions secure pay raises in future collective bargaining agreements. So additional salary increases, on top of the increases teachers receive as they gain seniority, are possible.

The “me too” clause makes it all the more important that the government prudently negotiate with other public-sector unions, with an eye on the difficult fiscal realities facing the province and the clear need for spending discipline.

The stakes in future collective bargaining sessions will therefore be high. The province currently faces a whopping $10.3 billion budget deficit with more big deficits planned as far as the eye can see.

Spending has already increased by 11 per cent over the past two years, and if the government doesn’t finally rein in spending growth, the province will rack up even more debt that will be passed along to future generations of Albertans.

Again, this process must include a disciplined and frugal approach to wage negotiations with government unions. Compensation costs for employees in the public sector are, by far, the largest provincial government expense and controlling these costs remains a prerequisite for repairing the province’s finances.

Any public-sector pay increases would further damage the province’s already disastrous bottom line, and if any new contracts run past 2019, could authorize increases beyond the government’s current mandate, making it harder for a future government to slay the deficit regardless of their political stripe.

The government should enter upcoming bargaining sessions recognizing that the research suggests there may be room for significant savings in this area. One recent study shows that, after controlling for a slew of relevant variables, government-sector workers in Alberta are paid, on average, 7.9 per cent more than comparably educated and experienced workers in the private sector. This public-sector wage premium comes on top of other advantages in non-wage benefits including greater job security and pension coverage.

And when it comes to spending on government employees in the education sector specifically (mostly teachers), costs have been on the rise in recent years. Consider that between 2004/05 and 2013/14 (the last year of comprehensive data), inflation-adjusted per student spending in Alberta public schools increased by 25.4 per cent. The majority of this growth was driven by increased spending on employee compensation, which climbed from $3.6 billion in 2004/05 to $6.3 billion in 2013/14 (in nominal dollars).

Of course, most teachers and most government employees make important contributions to their communities and the province. However, given Alberta’s huge budget deficits and rapid pace of debt accumulation, these fiscal realities should be considered carefully as the government develops its strategy for upcoming negotiations.

Bringing government-sector wages closer into alignment with private-sector norms over time can help repair the province’s battered finances. But achieving this goal requires a prudent and responsible approach to upcoming wage negotiations. This discipline will become doubly important if the teachers’ “me too” clause is indeed part of the final agreement, as it would mean any raise given to other public-sector employees would trigger matching spending hikes on education-sector compensation (again, mainly teachers), which has already grown considerably in recent years.

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