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A Most Peculiar Proposal

Posted on Thursday, June 12, 2014 at 4:22pm

categories: bargaining, salaries

As part of its general wage increase offer the University has made what must be described as a most peculiar proposal. Their proposal is that on May 1, 2016, in addition to the general wage increase they have proposed, our salaries will also be increased by 50% of the amount by which the Economic Forecast Council forecast underestimates real (inflation adjusted) GDP growth in 2014.  They also proposed similar forecast error increases on May 1, 2017, May 1, 2018, and May 1, 2019. This will take some explaining.

The Budget Transparency and Accountability Act of July 6, 2000 creates an Economic Forecast Council comprising “at least 10 persons appointed by order of the minister and selected for their knowledge of the economy of British Columbia and their expertise in economic analysis and forecasting.” Initially the Council included both academic and business experts, but after the Liberals came to power they quickly eliminated the academic experts, and the council now consists solely of appointees from banks, private consulting firms, business organizations like the Business Council of BC, and independent non-profit research organizations like the Conference Board of Canada.

In approximately February of each year the BC government brings down its annual budget, which includes forecasts of real  GDP growth for that year by members of the Council.  In the 2014 BC Budget and Fiscal Plan members of the Council forecast real GDP growth for 2014. Their forecasts ranged from 2.0% to 2.7% growth in real GDP, with a mean forecast of 2.33%. In November 2015 (twenty months after the 2014 budget was passed) Statistics Canada will produce its estimates of actual real GDP in 2014 and it will be possible to evaluate the accuracy of the Council’s forecasts. UBC has proposed that if the Council’s forecast error (Actual minus Mean Forecast) is positive, then in May 2016 (six months after the forecast error is known) our salaries would increase by one half of the forecast error.  In other words, they propose to tie our salaries to inaccuracies in the Economic Forecast Council’s forecasts twenty-six months earlier. If the Council’s average forecast is exactly correct we would get no additional salary increase, but if the Council wildly underestimates growth we will be in for a big payday.

The University claimed that the purpose of this peculiar proposal is to share “the benefits of economic growth between employees in the public sector and the Province contingent on growth in BC’s real GDP” This is false. Had the University wanted to tie our salaries to BC’s real GDP growth, they should have proposed increases based on actual GDP growth, or on GDP growth in excess of the long-run average growth rate. Rather than tie our salaries to BC’s real GDP growth, they have actually proposed to tie them to the inaccuracy of the Economic Forecast Council’s forecasts.  Now, to be fair, as far as we know the University’s proposal was devised by the Government, and the University believes the Government is willing to fund the proposal. In any case it is the UBC Board of Governors who are responsible for proposals made at the bargaining table and, for better or worse, this is the peculiar proposal they have decided to make.

How accurate has the Council been in the past? Starting in 2003, the first year that academic experts were eliminated from the Council, and ending in 2012, the last year for which Statistics Canada estimates are available, the Council’s estimates have been reasonably accurate (whether they would have been more or less accurate with the continued inclusion of academic experts is unknown). During that 10-year period the mean absolute forecast error was 0.85, which is not bad considering how sensitive BC’s GDP is to unexpected developments in international markets and resource prices. What would have been the effect on our salaries during those 10 years had the University’s current proposal been in place during that time? The average annual increase over those ten years would have been fifteen-one hundredths of one percent (.0015), which can be translated as $150 annually (before tax) for a faculty member making $100,000.

There is, however, no accurate way to assess what effect this specific proposal would really have on our incomes in the future. First, we have no way of knowing whether the future members of the Council, which is appointed by the Government, will be as accurate in forecasting GDP growth as the past members of the Council. Second, we have no way of knowing how the Council’s forecasting ability will be affected by finding its forecasts part of the mechanism by which faculty members are paid and universities are funded.

We have not responded to this proposal. There is very little point in discussing what is in effect a lottery with unknown expected payout until the University makes a proposal on a general wage increase that is sufficient to keep pace with inflation and faculty salaries at comparable institutions.  Nonetheless it remains a most peculiar proposal.

Next up on the blog: TBA

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UBC Proposes 0% for 2014/2015. The Association Declines.

Posted on Monday, June 9, 2014 at 3:25pm

categories: bargaining, salaries

On June 5 the Faculty Association and UBC exchanged proposals for a general wage increase (GWI). The University has proposed a five-year agreement with a GWI of 0% in 2014/15, 0.9% in 2015/2016, 1.4% in 2016/17, 1.4% in 2017/2018, and 1.5% in 2018/19. The Association has proposed a two-year agreement with a GWI of 3% in 2014/15 and 3%.

The University's proposals are actually a little more complicated than that, with some salary increases partly deferred by 10 months, the "option" of taking smaller GWI in exchange for increased benefits, like increased Professional Development funds, and a bonus based on the forecast errors made by the Economic Forecast Council We will explain this forecast error bonus in a subsequent blog, but if this bonus had been in place over the past two years, your base salary would have been increased by .04% [four one-hundredths of a percent].

In the last round of bargaining, UBC had originally proposed a GWI of 0.4% and 0.8% over two years. In this round they have initially proposed an even smaller GWI over two years (with below-inflation increases in three additional years).

The Association's proposal of 3% and 3% is based on the following considerations. First, under our Collective Agreement an arbitrator must take into account the University's need to preserve a reasonable balance between the salary of members of the bargaining unit and other expenditures. Second, we know from the last arbitration that a settlement of more than 5% per year would disrupt a reasonable balance, but a settlement of 5% over two years certainly does not disrupt a reasonable balance. Third, an arbitrator must consider changes in price and wage inflation in BC and Canada. It is clear that both price and wage inflation has been trending up from last year, so on that basis, a settlement greater than last year's settlement is justified. Finally, an arbitrator must consider salaries and benefits at other Canadian universities of comparable academic quality and size.

Since our settlement last round was not very different from the settlement at other large research universities in Canada, there is no reason to believe that there has been any change in the relationship between our salaries and those at other Canadian universities of comparable academic quality and size. Taking all these considerations into account, a settlement somewhat greater than last year's settlement is justified.

Next up on the blog: A Most Peculiar Proposal

Our Pension Proposals

Posted on Thursday, May 22, 2014 at 10:09am

categories: bargaining, pension, sessionals, post-71 members

Two of our proposals pertain to pensions. First, we propose that the university provide pension plan contribution for all sessional lecturers. Currently the university only pays full compensation (salary plus pension plan contributions) to sessional lecturers with at least 50% workloads. Second, we propose to work out a way for members' full compensation not to be reduced at age 71, which would happen if the university stopped paying the pension plan contributions at that age.

To understand why we feel so strongly about these proposals it is first necessary to understand how our pension plan works.

At UBC faculty do not have a standard pension. What we call a pension, and what is certainly a pension substitute, is actually a defined contribution savings plan, which is really more akin to a locked-in group RRSP plan. Each year the employer puts a certain percentage of our compensation into the savings plan, and we save a certain percentage of our salary in the same plan. The contributions to the plan are tax deferred, as is any income earned in the plan, just like any other registered savings plan. Unlike a traditional pension, which is both a deferred compensation and an insurance instrument, our plan is a forced savings and investment instrument.

In terms of the University's financial obligations it makes no difference whether they put some portion of our compensation into our group savings plan, or pay the equivalent amount to us directly, allowing us to put it into our personal RRSPs. And it makes no difference to the university at all how much we contribute to our group savings plan (currently about 5%). Whether we save 5%, 10%, or nothing at all in the plan in addition to the amount the university puts in directly is completely irrelevant to the university, at least in terms of cost.

This is not to take a position on the question of whether members would be better or worse off if all their compensation was paid directly them, rather than having some of their compensation placed directly into a locked-in savings plan. Nor is it to take a position on the question of whether a traditional pension, like the one at U of T, is better than our plan. There is certainly room for debate on those issues but since we have not proposed any changes in our plan, that debate is moot.

The point we want to make is simply this: the university's contribution to the plan is simply part of our total compensation, and our so-called pension is simply savings. Once that is understood, it is easy to see why this issue is so important to us.
Consider Sessional Lecturer A in the Faculty of Arts, who teaches one 3-credit course in each Winter session term and has been placed at step 1 of the minimum scale. Dr. A earns a salary of $6,264 for each of the two courses, or a total of $12,528. Sessional Lecturer B, similarly placed at step 1 of the minimum scale, who teaches two 3-credit courses in one term and no courses in the other term will also receive $12,528 in salary, but unlike Sessional Lecturer A, will receive $1,090 placed into his or her defined contribution savings plan. This is not just inequitable, but arbitrary. (Sessional Instructor C, who teaches the same two courses in the Faculty of Education would be paid only $3,756 per course but that gross inequity is the subject of a different proposal.)

Now consider the case of a full-time member who earns $100,000 a year in base salary. His or her total compensation is $100,000 plus the university's contribution to the group savings plan, $9,118. Once this member turns 71 the university is no longer allowed, by law, to contribute to either a defined benefit pension plan, or a registered savings plan. If we don't find a way to ensure that the member continues to receive that $9,118 in compensation he or she will have suffered a cut in total compensation, which is not only inequitable, but a blatant example of discrimination on the basis of age. The law does not require that individuals receive less compensation at the age of 71, only that the compensation can no longer be provided through a pension plan or a registered savings plan contribution. The Association has proposed that full compensation be maintained through the simple mechanism of salary in lieu of contribution to the plan. The fact that this hypothetical member will simultaneously be earning salary in lieu of group plan contributions at the same time he or she is drawing on his or her plan savings is completely irrelevant in the same way that drawing on one's private RRSP savings should not be taken as a reason for the University to cut one's compensation.

Next up on the blog: UBC Proposes 0% for 2014/2015. The Association Declines.

An External Analysis of the University's Budget Model

Posted on Wednesday, May 21, 2014 at 9:56am

categories: bargaining, budget, ability to pay

In preparing for the 2012-2014 arbitration, the Faculty Association commissioned a report from Professors Cameron Morrill and Janet Morrill, accounting professors in the Asper School of Business at the University of Manitoba. The Morrills have considerable experience in examining University budgets for Faculty Associations in Canada. While we did not use this report in the actual arbitration, it did help us to understand a variety of issues related to the University’s ability to pay appropriate salaries to faculty members.

Some of the highlights of their report include the following observations:

  • UBC has continuously had unrestricted operating surpluses i.e., operating revenues that exceed operating expenses. In the most recent fiscal year [for which data were available, 2012], UBC had the highest operating surplus of the five years covered by our analysis.  The $135 million operating surplus in 2011-2012 was equivalent to just over 13% of total UBC salaries for the year.  It would be interesting to see how this figure compares to total UBC faculty salaries.
  • Despite small reductions in government grants, UBC has a large student base and unrestricted revenues per student that are stable and have increased over the period of our analysis.
  • Net assets: unrestricted and operating became negative in 2012 after a 90-million-dollar decrease during the year, but this situation was created by the Administration’s decision to transfer $229 million in unrestricted funds to Capital Assets.
  • The recent level of capital asset acquisitions is extremely high and is financed with an unusually high proportion of unrestricted funds.  Management’s future commitments to purchase capital assets are minimal.  Thus, they can elect to not make as large capital assets purchases from operating funds, or can be forced to make such an election.
  • Over the period under study, management has expended large sums to increase their complement of management and professional staff.  While we only know the number of staff, our experience from other universities is that these staff are very highly paid and have often had salary increases that far outpace the increases provided to professorial faculty. 
  • As with many universities, UBC’s budgeted figures for the future tend to be pessimistic and should therefore not be relied upon as a basis for assessing ability to pay.

We encourage you to read the Morrills’ report carefully.

Next up on the blog: Our Pension Proposals

The University's Destructive Budget Model

Posted on Thursday, May 08, 2014 at10:34am

categories: bargaining, budget, ability to pay

By far and away the largest single complaint we received from members while we prepared for bargaining concerned UBC's budget model. Members are justifiably unhappy about a budget model in which the departments and Faculties are not treated as central to the core mission of the University. The comment “I am particularly concerned about the apparent over-allocation of University funds to administrative positions/costs, and a concomitant reduction of funds available to support scholarly activity and investment in hiring faculty” sums up the comments of many, many members. Repeatedly members asked us to attempt to force the University to fund departments properly. Several members pointed out something that, quite frankly had not occurred to us. They noted that because the costs of the equity settlement were downloaded onto departments, those departments that were predominantly women were most badly affected. Clever, that. The University admits it has been systematically discriminating against women faculty but its response has been most damaging to female-dominated departments by not directly funding the equity settlement. We have also heard repeated complaints that the University did not fund the salary settlement for faculty. The Central Administration does not seem to plan its budget around salary settlements, which many faculty members find troubling.

Although this issue does not fit easily into Collective Agreement language, and we have not attempted to do so in this round, the Association is extremely concerned with the destructive effects of the University's budget model. At this stage we strongly urge members, and particularly Heads, not to accept this budget model as appropriate and to push back on the Deans. We also encourage the Deans to push back against central administration. The current approach to budgeting is so wrongheaded and so destructive that it threatens the very integrity of the institution. It is starving those areas of the University that are its fundamental raison d'etre. While the property development side and the other non-academic sides of the University are undoubtedly important, at the end of the day it is the teaching and scholarly activity side that must remain the core business of the University and the budget model must reflect that.

Next up on the blog: An External Analysis of the University's Budget Model

Bargaining Themes: Three Big Issues Emerge

Posted on Tuesday, May 06, 2014 at 12:20pm

categories: bargaining, workload, instructors

When the bargaining preparation committee analysed the input we got from members in face-to-face meetings, from emails, and from the survey, particularly the comments sections of the survey, three major issues emerged, in addition to widespread concern about salaries. Members can see that most of our non-salary proposals deal with these issues in one way or another.

First, we are increasingly observing what can only be described as symptoms of burnout. Members complain of too much to do, with too little time, and too few resources. They report a sense that they have lost the capacity to influence the decisions that affect the quality of their worklife. They report significant concerns about the equity of the reward structure and a sense that the university does not value their contributions. Amongst many members there is a sense that the university's priorities no longer reflect the values that attracted them to academic careers in the first place. These complaints are classic, almost textbook, symptoms of burnout.

Terms like “bullying,” “no consultation,” “unfair,” “inequitable”, and “minimal information” appear repeatedly in the comments. Examples of such comments include:

  • “Faculty are more and more burdened with the downloading of administrative duties and not getting much credit for taking it on.”
  • “Management treatment of faculty is horrendous.”
  • “Toxic work environment.”
  • “ More comprehensive language around transparency.”
  • “Can the deteriorating work environment be addressed in any way by bargaining?”
  • “I believe the largest generation of long-term problems for faculty at UBC is the increasingly disconnected nature of the decision-making progress of upper levels (finance, initiatives like the Vantage program, IT, etc) from the faculty. Decisions are constantly being made with either no consultation with the faculty/staff members who these decisions will impact, or a sham of consultation.” 

Second, there is significant dissatisfaction with the status of contract academic staff. Over 25% of our members are contract academics, mostly Sessionals but increasingly Lecturers as well. Salaries, job security, access to benefits, and pension contributions are all inadequate. Comments from Sessionals and Lecturers were scathing of course, but many members in tenure-stream positions also made a point of conveying their dismay about the conditions of contract faculty.

Third, there is a great deal of dissatisfaction among members in the educational leadership stream (Instructor I, Senior Instructor, Professor of Teaching) about the lack of respect the university shows them.  Many expressed concerns that their heavy teaching loads would not allow them to complete the educational leadership requirements that are now required for tenure and promotion in that stream. These problems arise from lack of clarity in the Collective Agreement about the role of the educational leadership stream at the University.

We really appreciate the time people took to share their comments with us as we prepared for bargaining. It was very helpful to us in formulating our proposals.

Next up on the blog:The University's Destructive Budget Model

Bargaining Begins for 2014-2016

Posted on Monday, April 4, 2014 at 3:20pm

categories: bargaining, proposals

Negotiations between UBC and UBCFA to renew the Collective Agreement that expires on June 30, 2014 began formally on April 7 - 8, although the parties did engage in some preliminary discussions in the preceding months.

Both parties have presented all of their proposals, with two exceptions. UBC has a proposal on the library they have yet to make and we are still finalizing our list of housekeeping items.

The University has not tabled any specific language and the Association has thus far only tabled specific language on a few issues.  At our next meeting, on May 8, it is expected that both parties will table specific language on all proposals with the possible exception of across the board salary increases. The Association will not table a specific proposal on across the board salary increases until the University's bargaining team has been authorized to make a meaningful response.

Until specific language has been tabled, it's not reasonable to attempt to characterize the University's proposals; however, members can read the proposals that the University has tabled thus far here. The Association’s proposals can be found here. Over the next month we will be using this blog to give members more detailed description of the problems we are trying to solve and the objectives we are attempting to achieve, so stay tuned.

Next up on the blog: Bargaining Themes: Three Big Issues Emerge

Bargaining: Preparation for Next Round Begins

Posted on wednesday, january 22, 2014 at 3:15pm

categories: bargaining, arbitration

Although the 2012-2014 Collective Agreement was only finalized in late 2013, it will soon expire, on June 30, 2014. Consequently it is already time to begin preparations for the next round of negotiations, tentatively set to begin in mid-March. Once negotiations begin it is expected that they will proceed fairly intensively until either a new Collective Agreement, or impasse, is reached. Our expectation is that if the University is willing and able to negotiate a Collective Agreement without recourse to an Arbitrator, it will be done by mid-June. 

As always, if a new agreement is not reached before the expiration of the current agreement the current agreement will remain in force.

Members will well recall that the last round of negotiations, which started on February 14, 2012, was a very long drawn-out process. This was partly caused by the university’s unwillingness or inability to “put money on the table” until well after the previous agreement had expired and an arbitrator named, and partly caused when the arbitrator contracted an illness at precisely the time he was scheduled to hear our arbitration.  We hope that this round can be concluded more expeditiously, preferably without the help of an arbitrator, but to some extent this is outside our control.

Members can expect to receive an invitation to complete a fairly short electronic bargaining survey soon. In addition to the usual set of questions there is space for members to relate any specific concerns or issues they would like to see addressed in this round of negotiations. We would greatly appreciate it if you would take the time to complete it.

If you’d like to be considered for our bargaining preparation committee or our bargaining advisory committee, please send an email to us. We are looking for members who would like to be involved in various aspects of the bargaining process, and would like to make that commitment to the Association.

To avoid email overload, we selectively email blogs to the entire message. Be sure to check back to the blog on a regular interval by bookmarking this webpage. Or, you can subscribe to our blog to get automatic updates.

Next up on the blog: Bargaining Begins for 2014-2016

What the Arbitrator Ruled in Bargaining 2012, and Why

Posted on Monday, November 18, 2013 at 8:45am

categories: Interest arbitration, bargaining, salary increases

On July 25, 2013, the Faculty Association and the University sent out a joint memorandum describing the details of the arbitration award for the years 2012 – 2014. We also linked to the actual award so that members could read it in its entirety. However many members have found the entire award a bit much to internalize and have asked us for a short, non-technical, explanation of the reasoning behind the salary settlement. Here it is.

The first thing Arbitrator Taylor had to adjudicate was the question of how large a salary award the University had the ability to pay, based on maintaining a “reasonable balance” between faculty salaries and other expenditures in the University’s general purpose operating funds. He found that the ratio of faculty salaries to total expenditures, over the seven years between 2006 and 2012, ranged from a low of 24.9% to a high of 28.8%.

The Association took the position that a pay rise of 5% per year would still maintain a reasonable balance and the University took the position that 2% per year was the absolute maximum increase that would maintain a reasonable balance. Arbitrator Taylor accepted neither position. He ruled that the Association’s proposal of general wage increases of 5% and 5% would result in ratios for 2013 and 2014 (forecast) of 28.9% and 31.1%, respectively.  In his view, for 2014, the Association’s proposal was outside the reasonable balance and therefore beyond the University’s ability to pay. On the other hand he also ruled that the University did have the ability to pay a salary increase in excess of 2% per year.

The second question on which Arbitrator Taylor had to rule was, within the fairly wide range of salary increases that the University did have the ability to pay, what salary award was most appropriate? In making that decision he primarily considered the need to keep pace with inflation and the general state of salaries at our comparator universities.

The Association had argued that higher wages were also needed for the purpose of recruitment and retention. However on that point Arbitrator Taylor said “I accept the University’s submissions that it does not have a general recruitment and retention problem.”

The University had argued that our progress through the ranks (CPI, Merit and PSA) and annual bonus represented something analogous to an annual pay increase. On this point Arbitrator Taylor said: “I also accept the Association’s submission that PTR rewards individuals’ career advancement; it is not a substitute for a general wage increase to keep pace with inflation and the general state of salaries elsewhere.”

In terms of the criteria on which his award was primarily based, inflation and the general state of salaries elsewhere, he ruled that a) monthly price inflation was fairly low, ranging from 1.25% to 2.33% between January 2011 and July 2012; b) monthly wage inflation was somewhat higher, ranging from 1.8% to 3.2% over the same period; and c) salaries at UBC have fallen somewhat behind its relative place in terms of academic quality. Taking these factors into account he ruled:
“The appropriate Award under Article 11.02 [of the Collective Agreement] is therefore annual increases of 2.5% and 2.5%.” and “I am satisfied this falls within the University’s ‘ability to pay’ as defined in that Article.”

The Association was not unhappy with this award even though we would have preferred a larger increase. While a higher awarded increase would still have remained within the University’s ability to pay it was not the Arbitrator's duty to award the largest possible increase that the University can afford, but to make an award that is appropriate given criteria such as inflation and wages at comparable universities. We think he discharged his duties thoughtfully and impartially.

Next up on the blog: Bargaining: Preparation for Next Round Begins