This post focuses on the top bargaining issue for most of us: the Faculty Association’s proposal for a general wage increase in response to current inflation trends.
Consumer Price Index (CPI) inflation has now reached levels that would have been unimaginable only a few years ago. As of July 2022, year-over-year inflation is 8% in BC and almost 8% in Vancouver (7.7%), and Canada (7.6%). The year-to-year inflation rates for BC and Canada have hovered in the high 7% to low 8% range for the past three months, increasing slightly in BC and falling slightly in Canada overall between June and July.
These levels of inflation are not unprecedented, but the precedent is not a happy one. Forty years ago, initially caused by weather-induced agricultural price shocks and wars in oil-producing countries, year-over-year inflation in Canada exceed 10% for two entire years, reaching a peak of nearly 15% in the early 1980s. The current inflation spikes are similarly driven by the war in Ukraine, which affects both agricultural and oil prices, along with the lingering effects of the COVID-19 pandemic.
The bargaining team does not expect a repeat of the early 1980s. We expect the Bank of Canada to do now what it did not do then until too late: use its monetary instruments to drive inflation back down to the 2% target rate. The process has already started with the Bank of Canada raising the policy rate by 100 basis points in early July, and further increases in the 50 to 75 basis point range are anticipated. But the Bank’s aggression in taking action has been tempered by a desire to avoid inducing a recession. We expect then that the rates will decrease over time, but we are still likely in for several years of high inflation. The Bank of Canada agrees. In its July press release the Bank says, “Inflation in Canada is higher and more persistent than the Bank expected in its April Monetary Policy Report (MPR), and will likely remain around 8% in the next few months.” More recently Bank of Canada Governor Tiff Macklem, in an interview with CTV News, said that the inflation rate is “probably going to start with a seven for the rest of the year.”
With that in mind, the Bargaining Team is proposing introducing a Cost of Living Allowance (COLA) adjustment clause into the Collective Agreement. We are proposing a two-year Agreement with a general wage increase of 5% each year, and a COLA clause that would increase that general wage increase if inflation, as measured by the BC all-item CPI index, exceeds 5%. Given the current high rates of inflation, which have already significantly eroded our members’ real incomes, and uncertainty about how long inflation will remain elevated, we strongly believe a COLA reference-point is the best way to protect our members against inflation.
The Association is not alone in thinking that a COLA clause is the optimal solution to members’ need for income security in this bargaining round. Most, if not all, of the other unions in the broader public sector are of the same opinion. The BC General Employees Union (BCGEU) believes in a COLA benchmark so strongly they recently held a strike vote among their members to back their proposal which passed with 95% in favour of a strike (the Labour Relations Code requires those who vote YES to have “voted for a strike”). Bargaining between BCGEU and the government appears to be at a standstill. The BCGEU has already issued the necessary 72-hour strike notice and picketing has begun at various facilities.
The University has not made a general wage increase proposal, nor has it responded to our proposal. The University claims it has not yet been given a mandate by its principals (technically the Board of Governors, in practice the BC Government) to discuss proposals with financial implications. We understand their dilemma, but the University knows as well as we do that it is not open to one side to restrict the scope of bargaining until some third party to the agreement, in this case the Government, meets a condition. That would be an unfair labour practice. We fully expect, upon return to the table in September, that the University will respond to our proposal and that the parties will reach an agreement, or impasse, expeditiously.
The FA Bargaining Team’s objective in this round of bargaining, as it is in every round of bargaining, is to reach a tentative agreement it can recommend to the members for ratification. We believe the University similarly hopes to achieve an agreement. We know what our mandate is: to protect members against inflation. We do not yet know what the University Bargaining Team’s mandate is. If the two mandates are incompatible and bargaining reaches an impasse we will put the matter into the hands of an Arbitration Board that will make an award that is final and binding on both parties. This is something we have had to do twice in the last few rounds. At this stage we have no idea how likely an impasse will be this round, but we are preparing in case we need this option.