Echo of Bob Rae’s social contract
Published On Tue Jul 20 2010
Faced with a $20 billion deficit, provincial Finance Minister Dwight Duncan is meeting today with public sector unions to discuss his plan to freeze their members’ wages.
There is an echo here of the early 1990s, when then premier Bob Rae tried to negotiate a “social contract” with the province’s public sector unions. The unions refused to negotiate, so Rae imposed wage rollbacks on them by fiat. That, in turn, alienated the NDP government from its political base and helped pave the way for the election of Mike Harris and the Conservatives.
Could Premier Dalton McGuinty’s Liberal government be headed in the same direction? Not likely, because there are two key differences between then and now.
First of all, McGuinty and Duncan are not proposing to rip up existing collective bargaining agreements, as Rae did. Rather, they will wait until those contracts expire – most of the major ones have a couple of years left to run – before negotiating a freeze.
Secondly, what happened under Harris — tens of thousands of public servants were fired – is still fresh in the minds of most union leaders. The same could happen again if the unions fight the Liberals and the Conservatives regain power under Tim Hudak, a Harris clone. One hopes, then, that Duncan’s words today will find a more receptive audience than did Rae’s social contract pitch 17 years ago.
With private sector unions already suffering much worse in the form of wage rollbacks and layoffs, it seems perfectly reasonable to call for a public sector freeze. Indeed, the government has already imposed a wage freeze on non-union employees.
Opponents of a freeze offer essentially two alternatives: keep running deficits or tax the rich. Neither is tenable.
Given that the economic recovery is fragile, the unions are right in arguing that now is not the right time to begin slashing public sector spending. But surely it is time to plan for future restraint, which is what the government is doing. No one seriously argues any longer that governments can run deficits indefinitely.
As for “taxing the rich,” that is not a realistic option for a sub-national government. It would simply drive businesses and high-income individuals out of the province.
Should the deficit be fought entirely on the backs of public sector workers? Of course not. But they should be part of the solution.
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