Thoughts and Opinions On Today's Important Issues

Wednesday, November 11, 2009

Kennie Vs Edgar

CUPE Strike Presentation

That's what it really is. A contest between 2 political opponents with different views of the world no matter how politically correct someone may try and portray it.

Who won....that's easy. You decide for yourself after getting a new perspective on what took place during the CUPE strike.

Get some of the inside info and have events placed in a context.

Two different views of how to undertake labour disputes in a Municipal Environment.

You read ad nauseum about Edgar's views in the Messenger's pages for months. Now read what Junior has to say as set out in his meeting. Before the Star tries to tell you what to think!

Read the covering letter first and then watch the slide show above.
  • Can We Come Together to Build a Better City?

    By Ken Lewenza Jr.

    The hundred-day civic workers’ strike earlier this year was one of the most difficult and divisive events in our city’s history. And the repercussion and recriminations from the strike continue even to this day, living on in nasty “he-said-she-said” recriminations that mar our deliberations at city council and other civic forums.

    With the perspective that comes with a bit of distance, I want to revisit some of the underlying issues – both fiscal and social – that lay at the heart of the conflict. My goal is not to carry on old battles. My goal is to consider what we can learn as a community from this destructive and unnecessary confrontation, and how to prevent similar debacles in the future.

    Because the hard truth is that public sector agencies in general are going to face intense fiscal pressures in the next few years, a side-effect of the global financial crisis and resulting recession. Governments at all levels now face sizeable deficits. We must learn how to negotiate those fiscal challenges much better than we did in Windsor this year. The consequences, if we don’t, will be measured in social division, lost services … and, perhaps surprisingly, higher costs.

    Let’s take it at face value that the hard-line stance (demanding elimination of post-retirement benefits, or PRBs, for new hires, along with other concessions) taken by the City’s leadership was motivated by a desire to keep costs in line and reduce the fiscal burden on the City and its taxpayers. (Another possible interpretation of events is that “getting tough” with public sector workers is always a sure vote-getter during tough economic times.)

    The fundamental question I then ask is this: Was this an effective way to reach a cost-effective collective agreement with the CUPE bargaining unit? In retrospect, it clearly wasn’t. In fact, by emphasizing confrontation over cooperation, not only did we spark a long, ugly work stoppage, and drive a wedge through the middle of a community that needs to come together right now. We also ended up with a collective agreement that is clearly more expensive to the City, not less expensive.

    That may seem like a surprising claim, but here’s my logic. We’ve heard no end of doom-and-gloom actuarial projections regarding the ultimate cost of post-retirement health benefits for City workers. But in reality, the fiscal problem associated with those benefits is not that the benefit itself is inherently “rich.” In reality, the City’s own actuary confirms that the current service cost of CUPE’s post-retirement benefits is $2.7 million per year – which works out to a little more than $1 per hour for all the full-time workers who get this benefit.

    This seems very modest, compared to all the frightening headlines we saw about the City’s $300 million accumulated PRB liability. Because Canada’s accounting rules have only recently changed , and now require cities to report these lump sum liabilities, many average citizens (and even those who should know better, like politicians and reporters) misunderstand these numbers. Less than one-quarter of that $300 million liability is associated with the CUPE unit. The annual current service cost of that liability is quite modest. And all of that cost is associated with existing employees – not new hires. Yet PRBs for the current workforce weren’t even on the table. It was only for new hires that the City wanted to snatch this benefit away.

    So why on earth did we go to war over a $1 per hour cut in labour costs for new hires, who aren’t even on the payroll yet? In fact, it’s not even clear when the City will be hiring again. The problem is not the go-forward costs of maintaining this benefit (which is so important to the security and quality of life of workers when they retire). The problem is our past failure to set aside resources to support these PRBs. Instead, we just coasted along, crossing our fingers that the money would be there when we needed it. The epic strike didn’t reduce this accumulated liability by one cent.

    In other words, the problem is not the benefit itself. The problem is that we need to find a better way to responsibly pre-fund the benefit. Other industries are also grappling with this challenge (like the auto industry, which is implementing a new pre-funded trust system to pay for PRBs). Not by going to war to take the benefit away. But by working together to find better ways to sustainably pay for the benefit.

    A simple actuarial exercise illustrates the point. Suppose we took 50 cents per hour for all future new hires, and invested it in a fund (just like we do for pensions). These premiums would be indexed to future wage increases. We would invest the monies, aiming for a 7% return over the long-term (consistent with long-run experience). Using the same actuarial assumptions as are built into the City’s valuation of PRBs, and assuming 36 new hires per year (as per the forecast provided to city council), this modest premium would allow the full pre-funding of PRBs for those new hires until at least 2072.

    That’s a simple way to address the cost-overhang resulting from unfunded benefit promises. Instead of battling to the end to take them away from workers in the future, we should fund them responsibly, sustainably – and affordably.

    Even better, by taking this constructive problem-solving approach (rather than going to war), we could have reduced the overall cost of the CUPE contract. Early in bargaining I had proposed a status-quo roll-over agreement for this group, and I believe that CUPE officials were signalling that could be a face-saving solution to a very tough round of contract talks. Instead we slipped into a hundred-day conflict, driven by overheated rhetoric about “greedy” unions, that won’t produce a penny of savings for at least thirty years to come. Yet to eventually get that deal, the City had to sweeten the offer with wage increases that compound to more than 6 percent over four years. This compares to many employers in Windsor who are presently negotiating wage freezes (not surprising, given the current recession). The City threw in another $2.8 million in signing bonuses ($2000.00 for full-timers, $1000.00 for part-timers) to seal the deal.

    The cost of those wage increases will likely add $40 million to City expenses over the next ten years, just from the CUPE group (and much more if that pattern is extended to other bargaining units). And the bill only gets bigger in future years – as subsequent wage increases are applied to a higher starting point. Over the long run, once again using the same actuarial assumptions as the City, I estimate those wage increases (let alone the signing bonus) will cost more than twice as much as the City will ever save by wrestling PRBs away from new hires.

    So the next time a hard-line politician stands up and boasts about the money he “saved” you by getting tough with the unions, think again. There’s no doubt that the strike cost Windsor taxpayers (in money, in lost services, and in a divided community) much more than it saved them. We divided our community, we lost services, we damaged the regional economy (when it could least afford it), and we paid out tens of millions of dollars to settle the conflict. Why? To reduce the labour costs of new hires (who aren’t even on the payroll yet) by $1 per hour.

    Needless to say, Windsor has been hit hard enough by the global financial crisis and the manufacturing meltdown. Then, on top of tens of thousands of jobs that have disappeared from the private sector, the City then effectively eliminated another 1800 good jobs for over three months. How many millions of dollars of personal income, and how many thousands of spin-off jobs, were lost by this aggressive stance – precisely when our community could least afford it? We shouldn’t be glorifying the savings of that needless battle. Rather, we should be regretting its costs – monetary, economic, and social.

    As a city councillor , I am concerned both with treating our own employees fairly, and managing our finances in a responsible, sustainable way. There were much better ways to achieve both goals, than through the now-infamous War of 2009.

    Let’s hope that as we grapple with fiscal challenges in future years, we find better ways to solve our problems by working together – instead of battling each other in epic confrontations that no-one can win.