Thursday, 13 December 2012

Taxpayer funded Unions

As a long-time advocate of fiscal restraint in the public sector, it is very comforting to see the sobering report by Kevin Page the Parliamentary Budget Officer. His latest report states that the federal public sector compensation is approximately $114.000 per employee. This figure which comprises wages and benefits outpaces inflation and of course the average compensation in the private sector.

What we must remember is that the reported figure is for federal employees. We must also look at compensation for provincial and local government employees to see how much of the taxpayers money is spent on public sector employees; given that in some cases the wages, salaries and benefits of public sector employees account for over 60% of operating costs.

In the past years there has been a movement towards the right-to-work (RTW) in the United States. Last fall Wisconsin saw a very acrimonious battle between Unions and the State Government. A recall of the Governor by Unions was soundly defeated at the ballot box.
On December 11, 2012 Michigan became the 24th State to pass a right-to-work legislation. What is significant is that Michigan is the bastion of the union movement, the birth place of the Auto Workers Union, one of the most powerful unions, which also has a foothold in Canada.

Statistics show that unemployment is lower in most of the states that have adopted RTW policy. Union membership is dwindling in the United States where the huge settlements made through collective agreements in the public sector are the main cause of bankruptcies at the local and state levels. Governments can no longer sustain the costs of promised pensions in a changing economy.

In Canada, The Rand Formula (1946) which makes trade union dues mandatory regardless of the worker’s union status has legal force in certain province. While unions have contributed to the wellbeing of workers in the past, in the 21st century their role has changed and the results of collective bargaining, especially in the public sector has clearly become a burden on the taxpayer.

In addition unions in many cases have not represented their membership very well. For example the Alberta Teachers Association did not support Lyndon Dorval in the ‘no zero’ policy. Unions oppose immigration of foreign workers in an environment of high levels of vacancies and change in  demography . They oppose any privatization of public sector services, and always maintain that any collective bargaining is ‘not about money’ and yet refuse to open their books.

Despite the fact that Brent Rathgeber Conservative MP opposes a bill that will force unions to publicly disclose how they spend the dues collected from members, it is important for this bill to pass and this is why: Unions derived the majority of their revenues from dues paid by their members. Under the Rand Formula workers are forced to pay union dues deducted from their wages. Once collected there are very few limitations as to how this money is spent by the unions. In many cases they fund political parties or agendas. In the public sector all wages are paid from taxes collected from Canadians, it therefore seems that the tax payer is the main provider of funds to Unions. Should we not have more disclosure on how our money is being spent?

Canada should follow the United States in the sea change in laws governing unions. At the very least we should amend the Rand Formula to give workers the right to choose where their dues are being spent, or as in some cases designate where the money collected should go ( e.g. to charities of their choice). The right-to- work, without joining a union should be encased into the Canadian Charter; alternatively those who want to join a union can do so freely.

Unions have a role to play in the private sector, but no longer in the public sector, where as a result of their size have become too powerful and less conciliatory. The cost of their existence has become too expensive and they have become a deterrent to change required to make the public sector more efficient. It is time for Canadian taxpayers to demand that their money is better spent on services and not Unions.

Marcel Latouche

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