Drummond: Arbitration needs a-fixin'

Martin Cohn added some more today from his interview with Bay Street one-percenter Don Drummond who is developing recommendations for government on public sector reform.

And the news is not good. On interest arbitration (which hospital workers are forced by law to use to settle collective bargaining disputes) here is Cohn's report:

Drummond discounts public-sector pay freezes because unions inevitably earn catchup increases down the road. But he is mindful of criticism by Hudak’s Tories that a broken arbitration system needs reform: “Broken might be a bit strong, but I will definitely be making some recommendations for change.” Arbitrators should reflect private-sector wage trends. But they are wrong to think government can easily meet pay demands merely by raising taxes: with labour costs ranging from 50 to 80 per cent in some sectors, arbitrators must take account of deficit constraints and the lack of additional tax room.

Private sector union wage settlements have been higher than public sector settlements this year and last. And private sector bosses are doing much better, getting much bigger increases than private sector workers. (But, somehow, I do not think this is what Drummond has in mind when he suggests public sector settlements should reflect private sector wage trends.)

On the 'brutal' Mike Harris years, Drummond is dismissive, suggesting that Harris merely implemented across the board cuts. As discussed in the previous post, Harris's health care reforms were much more complicated -- and very similar to a lot of the ideas being kicked around today. But they were a failure -- and even the Harris government decided, eventually, to reverse many of them.

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