Economist insists that the B.C. government has lots of fiscal room to give civil servants a decent raise in pay

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      Anyone who watched Global B.C. News on Sunday had a glimpse into how difficult contract talks might be this year between public-sector employers and various unions whose contracts have expired or are about to expire.

      There's a good reason for this to be a tough bargaining year.

      In May, inflation in B.C. was running at an annualized rate of 8.1 percent, which puts workers in a mood to do some catch-up.

      On Sunday, Global's B.C. News legislature bureau chief Keith Baldrey told viewers that even a five percent increase in each of the next two years would cost the treasury about $4.65 billion for unionized workers and another $1.1 billion for nonunionized employees.

      While that sounds like an awful lot of money, an economist with the B.C. Centre for Policy Alternatives has suggested that the provincial government still has "plenty of budgetary room" to manoeuvre.

      In a policy note on the CCPA website, Alex Hemingway points out that the B.C. government has a long history of underestimating how much money it will have at the end of the fiscal year.

      "In the past two years, deficits have been roughly $7 billion and $9 billion smaller than projected, respectively (and when the numbers are finalized for the most recent year, this gap will likely grow)," Hemingway writes.

      Moreover, he maintains that the province underestimated its fiscal position in 16 of the past 20 budgets, as shown in the chart below.


      Hemingway suggests that the province's habit of lowballing its forecasts creates a bias against public spending and distorts democratic debates about fiscal priorities.

      The lowballing occurs in different areas, such as resource revenues or economic-growth rates. Deficits are also cushioned by large allocations to cover contingencies.

      This year, the B.C. government's operating budget is $62.5 billion.

      "Consider, hypothetically, what the cost would be of five per cent pay increases each year for three years for all unionized provincial public sector workers (let’s call this a “5-5-5” deal)," Hemingway writes. "If we accept the Ministry of Finance estimate reported in the Vancouver Sun, a one per cent pay increase for these workers would cost $310 million per year (coming from the employer, this estimate may be on the high end). This would imply that a 5-5-5 deal would have a cumulative outlay over three years of roughly $9.6 billion."

      Yet the contingency and forecast allowances alone add up to $16.2 billion over the same period, he notes.

      He also points out that operating spending as a percentage of gross domestic product in B.C. is projected to decline from 19.2 percent in 2023-24 to 18.7 percent in the following year.

      "To put it in more concrete terms, if we returned spending to 1999/2000 levels, which was 21.5 per cent of GDP, the provincial government would have about $8.5 billion more available in the upcoming fiscal year (and rising each year from there) to spend on badly needed social and environmental investments," Hemingway states in the policy note.

      BCGEU represent large share of public-sector workers

      Today, the B.C. General Employees' Union resumed bargaining for new contracts in the wake of receiving an overwhelming strike mandate from its members.

      "BCGEU members make up 17 per cent of the 384,000 unionized workers and public service professionals that will be negotiating with the provincial government in 2022," the union's  website states.

      There are six agreements, which took effect April 1, 2019 and are set to expire on March 31, 2022. 

      According to the BCGEU website, 31,500 members are covered by the public-service agreement. Another 11,000 BCGEU members are covered by community social-services agreements. And 13,000 members are covered by community-health agreements.

      In addition, 4,800 BCGEU members are covered by postsecondary agreements for instructors and support staff; more than 2,200 BCGEU members are covered by the health-sciences professionals' agreement; and more than 2,000 BCGEU members are covered by the health-facilities subsector agreement.

      In 2018, members ratified a contract with two percent annual wage increases over three years for 26,500 employees. There was additional funding to address staffing shortages in specific areas, such as child-protection social workers, deputy sheriffs, and corrections officers.