Teacher’s ‘me too’ clause puts Alberta in a fiscal squeeze

The stakes in collective bargaining sessions remain high. Alberta faces a $10.3-billion budget deficit with more big deficits planned

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Teacher's ‘me too’ clause puts Alberta in a fiscal squeeze

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By Ben Eisen
and Angela MacLeod
The Fraser Institute

VANCOUVER, B.C., May 8, 2017 /Troy Media/ – Premier Rachel Notley’s government recently reached a tentative short-term agreement with the Alberta Teachers’ Association. The deal must still be ratified.

According to news reports, the union accepted a salary freeze. That may leave some Albertans thinking teachers won’t get any raises.

It’s not quite that simple.

Teachers will still move up the salary grid as they gain years of experience. That means many teachers, especially those in the first half of their careers, will make more as they gain seniority.

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As well, the agreement reportedly contains a ‘me too’ clause. That would entitle teachers to matching pay bumps if other public-sector unions secure raises in collective bargaining agreements.

The ‘me too’ clause makes it all the more important for the government to prudently negotiate with other public-sector unions, with an eye on the difficult fiscal realities facing the province and the clear need for spending discipline.

So the stakes in future collective bargaining sessions remain high. The province faces a $10.3-billion budget deficit with more big deficits planned as far as the eye can see.

Spending has already increased by 11 per cent over the past two years. If the government doesn’t rein in spending growth, even more debt will be passed to future generations of Albertans.

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A disciplined and frugal approach to wage negotiations with government unions is essential. Compensation for public-sector employees is, by far, the largest provincial government expense. Controlling these costs remains a prerequisite for repairing the province’s finances.

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Any public-sector pay increases would further damage the province’s already disastrous bottom line. And if any new contracts run past 2019, they would authorize increases beyond the government’s mandate. That would make it more difficult for any future government to slay the deficit.

The government should enter upcoming bargaining sessions recognizing that there may be room for significant savings.

One recent study shows that, after controlling for relevant variables, Alberta’s government-sector workers are paid, on average, 7.9 per cent more than comparably educated and experienced workers in the private sector. This public-sector wage premium comes on top of other advantages in non-wage benefits, including greater job security and pension coverage.

And when it comes to spending on government employees in the education sector specifically (mostly teachers), costs have been on the rise in recent years. Between 2004-05 and 2013-14 (the last year of comprehensive data), inflation-adjusted per-student spending in Alberta public schools increased by 25.4 per cent. The majority of this growth was driven by increased spending on employee compensation, which climbed from $3.6 billion in 2004-05 to $6.3 billion in 2013-14 (in nominal dollars).

Of course, most teachers and most government employees make important contributions to their communities and the province. However, given Alberta’s huge budget deficits and rapid pace of debt accumulation, these fiscal realities should be considered carefully as the government develops its strategy for upcoming negotiations.

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Bringing government-sector wages closer into alignment with private-sector norms can help repair the province’s battered finances. But achieving this requires a prudent and responsible approach to wage negotiations.

This discipline will become doubly important if the teachers’ ‘me too’ clause is part of the final agreement.

Ben Eisen and Angela MacLeod are analysts with the Fraser Institute.

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