PS unions vow not to surrender severance

Treasury Board’s tactics ‘distasteful’

By Kathryn May, The Ottawa CitizenOctober 24, 2010

Thousands of federal statisticians, economists, accountants, diplomats, financial officers and computer specialists won’t give up severance pay for a bigger wage increase, say the unions that represent them.

This comes after the giant Public Service Alliance of Canada has tentatively agreed to surrender severance pay for public servants who retire or leave. The refusal to follow suit signals a fracture in labour relations and distrust of Treasury Board that’s dividing workers across the country.

“The message from our members is clear and consistent. No, no, no and no. They don’t see letting go of severance as an option and they would vote no if that was part of an offer,” said Claude Poirier, the president of the Canadian Association Professional Employees.

The government’s 4,400 financial officers already turned down the 5.3-per-cent wage increase Treasury Board offered in exchange for giving up severance.

“They offered it and we considered it for all of 20 seconds,” said Milt Isaacs, president of the Association of Canadian Financial Officers. “We’re not interested, it is a really bad deal and, to be honest, it’s insulting.”

The 14,000 computer specialists, represented by the Professional Institute of the Public Service of Canada, will also refuse.

PSAC traded severance pay for a bigger wage increase — 5.3 per cent over three years. Of that, 0.75 per cent is compensation for the loss of severance.

As part of the tradeoff, PSAC also negotiated improved severance payouts for all existing workers, including term employees. All workers can keep the severance pay they accumulated so far during their working years with several options to cash out.

Laid-off workers would still get severance and PSAC negotiated two extra weeks for long-serving employers. New employees, however, would no longer collect severance when they leave or retire.

The loss of severance is highly controversial among unions for professional workers. Many say it’s the biggest union concession in decades — especially from the government’s toughest and most militant union.

They argue PSAC members face a bigger risk of layoffs than professionals. Scientists, economists and engineers are in big demand so shouldn’t have to trade severance for a deal that’s only a fraction higher than the 1.5-per-cent a year raise the government gave the Canada Revenue Agency about the same time.

Poirier said giving up severance is like a pay cut, which is significant for the professionals who earn less than those in the private sector.

“If a group doesn’t see layoffs coming, there has to be money elsewhere to give up severance pay. … They would have to put a lot of money on the table to shove that down our throats,” said Poirier.

Isaacs said severance is one of the benefits the government relies on to recruit employees. He said many new professionals join because they’ve been “hooked” on the benefits. When government starts chipping at them, workers lose trust and may not stick around, he said.

The big worry is that giving away severance opens the door for the government to demand other concessions.

“Once you give it up, it’s gone and you can strike until the cows come home,” said one union official.

Public servants have received severance long before they were unionized in the 1960s. It was at first given to public servants to help them bridge “transitions” upon layoff or retiring. Severance pay accounts for about 1.3 per cent of the government’s $30-billion a year payroll.

“They’re bringing them in line with the reality of workers in all other sectors … where you don’t get severance when you retire,” said Alan Riddell, an employment lawyer at Soloway Wright.

Public servants collect one week of pay for each year of service to a maximum of 30 years of service. For someone making $80,000, they can collect a nest egg of nearly $50,000 at retirement.

Treasury Board’s unprecedented handling of the talks infuriated unions from the start. It invited the two largest unions, PSAC and PIPSC, to negotiate a new deal before their contracts even expired.

It argued an early deal would give “economic certainty” to departments, which face a three-year-freeze on operating budgets.

But unions said the plan was to “divide and conquer the unions.” Get a deal with PSAC and force it on the rest.

Treasury Board is now inviting other unions for “expedited talks,” but they have to negotiate severance. They can refuse and resume bargaining as normal when contracts expire later next year.

The wild card is the upcoming federal budget and whether the government will legislate a settlement on public servants. The government has forced wage controls or freezes by legislation, but using it to override contracts and kill severance is a big step that would lead to lawsuits.

The next key moves are whether PSAC members vote for the deal and what PIPSC does when it goes to the table this week for its invited round of talks.

PIPSC president Gary Corbett said the union hasn’t confirmed its position. He’s been swamped with protests from members who want to keep severance and he’s clearly annoyed by Treasury Board’s divisive “distasteful” tactics.

“It’s not fair to put us in this position. … Our position is severance is there to be protected in the long run and the employer is benefiting from this and driving the public sector into disarray.”

By Kathryn May, Postmedia NewsOctober 24, 2010

Public Service Alliance of Canada National President John Gordon.

Photograph by: Julie Oliver, Ottawa Citizen

OTTAWA — Canada’s largest and most militant federal union agreed to give up severance pay in a controversial deal with the Harper government to help minimize job losses in the public service, says its president.

The Public Service Alliance of Canada has been under fire for making an unprecedented concession when it struck a three-year 5.3 per cent wage deal with the government that included giving up severance pay for public servants when they retire or leave. The tentative deal has yet to be voted on by the union’s members.

But PSAC President John Gordon said the surrender of severance isn’t a concession, but a trade-off the union made to help minimize possible job losses. In return, it negotiated bigger wage increase; increased payouts for existing workers and some improved severance for laid-off workers.

“It was a trade-off and we got additional money that immediately goes onto salaries and is pensionable,” he said. “So they may not be accumulating severance any more for when they retire but they’re getting more in every pay cheque.”

With an operating freeze, departments must absorb any increased costs, which the union fears could mean cutting jobs. By cutting an early deal, departments can plan with certainty around wage increases.

About 0.75 per cent of the 5.3 per cent wage increase would offset the loss of severance pay for voluntary departures.

The deal was also structured over three years to minimize the impact on departmental budgets so managers won’t be pressured into job cuts.

The union negotiated a 1.5 per cent raise in each in the next three years with a gradual phase-in of the 0.75 per cent severance provision. Workers would get 0.25 per cent for severance in 2011, but the bigger slice of 0.5 per cent will come in 2013 after the freeze on operating budgets is lifted. PSAC hopes this will take some pressure off departments as they cope with the freeze.

As part of the trade-off, PSAC also negotiated improved severance payouts for all existing workers, including term employees. All workers can keep the severance pay they’ve accumulated during their working years with several options to cash out.