A Reasonable Proposal: Why Arbitration Makes Sense for Public Sector Employees

On Tuesday the BC Teachers’ Federation and the provincial government reached a tentative deal, ratification of which will end a strike that cost students the last two weeks of classes prior to the summer and the first three weeks of class this year. Prior to the agreement the teachers’ union had voted in favour of ending the strike if the government would agree to binding arbitration (which the government rejected). Public sector workers’ strikes are somewhat odd. Unlike in private sector strikes, the individuals that are hurt most by public sector strikes are not the employers but rather the public itself. Despite this, the public has limited ability to influence the outcome of the strike. The ability of the government, who are also the employers, to legislate workers back to work can also put workers in a precarious position. It can be difficult to negotiate with an employer when you know that employer has the ability to end a strike simply by passing legislation (though it should be noted that the BC government has committed to not using back to work legislation against the BC teachers). Binding arbitration is a tool that should be much more common in public sector employee labour disputes. It provides a way to work around some of the unique characteristics and awkward incentives that exist in public sector strikes.

The difference in who is affected by a strike is a key one between public sector and private sector strikes. In private sector strikes labour is able to hurt the employer by striking. If workers refuse to work than the company cannot operate and ends up losing out on profits. The reasonable hope on the part of labour is that if the employer loses enough money they will have an incentive to give in to some of labour’s demands. The same does not hold for public sector strikes because public sector organizations are rarely in the business of making a profit. If anything the BC government stands to benefit from a strike in the short term because they save money on having to pay teacher’s salaries. It is the public that ends up suffering the consequences of a public sector strike when key services, in the case education, are disrupted. The public, however, has very little ability to make the employer (or for that matter labour) go to the bargaining table and work out an agreement. This is especially the case if a government has a long time before they have to call an election, as is the case with Christy Clark’s Liberal government in BC. Clark’s Liberals have plenty of time to recover from losses in popularity due to the strike, and the public has few other mechanisms to force the Liberal government to compromise with teachers. The people hurt most by public sector strikes are often the people who have the least ability to force compromise in order to reach an agreement.

The way that strikes impact the public also affect the the justifications that public sector unions present in defence of their action. Because the harms of a strike are experienced largely by the public and not the employer, there is often an expectation that public sector unions’ justify strikes not only in terms of their own best interest but also in terms of the public’s interest as well. This is why teachers’ strikes are often accompanied by arguments by teachers about how students will be better off with demands that they are making- such as demands for smaller class sizes. This is an expectation that private sector unions rarely face and which goes beyond the purposes of unions. Rarely would a union like the autoworker’s union be expected to explain why job action makes society or a car manufacturer better off. Unions exist to defend the interests of their members because, without them, employers can exert disproportionate pressure on labour to accept low wages and poor working conditions. Public sector workers deserve to protect their interests as much as private sector workers do, and unions should not be expected to subordinate their interests to the goals of the employer. Serving the public should not mean that teachers or any other set of public workers should lose the ability to make demands for fair pay and reasonable work loads and conditions.

Binding arbitration presents a way for governments and unions to get out of the awkward incentives that public sector disputes present. It forces the government to come to the bargaining table when there can be limited incentives for them to do so otherwise. It also protects labour from back-to-work legislation which, while not being used by the BC government with teachers, is often used by governments in order to end strikes in which they feel labour is unlikely to succeed. At the same time arbitration does not mean that the government ends up conceding to labour’s demands. Having an arbitrator hear the cases for government and for the teachers and reaching a compromise between the two allows a compromise to be reached that balances the interests of both of the actors that are involved. Employees will not be able to win all of their demands, but at the same time the government will not be able to try to avoid negotiation while passing the costs of doing so onto the public.

During the teachers’ strike the BC government took a clear position against the use of arbitration. One of the major reasons that they used to support this decision is the concern that binding arbitration takes control over the costs of raises in teachers’ salaries (and costs associated with limits to class sizes) out of the governments’ hands. If binding arbitration leads to increased salaries for teachers or reduced class sizes the costs of education to the government increase. In response the government would either have to cut funding to other programs, raise taxes, or borrow to cover the additional cost. None of these options are likely to be popular with the public. It should not however be the job of a public sector union to make sure that the government can balance the budget. The public are the ones that benefit from public sector employees’ labour and therefore it is the public, through the government, that should be responsible for providing teachers with fair compensation for their labour. If this forces the government into difficult decisions about tax increases or cuts to other programs than those decisions are the obligation of the government not the responsibility of the union. In the same way that one would not expect a autoworkers to take a pay cut in order to help an auto manufacturer increase its profits, one should not expect teachers or other public sector workers to accept low wages and higher workloads (in the form of increased class sizes) in order to make the government’s job of balancing the budget easier. There are of course limits to this, it would be unreasonable to expect the government to accept teachers’ demands without limits, but that is where arbitration comes in. Having an arbitrator mediate the dispute means that the outcome is likely to be as close an approximation to fair wages and working conditions as one can expect to achieve. The government and the public owe it to their employees to pay them fair value for their services even if doing so means having to find ways to increase government revenue or make savings elsewhere.

Public sector strikes are fundamentally different from private sector strikes because of the different incentives that actors, particularly the employer faces. The ability of governments to off-load the costs of labour disruption onto the public, or to legislate workers back to work creates a negotiating environment that unduly harms the interests of the employees or the public as a whole. Binding arbitration may serve as a way for governments and government employees to avoid the kind of acrimonious strike and service disruption that occurred during the BC teachers’ strike.

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