Productivity |  Quebec continues to catch up

Unions | How negotiations contribute to inflation

The rise in pay scales worries economists, knowing that these increases can fuel inflation, which the Bank of Canada seeks to combat by raising interest rates. Our columnist takes stock after reviewing the 2022 union-management agreements.

Posted at 6:30 am

All workers want better wages, especially with prices through the roof. Like these members of the furniture union near Rimouski, who saw their compensation increase by 26% in 2022, I found out.

However, the dynamics of prices and wages can become problematic, at a certain point, and create a vicious circle: prices go up, therefore wages go up, which further increases prices and therefore possibly salaries, and so on…

Hence the question: what raises do workers get these days? Above all, are muscle raises granted over several years, as was the case with the collective bargaining agreements of the 1970s, which had contributed to the inflationary spiral, forcing a further increase in interest rates?

The issue worries the Bank of Canada, as was understood in a speech by its governor, Tiff Macklem, to members of the Canadian Federation of Independent Business (CFIB) on July 14.

Asked for advice on fighting inflation, Tiff Macklem responded: “As businesses, we don’t expect the current rate of inflation to remain at this level. Do not include this in your long-term contracts. Do not include this in salary contracts. It will take time, but you can be sure that inflation will come down. […] We trust that inflation will return to our goal of 2% in the next two years,” he explained.

What about salary increases, actually? To get to the bottom of it, I reviewed most of the major collective agreements that were signed in 2022 in Quebec.1.

First observation: the progression of salary scales for 2022 no longer has anything to do with the recent past. Of the 47 collective agreements analyzed, only four offer increases of less than 2.5% in 2022. And eight companies granted 10% or more for the year 2022 alone.

On average, the jump in the salary scales of all the agreements analyzed reaches 6.5% in 2022.

This figure is very close to the inflation forecast by economists for the year as a whole (between 6.5% and 7%). And quite close, too, to the annual increase in the average salary registered by Statistics Canada in the last quarter in Quebec (7.5%).

Now, a crucial question: how did employers and unions come to an agreement for the following years? Result of my research: in the main collective agreements, the scale increases are 3% for 2023 and 2.8% for 2024, on average.

Presumably businesses have heeded Tiff Macklem’s message and forecast that inflation would eventually fizzle out, as most economists predict, though forget the Bank of Canada’s 2% target two years from now to these salaries.

Of course, nothing is set in stone. We will have to be attentive to the next agreements that will be signed at the end of the year. The more time passes, the more inflation is perceived as permanent and the more expectations of employees grow.

In addition, no one will prevent the parties from reopening collective agreements next year, in the event of inflation, as has happened on several occasions in the last two years in the face of high staff turnover, fueled by virtual absence, unemployment and shortage of workforce. .

The boom comes from the regions

In many cases, it is precisely labor shortages that compel business leaders to extend bidos, far more than the union’s balance of power or the desire of employees to catch up with inflation. And this fuel for price increases seems much more worrying to me, especially in Quebec.

Thus, the 10 biggest wage increases in Quebec’s major deals have been listed in the regions, away from Montreal, where the shortage is felt most cruelly.

For example, the kitchen and bathroom furniture maker Miralis, from Saint-Anaclet-de-Lessard, near Rimouski, gave its 252 employees average raises of 26% in the first year. At the time of signing, cabinetmakers’ wages ranged from $21.02 to $24.35 per hour.

Drummondville-based auto parts maker Soucy International also increased its pay scale by 22% this year, slightly more than the Verreault Navigation shipyard in Bas-Saint-Laurent (about 16% this year, according to my reports). estimates).

In both cases, wages fluctuate between $23 and $35 an hour, and electrical mechanics are among the highest paid, at nearly $33 an hour.

Other agreements to highlight are those recently signed in the paper and sawmill sectors by Resolute Forest Products. Unlike most other deals, which return to 3% raise horizons in 2023 and 2024, Resolute’s salary increases reach 4% in 2023 and nearly 6.5% in 2024, on average.two.

Resolute agreements are also unique in that they serve as a benchmark agreement for the paper industry and sawmills.

Of course, these salary increases are usually accompanied by improvements in working conditions (holidays, retirement, etc.).

To agree, employers and unions have sometimes relied on the future consumer price index (CPI) from 2023 to 2025. This is the case for 7 of the 47 agreements analyzed.

For example, at the Microbird bus manufacturer, in Drummondville, it was agreed to fix the increase in 2023 to the evolution of the CPI, after an average salary increase of 16% in 2022. In 2024 it is the CPI with a minimum of 2.5% and a maximum of 4%.

Another example: the Sandoz factory, recently acquired by Delpharm, which sets the CPI rise in 2023, with a ceiling of 4%.

Obviously, recent agreements between management and unions are unlikely to contribute to inflation in the long run. It remains to be seen how the negotiations will play out in the coming months, particularly with the Quebec government…

1. I selected 47 collective agreements, including those that cover 100 or more employees. Information is available on the Corail website. I fine-tuned the work with calls to the big trade union centrals.

2. Settled forest products deals are very complex. They include salary adjustments in dollars per hour, in addition to increases in percentage or dollars per hour for certain years. There are also separate raises for trades and production employees. The overall increases calculated by Press They are therefore approximations. And they do not include retention bonuses.

Jumps in salary scales

Manufacturing, transportation equipment.

It is in the manufacturing sector where the wage increases of the main collective agreements are strongest, in particular for transport equipment. Four of the eight listed companies offer 10% or more in 2022. And again, for a fifth company, Bombardier, the recently signed agreement includes a 6.5% increase for December 2021, so this increase is not included. in our augmentation compilation. by 2022. One notable exception: engine maker Pratt & Whitney. The 5-year deal only offers 2.4% in 2022 and little else thereafter. However, it includes a complex cost-of-living compensation mechanism that is not, however, built into the salary.

miscellaneous manufacturing

Furniture, textiles, fireplaces, electrical transformers: regardless of the sector, increases in salary scales are quite generous in the manufacturing sector. This is the case, in particular, for furniture manufacturers, hit by labor shortages. Thus, Miralis offers 30.5% for three years and Ameublements El Ran, around 14.3%, according to the evolution of the consumer price index (CPI). It should be noted that this table contains the largest increases for the second year of the collective agreement (2023), for example, 4% for the companies Cheminées Sécurité International, de Laval, and Hitachi Énergie, de Varennes.

food and trade

Several companies in the food or commerce sector have had to grant significant salary increases to their union members. This is the case at Olymel, in particular at the Saint-Hyacinthe plant (11% in 2022), at the Aliments Conagra pogo maker, in Boisbriand (7.1%), at Boulangerie Canada Bread, in Montreal (6% ), and even at the Sobeys warehouse in Terrebonne (6%). In this battle against inflation, the SME that produces the Boréale (Les Brasseurs du Nord), from Blainville, had reached an agreement before the war in Ukraine and the rise in the price of gasoline, at the beginning of 2022. He distributed the increases to six years, essentially offering its employees 2.75% per year for five years and 3% in the last year of the contract.

Service sector

In this industry, drivers win. Repentigny-based Lanau Bus has pegged increases to inflation in 2022, which is likely to be 6.5%, as well as adding 1.5 percentage points to the CPI for the next two years. Quebec’s Autocar des Chutes agreed to 11.2% in 2022, then 2% a year for nine years. At Autobus Galand, Théberge Transport and Victor Transport, the jumps are 20% in the first year, according to Teamsters spokesman Stéphane Lacroix (these last four companies are not included in our table because their agreement targets fewer than 100 employees). . A head-on collision is in the offing this fall for some of the carriers still in negotiation.

Public Services, Forestry and Mining

Judging by recent collective agreements, the public sector remains, for the time being, the poor relation in terms of salary increases. The Sherbrooke police officers certainly got 4% in 2022, but Quebec City limits the increase in salary scales to 2% in 2022 and 2023. It must be said that some, like the professors at the University of Quebec in Abitibi-Témiscamingue , await the wage policy of the Quebec government in the coming months. On the other hand, in the resources sector, the agreement signed in Resolute (approximately 9% in 2022, 4% in 2023 and 6.5% in 2024) is likely to increase the prices of forest products, since it involves the agreement reference in the industry.

1. This is the progression to the top of the ladder for most major collective agreements covering 100 or more employees in Quebec. Seven of the 47 collective agreements analyzed link wage increases to the CPI (usual inflation rate). To estimate these increases, we assume that inflation would be 6.5% in 2022, 3.5% in 2023, and 2.5% in 2024.

2. For 2022, this is an average of the increases of the first 4 classes of the Olymel convention in Saint-Hyacinthe.

3. Bombardier gave a 6.5% raise to its employees for the union year beginning December 2021. Similar raise in December 2021 for Laurier Architectural (6%).

4. The legal name of Hôtel Bonaventure in the agreement is 9312-5581 Québec inc.

5. Settled forest products deals are very complex. They include salary adjustments in dollars per hour, as well as salary scale increases in percentages or in dollars per hour for certain years.
There are also separate raises for trades and production employees. The overall increases calculated by Press They are therefore approximations. They do not include retention bonuses.

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