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In November last year, the Protecting a Sustainable Public Sector for Future Generations Act, also known as Bill 124, was deemed unconstitutional by the Ontario Superior Court of Justice. Over 40 unions, including OCUFA member organizations, brought to court’s attention that the law violated the Canadian Charter of Rights and Freedoms, namely the part that guarantees workers’ rights for a meaningful bargaining process.
As a consequence of Bill 124, a 1% cap was imposed on compensation increases for Ontario’s public sector workers over a three-year moderation period. For University of Waterloo employees, the moderation period commenced in May 2021, and was supposed to end in April 2024, but due to the Superior Court’s decision, it will end one year earlier than expected. Despite the Ontario government’s appeal of Bill 124 in December, there are indications that the UW administration has agreed to review the 2021 salary settlement. At the time of publication of this blog post, these negotiations are presumably ongoing.
Bill 124 at UW
Bill 124 has profoundly affected faculty members, as for two years the scale adjustment (as opposed to selective or merit adjustment) of every faculty member was capped to 1%.
You can confirm that 1% scale adjustment was applied to your salary by going to Workday, clicking the person icon at the top-right corner, then selecting View Profile -> Personal -> Documents. There you should find Faculty Salary Increases (FSI Advice) for all years, including 2021 and 2022 when the cap was imposed.
In comparison, in 2020 the scale adjustment was 2.15%, and over the past decade the lowest scale adjustment was 1.95%. Looking at the university’s audited financial statements, salaries remain the biggest expense, constituting over 50% of all expenses. For example, according to last fiscal year’s statement of operations, where the 1% cap increase was in effect, the university paid $612,584,000 in salaries. Replacing 1% with the conservative estimate of 1.95% yields $618,345,000, meaning that the university paid at least $5,761,000 less than it should have – an amount that constitutes almost 10% of university’s profits (where profits = excess of revenues over expenses). This number increases to 12% of profits if we replace a conservative estimate of 1.95% with the most recent scale adjustment of 2.15%.
All in all, because of Bill 124, the university has saved big on salaries in the 2021-2022 fiscal year. Information pertaining to the fiscal year of 2022-2023 will be published on or after April 30th. Needless to say, even an increase of 2.15% can be seen as moderate, in view of the fact that by the end of fiscal year Canada’s inflation rate peaked at 6.8% and was, on average, 4.78% during the fiscal year (see the diagram below).
Figure 1: Canada's inflation rate from May 2021 to April 2022
While faculty members are waiting for the result of negotiations, it is useful to remind ourselves of factors that should be considered when calculating the upcoming 2023-2024 scale adjustment. Perhaps the most important factor is that Bill 124 has been in effect for close to two years, and starting negotiations from scratch, considering solely the present financial reality while disregarding past circumstances, would be unfair.
Table 1: Average inflation over a fiscal year in comparison to a scale increase in effect at UW. Source: https://tradingeconomics.com/canada/inflation-cpi. Note that inflation data for April 2023 was not available at the time of publication.
Fiscal Year | Average Inflation | Scale Increase in Effect |
May 2020 to April 2021 | 0.925% | 2.15% |
May 2021 to April 2022 | 4.78% | 1% |
May 2022 to March 2023 | 6.61% | 1% |
Even though inflation was at a record low during the start of the pandemic, things quickly escalated in the last two fiscal years. In this soon-to-end fiscal year, the average inflation was 6.61% at the time of publication (See Table 1 for more details.). In a fair outcome, all of these factors would be reflected in any updated salary agreement negotiated with the employer.
Another factor to remember is that present inflation of 4.3%, while being lowest since January last year, has been achieved by means of rather strict measures taken by the Bank of Canada, which led to increased mortgage rates. Further, in February food prices were 10.6% higher than a year ago, so grocery prices outpaced overall inflation.
Anecdotally, we have noted that the university sometimes invokes Bill 124 as a reason for denying raises and therefore preventing faculty members from being fairly compensated for their work in an increasingly complicated economic situation. While Bill 124 does apply to scale increases, it has no bearing on merit increases or other special adjustments, which the university could use as mechanisms to ensure fair pay. At minimum, salary increases should be indexed to cost of living; anything less amounts to a pay cut.
The university would argue that it is important to build savings, particularly in an uncertain economic climate, yet it prevents its own faculty members from doing the same by keeping salaries artificially low. Here we can only remind the reader of a more than 100% increase in surplus during the 2020-2021 fiscal year ($117M), in comparison to the fiscal year preceding it ($56M). The university has undoubtedly profited from the pandemic, a profit that is in large part due to the tremendous effort put in by faculty members, yet those efforts are not properly compensated. Saving for a rainy day should include caring for those whose labour upholds the institution.
Finally, we note that the consequences of Bill 124 are particularly pernicious for Lecturers, who have lower salaries compared to tenure-track faculty members. Lecturer salaries at UW are 48% those of tenured professors, which is behind our comparators at McMaster and UofT, where teaching stream professor floors and ceilings are on par with those of research professors. There are further complications when we consider that Lecturers are the faculty rank with the highest percentage of salary anomalies, and that this percentage has been growing since the first salary analysis in 2015. (For more discussion on salary anomalies, take a look at our page on Salary Equity.)
Environmental Scan
In February, OCUFA called for Ontario universities to revisit employment agreements with faculty and academic staff. Since then, several bargaining successes were reported by OCUFA. For example, Queen’s University Faculty Association was the first faculty association to fully avoid wage restraint under Bill 124:
Annual across-the-board (ATB) increases of 3.5%, 3%, and 3% were achieved retroactive to July 1, 2022. Even more significant compensation gains were attained for contract faculty, whose base stipends increase prior to the ATB rates being applied, and who will receive a two per cent increase to pay in lieu of benefits (from six to eight per cent).
Unlike at the University of Waterloo, where Bill 124 is de facto still in effect even after it was deemed unconstitutional, at Trent University,
Salary increases included an immediate increase of 1.75 per cent for January 1, 2023, cutting short the union’s moderation period by six months. Three per cent increases were achieved for the second and third years, applied on July 1.
At Wilfrid Laurier University,
WLUFA full-time unit was successful in recapturing a $900 lump sum that was precluded while Bill 124 was in force. The university has now provided eligible members with the Ontario System Adjustment amount.
Needless to say, each of the above faculty associations operate under a collective agreement with their respective university, and so they have a leverage that enables them not only to bring their conditions to the negotiation table, but also to demand what their constituents consider to be fair. We have yet to see what will be agreed on at UW, but without having more substantial leverage, in the end, we will have to accept whatever we are being offered.
Zooming out a little more to the broader public sector, the Public Service Alliance of Canada (PSAC) has been in the news of late due to their ongoing strike. Workers are asking for a 13.5% retroactive pay increase over three years (4.5% per year for the next three years) and want more flexibility to work from home. The pay increase is to keep up with the 13.8% rate of inflation from the past three years. The current offer from the government is 3% over three years for a total of 9%, which is 4.5% lower than the ask.
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