In battle for talent, it’s hard for businesses to compete with Yukon government’s perks

Did you know that the Yukon government is currently in the process of negotiating a major contract that could have significant cost implications for territorial taxpayers?

Did you know that the Yukon government is currently in the process of negotiating a major contract that could have significant cost implications for territorial taxpayers and could impact the ability of private businesses in the territory to hire and retain employees? I didn’t either.

The negotiation of new collective agreements with public sector unions rarely make the news unless bargaining breaks down and a strike may be imminent. Once a deal is inked and it is a fait accompli the new contract gets passing mention in the media with a brief overview of some of the major changes, but very little beyond that.

That may be a good thing in a way. Public discussion on matters relating to collective bargaining is notoriously polarized. Too many of us take reflexive positions based on how we view the role of unions in society.

If we are positively disposed towards unions, their demands are reasonable by virtue of the fact they were made. Anyone who thinks otherwise must want us all to return to the days of the industrial revolution when people worked 12 hours a day, seven days a week, for peanuts with no overtime.

If we are inclined to oppose unions, the opposite is true. Even if employees are lagging behind the market price for their wages, they’re a drag on the taxpayers and shouldn’t be able to hold the public hostage.

Moderate positions – where demands and existing agreements are analyzed based on their reasonableness within the prevailing economic context of the time – are a rarity.

Having said all of that, I still believe that more light ought to be shone on this secretive process, particularly at this juncture in the territory’s history.

There is a level of frustration that exists in some segments of our community – particularly in the private and non-profit sectors – regarding the strong and growing gravitational force that the Yukon government exerts on the territorial workforce. The government has come to be seen by many as something like a black hole sucking in talented employees by offering salaries and benefits that exceed what those limited by revenue can reasonably offer.

Turnover is a huge expense for business. More than a few employers have lamented to me that no sooner have they invested a substantial amount of time and resources in training a new employee that they leave for the greener pastures of the government. Maybe the employee is of child-bearing age and the possibility of many months of fully paid maternity leave is too irresistible to turn down. Or the employee is near age retirement and wants to build up some hours towards a defined benefit pension where the employer kicks in half the cost.

Or maybe the government just offers more salary. There was a time when employment with the government was a trade-off of less salary for more security and benefits. But if one takes a look at the compensation offered for many positions on the government job board even that isn’t true anymore. It is not clear to me how the salaries of some positions with government are determined, but it certainly isn’t the “market rate.” All in all, employment with the Yukon government is a real plum gig.

The issue of public sector compensation has been a frequent subject of debate around the dinner table with my family and friends. Whenever it arises I am told (once we move past the usual spiel about the important historical role of unions) that strong middle class wages are a positive thing, that the public sector “leads by example” and we should be focusing our efforts on extending them to others rather than knocking down what someone else has fought for won.

If only things were that simple. Under existing economic structures it is simply not possible for many businesses to offer salary and benefits to match an entity that receives nearly a billion in federal transfers every year.

Contrary to leftist caricatures, not every business owner is a money-gorging sweatshop operator. Many business owners in our small community earn a relatively modest living and in more and more cases – particularly in the professions – could themselves earn more money by abandoning their business endeavour altogether and joining the civil service. Forcing businesses to compete for employees (using their own tax dollars no less), I would argue, is patently unfair. Unlike government, private business cannot create money out of thin air and must offer services at competitive rates or die a painful and bloody death.

The problem is even more acute for non-profits, which often have even tighter fiscal restraints than private business. Hire a new employee, train them, they leave for government, repeat.

There is also the matter of cost for territorial coffers. These are tough financial times for the territory. We’ve been hit with the one-two punch of declining tax revenues and slowing transfer payments. A substantial cost of living increase combined with expensive new entitlements that accrue only to government employees could drain the treasury and even put us in a deficit position leaving little for all those Yukoner’s who don’t work for the territorial government.

The Yukon Employee’s Union is pretty blunt in its list of demands to the government (which are available on their website for anyone who is curious): “The Union will not engage in concessionary bargaining” – meaning it will not agree to give up anything it already has. And reviewing the list of demands the union has put forth (admittedly without the benefit of a full costing) some would seem to come with a pretty hefty price tag.

I would say that now is not the time. But our leaders probably need to hear if from Yukoners or we’ll wake up one day and it’ll be a done deal.

Kyle Carruthers is a born-and-raised Yukoner who lives and practises law in Whitehorse.