Manitoba's inability to freeze pay of public sector workers now costing province in retroactive wages

The Manitoba government's bid to freeze the wages of public-sector workers backfired — and now it's costing the province financially. 

As a result of new collective agreements that ignored the wishes of the Progressive Conservative government, several employee groups are entitled to years of retroactive wages.

After going 4½ years without a contract, Manitoba nurses recently collected $216.7 million in owed wages, dating back to 2017, the province said.

Cash-strapped school divisions are receiving $80 million this year and $77 million next year from the province to cope with financial pressures — primarily, pay increases — they cannot handle on their own.

And Manitoba Hydro spent $14 million on a labour dispute stemming from its refusal to pay front-line workers more, yet the labour board decided to boost their wages anyway. 

The province initially tried to limit these types of costs through legislation, passed in 2017, that mandated two years of wage freezes for public sector workers.

Pay freeze law cast a chill

Though it was never proclaimed into law, their unions say government negotiators acted as though the legislation was. It cast a chill on contract talks, with some employers refusing to entertain pay increases. 

While some new contracts adhering to two years of stagnant pay were reached anyway, many agreements were settled with an outside party that disregarded the legislation, or the wage pattern set by them.

Fletcher Baragar, an associate professor of economics at the University of Manitoba, argues the Tories made a mistake trying to enforce wage freezes, first through legislation and later through mandates. 

There's "the incidental costs of just having to contest this through the courts and the ill will that the dispute undoubtedly carries with it," Baragar said. 

He said the government is now coping with paying years of retroactive wages in some cases, while enduring a COVID-19 pandemic that plunged the province's deficit to a record $2.1 billion. 

"The government was in a relatively good financial fiscal position prior to the pandemic. That would have been a time when it would have been easier for them" to foot the bill, he said.

Baragar thinks increasing inflation will come up during still-unresolved contract negotiations, some years in the making, such as talks with the Manitoba Association of Health Care Professionals on behalf of more than 6,000 members.

"The window of low and stable price [increases] have, I think, been left behind," he said.

The push for wage freezes had far-reaching negative effects, Baragar said, with employees feeling underappreciated and the employer potentially finding it tougher to retain those employees and hire new ones.

School divisions were stretched thin financially even before teachers won a pay bump, said Alan Campbell, Manitoba School Boards Association president.

Some divisions previously told CBC News they didn't budget for any increases, following the direction of the province. 

The provincial funding announced thus far to cover the wage increases that staff deserve may not be enough for most school divisions, which faced years of underfunding, Campbell said in an interview last week.

Manitoba Nurses Union president Darlene Jackson said the government should never try to short-change public workers again.

The nurses' previous contract expired on March 31, 2017. A new seven-year deal with general wage increases that total 9.6 per cent before compounding was ratified last October, after seven weeks of mediation.

"MNU fought long and hard for a new collective agreement. One fruit of that labour was retro (earned pay) and although we have heard from [Health] Minister Gordon that expediting nurse back pay is a priority, we still have members who are without, waiting months," Jackson said in a statement.

The government told CBC News last month the vast majority of nurses received a lump sum payment last December, aside from a few exceptions related to a different payroll system.

Government repeals legislation

In 2020, the government-mandated wage freeze was struck down in court as a "draconian measure," but the Manitoba Court of Appeal overturned the decision last October. 

The Progressive Conservative government, however, decided to repeal the bill anyway, as new premier Heather Stefanson reversed one of the biggest decisions of her predecessor, Brian Pallister. 

Baragar said the negative effects of previous bargaining talks likely lingers to this day.

He acknowledged that paying retroactive wages is a "part of the reality" for major government-funded employers dealing with sometimes a number of collective agreements.

The government did not respond to a request for comment regarding its actions that led to significant back pay, but said in a statement the many years where nurses didn't have a contract is an "exceptional case." It said it spent part of its time restructuring the number of health-care bargaining units. The nurses, however, have long argued the province wasn't prioritizing their contract.