Tory leader Tim Hudak wants to overhaul the private sector arbitration system. Ontario’s Labour Relations act dictates that when an employer and public sector union cannot agree upon a new contract, they may enlist the help of a third-party arbitrator. The system allows for an arbitrator to settle disputes based on evidence provided by both parties. The problem says Hudak is that current legislation does not require arbitrators to make decisions reflecting local economic circumstances, provide time limits on the arbitration process, or require arbitrators to sufficiently explain how they reached their decisions.
There is no appeal process, so all decisions by arbitrators are final and binding. Hudak says the voluntary wage freeze called for by the Ontario treasurer in2010 was a failure. Arbitrators have ignored the wage freeze when determining contract settlements. Between Budget 2010 and February 2011, 65,700 public-sector workers received wage increases, which the Globe and Mail estimated would cost the treasury over $125 million. (Globe and Mail, February 3, 2011)
Hudak points to Owen Sound where fire service costs will jump to $4.2 million this year from $3.7 million in 2011, due to higher wage and benefit costs after an arbitrator awarded retroactive pay hikes of 3.6 per cent for 2009, 3.8 per cent for 2010 and 3.6 per cent for 2011.
In October 2010, an arbitrator awarded University of Toronto professors and librarians 4.5 per cent salary increase over two years. The salary increase was in addition to the 1.9 per cent increase in merit pay that the university pays each year. The university also provides 11 per cent of pension contributions for every 5.5 per cent that employees pay.
David Naylor, University of Toronto president, stated that every 1 per cent raise in faculty wages costs the university $4 million. Naylor stated that the 4.5 per cent – or $20 million – salary increase could have hired over 100 new professors or spared some departments from budget cuts.