Public Sector Compensation

Collective agreements for almost 90 per cent of public sector employees will be up for re negotiation over the next four months. The Minister of Finance, as Chair of the Public Sector Employers’ Council, worked with public sector employers to create a new negotiating framework.

The new negotiating framework will provide up to $6.0 billion to approximately 300,000 employees: $1 billion for an incentive allocation; $4.7 billion for compensation increases; and up to $300 million for a dividend. The framework replaces the previous "one size fits all" mandate with a more flexible and creative approach that retains affordability, sustainability and better services for taxpayers' dollars as the guiding principles for compensation agreements. Government believes the negotiating framework is fair to both public sector employees and the people of British Columbians. The negotiating framework envelope represents half of the forecast fiscal room available over the next four years. The three components of the negotiating framework include:

• $1 billion early incentive — This is available in 2005/06. The funds could be distributed to employees as a lump sum payment or used to make adjustments to benefit plans as long as they comply with generally accepted accounting principles.
• $4.7 billion compensation — This is available for new wage/benefit compensation increases. The framework anticipates compensation agreements to vary from sector to sector due to specific and relevant labour market conditions.
• Up to $300 million dividend — A dividend will be available to employees if the projected surplus at March 31, 2010 is greater than $150 million, to a maximum of $300 million, and if settlement expiry dates are not before March 31, 2010. Like the Early Incentive allocation, the funds could be distributed to employees as a lump sum payment or used to make adjustments to benefit plans as long as they comply with generally accepted accounting principles.

In 2006/07, the wage and benefit funds will be included in the Contingencies Vote and will be distributed by the Minister of Finance once settlements are reached. It is expected that future budgets will incorporate compensation funding into ministry budgets once settlements are reached and costs are known.