It's government v. labor v. business in this tense debate.
TORONTO, Canada — A government report tracking Canada’s rapidly aging labor force has raised concerns about a looming pension crisis.
The report, released this month by the government’s Statistics Canada agency, warned of a demographic time bomb caused by waves of retiring baby boomers, increased life expectancy, and low fertility rates.
That scenario already has made pension plans the main cause of labor strife in Canada.
Workers increasingly anxious about their retirement — particularly as savings disappear in volatile stock markets — are facing governments and employers trying to cut back on pension costs.
The report notes a sharp increase in the number of workers poised to retire over the next decade.
Between 2001 and 2009, employees aged 55 or older increased from 10 percent to 17 percent of the labor force.
By 2021, that figure will be closer to 25 percent — the highest proportion ever recorded in Canada.
At the same time, the pool of taxpayers will grow at a much slower pace — a formula sure to strain the country’s pension and health-care systems.
The federal pension fund is still healthy, and can cover retirement payments for the next 75 years at the current rate of contributions from workers and employers, according to Canada’s chief actuary.
But its payments have been widely criticized as too low for pensioners who have nothing else to rely on.
The federal government’s pension plan covers all workers and currently pays, at age 65, a maximum of about $1,000 a month. Most pensioners get less. The average amount received last year was $500.
The country’s largest labor organization, the Canadian Labour Congress, is pushing for pension payments to be doubled. The Conservative government initially indicated it was prepared to increase payments, but then decided to encourage workers to retire later instead.
New pension rules this year further reduce payments for those who retire before age 65 and increase payouts for those who retire later. The government is also proposing to help workers save more on their own for retirement.
The toughest battles have so far occurred among those Canadians — about 40 percent of the workers — who also have pension plans established by either employers or unions. Most of these workers have what are called “defined benefit plans,” which pays out a guaranteed amount of money at retirement.
Falling stock prices have left most of these workplace plans in debt. Employers are required by law to make up any shortfall.
Companies are trying to reduce this cost by pushing workers out of the guaranteed plans, leading to clashes with labor unions determined to defend the employees.
In June, Canada Post, the publicly owned mail service, locked out its 48,000 employees after contract negotiations broke down. Canada Post’s pension plan has a $3.2 billion deficit, and the company refused to make new employees part of the plan that would guarantee them a certain pension payment.
The same month, workers at Air Canada, an airline with a $2.1 billion pension fund deficit, went on strike. Like Canada Post, the airline wanted to place all new employees on a pension plan pegged to the stock market.
The Conservative government, which is expected to face a similar pension battle with its public servants, quickly passed legislation ordering Air Canada employees back to work.
Canada Post employees reached a settlement after the government tabled a law to also order them back. Both companies are expected to resolve the pension fight through arbitrators.
In a letter to the government this month, Ken Georgetti, president of the labor congress, bemoaned the growing inequality between the “lucky few” who still have guaranteed workplace pensions, and the majority of Canadians who don’t.
“With a growing pension divide, and the foundation for decent incomes in retirement crumbling beneath working families, anxiety and anger are building,” Georgetti wrote.
“Not surprisingly, pension security lies at the heart of nearly every major labour-relations dispute in Canada today, in both the private and public sectors.”
It seems there’s no end in sight to the battles.
http://www.globalpost.com/dispatch/news/regions/americas/110901/canada-pension-politics-labor-business
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