Air Canada workers go back to work

On Thursday, Air Canada reached a tentative collective agreement with the Canadian Auto Workers union (CAW) ending the three-day walkout of the airline’s call centre and airport check-in and gate agents in Canada. It is reported that all employees are expected to return to work effective Friday morning June17, 2011.

Considering the parallels between the Air Canada labour dispute and the problems at Canada Post, it is interesting to get the opinion of CAW President Ken Lewenza. In the CAW’s announcement of the tentative agreement, Mr. Lewenza was critical of the government indicating they would intervene in the dispute with back-to-work legislation and arbitrate an outcome. He called it an intrusion into free collective bargaining. Denis Lemelin, head of CUPW, has expressed a similar opinion now that the Conservatives are tabling a bill which would force postal employees back to work.

Let’s keep in mind that this deal is tentative. The workers still have to ratify it and the contentious issue of changing the pension for new hires from defined benefit to defined contribution must be settled by an arbitrator. According to reports, this tentative agreement, good for four years, says that existing employees get to keep their current defined benefit pensions. New hires are a different story.

While everybody is back to work; this does not necessarily mean that the negotiations are over. Air Canada still must face issues with other groups of airline employees. The union representing the airline’s 6,800 flight attendants sees its current contract talks in difficulty – they have asked for a conciliator – and Air Canada’s mechanics return to the bargaining table next month.

Outstanding Issue

Okay, this isn’t outstanding as in great; this is outstanding as still unresolved. The NY Times makes this frightening statement: Current Air Canada workers have a defined-benefit plan that is underfinanced by 2.1 billion Canadian dollars. And now for a quickie refresher course.

A defined benefit plan means that somewhere, sometime, somebody set up a rule that you get $100. This is based on the idea that other people contributing into the fund and the fund investing its money will be able to generate enough money to pay you $100 and keep the whole shebang working for you and everybody else who’s retired. The problem crops up when investments tank as we have seen with the markets – Have you already forgotten 2008? – or when the number of workers retiring may exceed the number of new workers coming into the fold to contribute as they work. The teachers’ pension plan, a defined benefit plan, found itself closing in on a brick wall even though it had an astronomical amount of over $100 billion – yes, billion – and had to raise the contributions paid by working teachers.

With a defined contribution plan, you yourself contribute to your own retirement so if you contribute only enough to pay you $90; you only get $90, not $100. The theme of a defined contribution plan is that the whole system can’t collapse on itself as it is only going to pay out what it can afford to pay out; there are no “artificial” circumstances where the fund is obliged to pay out more than it has or more than it earns. It is no wonder that all modern plans are defined contribution plans. In fact, a defined benefit plan almost seems like a Ponzi scheme in that you are sort of basing your payouts on the new people coming into the plan. Okay, it’s more complicated than that but it seems a little unrealistic to set up any system which says you get $100 without considering whether the system can afford to pay you $100. Believe me, it sounds like a great idea, especially if I’m the person getting the $100 but it puts pressure on the system to be able to come up with the $100 under any circumstances. Unfortunately, the circumstances where investments within the system were always giving great yields and that the number of new workers coming into the system together managed to yield enough to pay all the retired people  – a number which keeps going up as we live longer – now seems unrealistic.

This is going to be the4 sticking point in the negotiations for both Air Canada and Canada Post. Everybody wants their hundred bucks but can the system afford to keep paying a hundred bucks to everybody ad infinitum? Sooner or later it would seem the system is going to go bust.

Documents list below

* Air Canada’s announcement of the tentative agreement – Jun 16/2011

* CAW’s announcement of the tentative agreement – Jun 16/2011

* Government of Canada: Air Canada and CAW Reach Agreement – Jun 16/2011

Air Canada’s announcement of the tentative agreement 

Air Canada has reached a tentative collective agreement with the Canadian Auto Workers union (CAW) which ends a three-day walkout of the airline’s call centre and airport check-in and gate agents in Canada. Employees are expected to return to work effective Friday morning June17, 2011.

“We are very pleased to have reached a tentative agreement with the CAW. The agreement will help ensure the long-term sustainability of Air Canada while maintaining industry-leading compensation and benefits for our employees,” said Duncan Dee, Executive Vice President and Chief Operating Officer. “It is business as usual at Air Canada. We want to thank our customers for their understanding and loyalty, and we appreciate their ongoing support. We also want to recognize our employees including pilots, flight attendants, maintenance and ramp workers, and especially management personnel for their dedication and support for going ‘above and beyond’ to keep the airline operating.”

Air Canada continues to operate its regular schedule and recommends that customers, prior to leaving for the airport, consult their flight status information online at aircanda.com or on a mobile device where they may also check-in within 24 hours of their flight departure for added convenience.

CAW’s announcement of the tentative agreement 

The CAW reached a tentative agreement with Air Canada earlier today after more than 12 weeks of grueling negotiations with Air Canada.

After the tentative agreement was announced, picket lines were taken down and plans were established for ratification votes over the next two weeks on the new four-year agreement.

CAW President Ken Lewenza said the new agreement is an important achievement for the 3,800 CAW members at Air Canada, who resisted company demands for major pension concessions.

Lewenza said the new agreement covers wages, pensions, benefits and all other key issues in bargaining. But he said the contentious issue of pension benefits for new hires will be sent to arbitration where the union will present the case for continuing a defined benefit pension plan.

The existing defined benefit pension plan remains unchanged until January 1, 2013, when there will be some modifications to the plan. Lewenza declined to provide details of the wage increases until the ratification meetings, but said the wage package was good.

He blasted the Harper government for indicating only a few hours after the strike started that it would intervene with legislation to end it and arbitrate an outcome. “This is an unprecedented intrusion into free collective bargaining,” Lewenza said.

Lewenza said the government’s intervention was heavy-handed and made bargaining more difficult. He said the federal government’s push for back to work legislation is evidence of how it’s going to behave now that it has a majority.

“Don’t think for a moment that government intervention settled this strike, far from it. It is always better for us to negotiate a contract than to have it imposed and we have a very good record of negotiating collective agreements,” Lewenza said.

Government of Canada – Jun 16/2011

Air Canada and CAW-Canada, Local 2002, Reach Agreement 

Today, the Honourable Lisa Raitt, Canada’s Labour Minister, congratulated Air Canada and the National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW-Canada), Local 2002, for successfully reaching a tentative agreement.

“Our Government remains focused on Canada’s economic recovery and the financial security of Canadians. We are pleased that there will be a resumption of service for Air Canada passengers,” said Minister Raitt. “I applaud the efforts of the parties and the Federal Mediation and Conciliation Service.”

This agreement was reached through intense bargaining between both parties with the assistance of mediators from the Government of Canada’s Federal Mediation and Conciliation Service.

“The best solution in any dispute is the one the parties reach themselves,” Minister Raitt added. “Strong labour-management relations contribute to our country’s economic prosperity and the economic security of Canadians.”

The Federal Mediation and Conciliation Service provides dispute resolution and dispute prevention assistance to trade unions and employers under the jurisdiction of the Canada Labour Code.

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