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Nurses, Wages, and Market-Based Pay

Author: Mark Milke 2001/04/02
It may be spring in British Columbia but the public sector battles now in play and about to explode are reminiscent of the winter of discontent in Britain just over two decades ago. Then, the specific issue was striking garbage workers. And general dissatisfaction with Britain's sclerotic economy, due in part to inflexible labour and poor economic policies, led to the ouster of the Labour party and the introduction of Margaret Thatcher into the political lexicon.

Fast forward to BC in 2001 and it appears British Columbia is about to suffer a milder ( ) version of the labour unrest that plagued Britain in the late 1970s. As I write, transit workers are on strike in Vancouver and Victoria, nurses want a 60 percent pay raise, teachers are restless, and paramedics are also unhappy.

There are two important items to note as it concerns current public sector negotiations. The first is the recognition that some wage levels are below market-based comparisons and some are above that level. The second is the question of why some wage levels are below or above market levels.

Consider the demand from the nurses' union for a 60 percent wage increase. Supply and demand do drive wage scales and it is fair game to make comparisons to other provinces and even the United States. But the "pay-us-market-wages" cry is a bit disingenuous coming from a union that opposes private health care in any form. And it is here where those who chafe at the thought of more private health care - not something outlawed under the Canada Health Act by the way - are caught in a bog of their own making.

As it concerns the Canada Health Act, it allows any government the right to contract with any provider it cares to - public, private, or non-profit - as long as the provincial government signs the cheque for medically insured services. (The Canada Health Act prohibits private insurance for provincially insured services. It does not and never has prohibited private medicine.)

There is then, a lot of room for a government to provide services through a variety of providers, and there is much justification for doing just that.

For example, a 1995 study by the Fraser Institute pointed out that unionized non-technical workers such as housekeeping aides, cooks, plumbers and painters were paid significantly more in the publicy-run Royal Columbian Hospital in New Westminster, as opposed to privately-run hotels which also employed union staff performing the same duties. The Institute figured that Royal Columbian could save $5.4 million annually if they paid non-technical staff wages equivalent to those found in the unionized private sector. The numbers from that study are now dated but the point still stands: When one sector is effectively monopolized, wage scales are out of whack with reality. The irony for hospital workers is that more dollars would be available for technical hospital employees, i.e., nurses and doctors, if non-technical staff did not swallow up more of the wage bill than was justified in a fair comparison with the private sector.

But by opposing the private delivery of health services, and the competitive check (and boost) it would provide on wage scales, nurses and other skilled health care professionals undercut their demands for higher wages in two ways. One - their claim for market-based wages is rhetorically undercut by their opposition to market realism. Such realities would more equitably distribute tax dollars according to skill and the demand for their very own positions. Two - they ensure, in reality, that less money is available for their profession by ensuring non-technical staff are overpaid relative to the private sector equivalents.

If health care professionals in Canada want market-based pay, they also have to accept some market-based measurements of what each individual job is worth. They cannot have it both ways.

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