Putting the boom and bust in mining wages

Employers and unions in Canada's oil patch seek to take the boom-bust cycle out of labour deals by tying salary gains to oil price performance.

When commodity prices boom, unions can feel their members — with wages tied to contracts signed before prices jump — are standing on the sidelines while their employers enjoy a windfall.

But when those prices go bust, employers absorb a heightened cost blowout risk if their workers' wages were negotiated on the basis of higher commodity prices and revenues.

Building trade unions and construction employers working in the oil sector of Alberta, are trying to break that cycle with an approach that could be replicated in other regions and commodity sectors.

When the two sides sat down in 2010 to negotiate a contract covering 2011-2015, both unions and employers felt bruised by the two preceding four-year contracts. In the first instance, workers saw their employers in Canada's oil sands sector enjoy runaway profits while wages crept up by previously-negotiated increments.

When it came time to negotiate wages for the 2007-2011 contract, unions won fixed annual wage hikes of 6.5 per cent, 5 per cent, 6.5 per cent and 5 per cent.

But then the global financial crisis struck in 2008, sticking companies with robust wage hikes despite plummeting demand and revenues.

Both sides were ready for a fresh approach.


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