What does the new Collective Agreement mean?

This post was written by Bedford Beacon Editor on March 15, 2012
Posted Under: News and Information

What does the new Metro Transit Collective Agreement mean for HRM taxpayers?

HRM got exactly what Council and citizens asked us to get in the new deal with ATU Local 508:

- Wage package within the maximum cost set by Council
- Rostered scheduling
- Cost savings that enable a predictable transit future
- Accident Review Committee

We didn’t spend a cent more than what was offered to ATU Local 508 on February 23.

Don’t be distracted by the shiny $4,000 lump sum payment in year one of the deal; it’s not as attractive as it looks. Imagine you took out a five-year loan; you have several repayment options. You can choose to spread out the loan amount over the five-years, but you end up paying more in interest. Or you can put more money down at the beginning of the loan to reduce the principle and save interest over the term.

The second option is the one selected by ATU Local 508. They chose to receive more money upfront, which means they will receive less over the span of the contract. The impact on HRM is a positive one; we spend less overall by giving more money up front, thereby reducing the compounding effect on annual raises in year’s two through five of the contract.

In addition, any ATU employee hired from this day forward will not receive the $4,000 lump sum payment. If the deal had included a percentage wage increase instead in year one, they would have received that increase, however small.

Why the $4,000 lump sum payment is better for HRM than you think.

The $4,000 lump sum payment may appear to cost more but the savings far out weight the cost, and the long term gains are huge. For example, a 2% raise in year one of the contract would, on average, equate to $1,000 wage cost per employee. As raises on base wages carry forward, over the five-year contract this 2% raise in year one amounts to a cost of $5,000 per employee (this cost does not take into account added costs of overtime, pension, etc).

By paying a $4,000 lump sum in lieu of a wage increase in year one, HRM saves $1,000 per employee over the five-year deal. This amounts to over $700,000 in savings before factoring in pension and benefits cost over the five years. This $700,000 savings is then realized in each of the next four years of the contract.

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