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Cablegate: Atlantic Canada: Tough Budgets Provoke Labor Unrest

This record is a partial extract of the original cable. The full text of the original cable is not available.




E.O. 12958: N/A


1. (SBU) Two Atlantic provinces took very different
approaches to the issue of public sector wages in their
just-announced budgets. The Premiers of Newfoundland and
Labrador and New Brunswick both said they needed civil service
wage freezes to help achieve fiscal soundness. The results -- a
looming general strike in one province and union acquiescence in
the other -- say as much about the political experience of the
two leaders as they do about the austere budgets.


2. (SBU) In Newfoundland and Labrador, Premier Danny Williams
is facing a general strike of approximately 20,000 public sector
employees in response to his plans to freeze public sector wages
and eliminate approximately 4,000 government jobs. Williams,
who told the CG during a recent meeting that the tough measures
are needed to bring the province's finances under control,
announced publicly months before the budget that there could be
no civil service pay raises. News of the job cuts leaked a few
days before the budget, enraging labor leaders who were already
upset that the Premier had dismissed without discussion their
call for a 21% salary increase over three years. Most observers
of the N-L labor scene, where unions can be quite militant, are
predicting a bitter and protracted strike.

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3. (SBU) In New Brunswick, Premier Bernard Lord took a
different approach to a wage freeze and seems to have gained at
least near-term union acceptance of his plan. Lord told CG that
he took the unprecedented step of meeting privately with public
sector union leaders in advance of the budget to explain why
there could be no wage increases this year and to seek their
help in preserving jobs. He also told them that future year
raises were possible, depending on the state of the province's
finances. The meeting was clearly effective, as most major
public sector unions in New Brunswick say they support the
Premier's budget. How much time the Premier bought will be seen
this time next year when a new budget is due.


4. (SBU) Two austere budgets, two different approaches to
public sector unions. Premier Lord and others have suggested
privately that Williams' labor problems may stem as much from
lack of political experience as from the tough measures needed
to bring order to provincial finances. Announcing publicly in
advance of any negotiations that there would be no raises seemed
almost designed to provoke a showdown with the unions.
Interestingly, Lord has been criticized by some for not
consulting about fiscal matters that have a direct impact on
various aspects of the province, but he went the extra mile to
consult in this case to try to avoid a confrontation. For the
short term at least Lord appears to be the more deft politician,
but Williams is betting that he will emerge from his battle with
the unions with the respect and public support necessary to
craft a long-term agreement on civil service wages that will be
vital to N-L's fiscal health. END COMMENT.


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