Arbitrator, and NAA member James Oakley Q.C. summarizes a report from the Dispute Resolution Services at the Ontario Ministry of Labour that compares wage increases in arbitrated and non-arbitrated settlements. See Average Annual Increase in Wages for Arbitrated v.s Non-Arbitrated Settlements.
Do arbitrators in interest arbitrations (interest arbitration is used to resolve an impasse or deadlock during bargaining in the formation of a contract or one of its provisions – see “Arbitration” in the Glossary on this site) award higher wage increases than those reached by the parties in voluntary collective bargaining? Statistics that address this issue are available in a recent report by the Ontario Ministry of Labour (MOL) Dispute Resolution Service. The Ontario report compares wage increases for arbitrated vs. non-arbitrated settlements for a seven-year period from 2009 to 2015.* The report is based on information provided to the MOL for Ontario wage settlements.
In its report, the MOL compares settlements reached through arbitration, by interest arbitrators issuing an award, with settlements reached through non-arbitrated methods, such as negotiation or mediation. The types of settlements reached through arbitration awards are compulsory arbitration, first agreement arbitration, final offer selection, legislated arbitration to prevent a work stoppage, mediation-arbitration (with an award issued), and voluntary arbitration.
The report covers both the private and public sectors. However, there were only 21 arbitrated settlements in the private sector, compared to 702 arbitrated settlements in the public sector, during the seven-year period.
For all industries and sectors in Ontario during the period 2009 to 2015, arbitrated settlements generated average annual wage increases of 1.62%, compared to an increase of 1.39% for non-arbitrated settlements. In the public sector during the same period, the average of annual wage increases was 1.52% for 702 arbitrated settlements, compared to an average wage increase of 1.22% in 1894 non-arbitrated settlements. Year-to-year comparisons over the seven-year period show that there were three years where non-arbitrated settlements were higher and four years where arbitrated settlements were higher.
Data for police, firefighter, and hospital employees groups within the public sector (where compulsory arbitration exists in place of the right to strike) reflect similar patterns (but higher absolute wage increases). The following are the average annual wage increases over seven years for these groups:
18 arbitrated settlements 2.92%
60 non-arbitrated settlements 2.71%
15 arbitrated settlements 2.44%
24 non-arbitrated settlements 3.00%
359 arbitrated settlements 1.39%
190 non-arbitrated settlements 1.28%
The report indicates that arbitrated wage increases were higher than non-arbitrated wage increases on average over the seven-year period from 2009 to 2015 but includes no analysis to determine if the difference is statistically significant. However, considering the principles of interest arbitration and the criteria applied by interest arbitrators, a significant difference should not be expected. Interest arbitrators consider the wage comparator information available at the time of the award (including wage comparators in the same industry), wage comparators for different bargaining units employed by the same employer, and wage comparators in other industries for the region and province. Interest arbitrators will consider both arbitrated and non-arbitrated wage increases when determining the amount of wage increases in their arbitration awards. Therefore, some degree of consistency between arbitrated and non-arbitrated settlements should be expected.
*Arbitration settlements in the MOL report refer to arbitration awards issued by interest arbitrators. The arbitration award may decide all the terms of the collective agreement, or it may decide only wages and other items for which the parties could not reach settlement without arbitration.