US embassy cable - 04HALIFAX97

UNCLAS HALIFAX 000097 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ELAB, EFIN, ECON, PGOV, CA, Labor, Newfoundland and Labrador, Danny Williams, New Brunswick 
SUBJECT: ATLANTIC CANADA:  TOUGH BUDGETS PROVOKE LABOR UNREST 
 
SENSITIVE BUT UNCLASSIFIED -- PROTECT ACCORDINGLY 
 
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. 
 
WILLIAMS:  CONFRONTATION 
 
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. 
 
LORD:  CONCILIATION 
 
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. 
 
COMMENT 
 
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. 
 
HILL