Last year, health care facilities in British Columbia were behind picket lines for several weeks. At issue was a new collective agreement, unilaterally imposed by the B.C. government, that cut wages and increased work hours for the lowest paid workers in health care.
Most of the striking workers were from the Hospital Employees' Union (HEU). The vast majority are women, and many are from visible minorities of immigrant backgrounds. HEU workers include licensed practical nurses, care aides, lab technicians, clerical and support occupations, and tradespeople.
What was unusual was the depth of public support, considering that the strike became illegal and disrupted Canada's most treasured social program. It was this public support that forced the government eventually to make a deal with the union, brokered by the B.C. Federation of Labour. In the end, the union wrenched some modest concessions from the government, but had to live with a 15% hourly wage reduction.
Looking back, it is worth pondering why many people were sympathetic to the strikers, and what the consequences of the wage cut have been for the province's health care system. A body of economic research on wage cuts finds that employers almost never impose them on workers. The reason? Any cost savings from wage cuts tend to be outweighed by the negative consequences on workplace morale.
Wage cuts hurt workers twice: in their pocketbooks, and because they are perceived as an insult. For organizations, the accompanying drop in morale means staff turnover goes up and productivity falls. All of this is costly to organizations, particularly if it is the best workers who feel the slight most acutely and are therefore more likely to leave.
This research has some strong implications for the health care system. The justification for the wage cut was to save $200 million in operating costs, funds that would allegedly be allocated to other health care needs. But the hidden costs of the wage cut may swamp the intended savings.
To get at these hidden costs, we commissioned the McIntyre and Mustel Group polling firm to conduct a survey of over 500 HEU workers six months after the wage cut. Our survey results show that the remaining HEU workers have indeed taken a major hit to their morale. Job satisfaction has plummeted. Much of this is rooted in the ripple effects of the wage cut at a personal level.
The vast majority of workers and their families have cut back on household expenditures. Most of these are discretionary expenditures like eating out and entertainment, but some workers have had to move, refinance a mortgage, or sell their car in response to lower wages. Others have gone deeper into debt or have reduced their savings. Still others have increased their hours of work to compensate for lost income (spouses and children are working …