It is sometimes difficult to clearly see all of the important factors that go into a salary proposal. Out of context, perfectly reasonable proposals can be made to look unreasonable. In this post, we will focus on how little the real purchasing power of academic staff salaries has been changing in recent years.
The cost of essentials such as food, housing, energy, transportation, etc., have been steadily rising over the past decade and recently rising very sharply (e.g., 5.1% in January 2022, the highest rate since 1991). If salaries remain the same over a period of years, then there is a real loss in buying power. The value of your dollar declines.
For many years prior to our last contract, ULFA’s collective agreement had a clause in Schedule A (Salaries and Stipends) that caused our compensation to rise each year with a formula based on the cost of living index for the previous year. This prevented a decline in the value of compensation related to inflation.
During the four years of the last contract and the two years that followed, there were no adjustments to match inflation and the value of compensation has significantly declined as a result. As inflation accelerates, most academic staff will notice this at the gas station, when paying heating and electricity bills, and when buying groceries. When lending rates move up, some members will acutely feel the loss of real salary as their mortgage payments rise. The loss of adjustments to compensation also begins to erode the value of our progress through the ranks and the value attached to especially meritorious performance on the job. This will be addressed in more depth in a follow-up blog.
Two examples are worth describing. These are real people from the University of Lethbridge, and real numbers. One is a senior, full-time member of academic staff who has received career progress and merit increments in each of the last four years. This member’s compensation has increased over that time interval by 0.85% above inflation (~0.2% per year), essentially wiping out the value of progression through the ranks and merit pay. The second example is a senior administrator who over the last four years received a 26% increase in salary over inflation (~6.5% per year), experiencing no bite from rising cost of living and fully enjoying the value of moving through ranks of senior administration. Figure 1 illustrates the cumulative effects observed, accounting for inflation, in the described case study of an academic staff member and a senior administrator. Figure 2 illustrates the cumulative effect of inflation eroding compensation with limited cost of living adjustments for ULFA members since the 1% rollback in 2013.
Figure 1. Cumulative compensation increases above Alberta inflation (as reported by Statistics Canada) for the case study of a senior administrator and an academic staff member. The numbers are taken from the sunshine list with calculations as follows: for the two selected case study individuals the percentage increase over a 4 year period is calculated and then divided by 4 to obtain an average annual increase, the Alberta inflation amount for the given year is subtracted from these increases, and the cumulative effect is determined by compounding these net increases over the four year term.
Figure 2. Erosion of compensation due to inflationary pressures (Alberta inflation data from Statistics Canada) since the 1% rollback in 2013. The sharp declines observed in years of 0% cost of living increases are clearly evident.
Compensation is only one of several important items in our bargaining mandate. ULFA did not have specific numerical values in our bargaining mandate, but the negotiating team was tasked with attempting to push back on loss of compensation due to erosion. Even with this mandate, however, our current position still represents a loss in the value of compensation, perhaps a very large loss as the rate of inflation increases. After consideration of the financial compensation being accepted by other public-sector unions, our current position provides only a 2.75% increase in Schedule A over four years. In addition to this increase, we have also proposed the equivalent of a single career progress increment for faculty ($2600) to make up in part for losses in the value of career progress over the past many years. The Board’s current position matches the 2.75% salary increase, but without the additional $2600 increase.
The ULFA negotiation team has presented Schedule A (Salaries and Stipends) on September 27th, 2021, and on February 4th, 2022. More details on compensation and negotiations is available here and here, and will also be provided in upcoming posts in this series.