Role of the Cost-of-Living-Adjustment clauses during low inflation time

Introduction

The Cost-of-Living-Adjustment (COLA) clauses allow increases in wages at specified intervals during the life of a contract. The increments are subject to adjustments to the increase in the cost of living as measured by the consumer price index (CPI). During the late 1970’s and early 1980’s, when inflation was in the double digits, COLA clauses were a common feature in most collective bargaining settlements (Statistics Canada 2005). Later, with lower and more stable annual inflation, COLA clauses became less relevant and eventually less desired by unions compared to other provisions (Christofides and Peng 2010). This study analyzes the declining frequency of the presence of COLA clauses in collective bargaining settlements in Canada. The analysis is based on a pattern of evidence from major Footnote i collective bargaining settlements between 1977 and 2014.

Presence of COLA by jurisdiction

Between 1977 and 2014, a total of 16,355 major agreements were ratified. Ontario (37%) and Quebec (14%) in combined had more than half of the agreements ratified during that time. Of these all agreements, 17% (2,724 agreements) had a COLA clause. By jurisdiction, the highest proportion of agreements with COLA was in Quebec (32%, 743 agreements), followed by Manitoba (20%, 152 agreements), Saskatchewan (19%, 76 agreements), and Ontario (18%, 1,087 agreements) [Figure 1]. In the federal jurisdiction, 273 agreements (14%) had a COLA clause and most (67%) of them took place before 1991.

Figure 1: Share of agreements with COLA, 1977-2014
The data table for the figure 1 is located below
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Figure 1: Share of agreements with COLA, 1977-2014
Jurisdiction Agreements with COLA
Alberta 3%
All territories 8%
British Columbia 12%
Manitoba 20%
New Brunswick 8%
Newfoundland and Labrador 7%
Nova Scotia 13%
Ontario 18%
Prince Edward Island 0%
Quebec 32%
Saskatchewan 19%

Decline in agreements settled with COLA

The proportion of agreements settled with a COLA clause each year has been in gradual decline since 1981 [Figure 2]. During the late 1970’s and throughout the 1980’s, when inflation was significantly higher than today, the proportion of settlements with COLA mostly remained between 20% and 30%, with the exception of 1977 when all of the ratified agreements included a COLA clause. From 1992 onwards the share of such agreements had been in the range of 6% to 16%. This comes as no surprise since inflation during the latter period remained stable, mostly around 2%.

COLA clauses across jurisdictions

Overall, the share of agreements settled in Canada with a COLA clause declined over the study period and mirrored inflation [Figure 2]. Most jurisdictions had a decline in settlements with a COLA clause since the early 80s. Quebec, with the largest proportion of agreements with COLA, experienced a significant decline since the 90s.

Figure 2: Settlements with COLA - all jurisdictions
The data table for the figure 2 is located below
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Figure 2: Settlements with COLA - all jurisdictions
Years Inflation rate Share of major agreements
1977 8.0% 99.0%
1978 8.9% 20.4%
1979 9.3% 27.8%
1980 10.0% 33.2%
1981 12.5% 28.4%
1982 10.9% 21.5%
1983 5.8% 18.1%
1984 4.3% 17.0%
1985 4.0% 20.9%
1986 4.1% 13.7%
1987 4.4% 30.5%
1988 3.9% 22.0%
1989 5.1% 19.6%
1990 4.8% 31.8%
1991 5.6% 21.2%
1992 1.4% 19.6%
1993 1.9% 13.1%
1994 0.1% 12.2%
1995 2.2% 8.2%
1996 1.5% 12.7%
1997 1.7% 9.7%
1998 1.0% 8.7%
1999 1.8% 12.7%
2000 2.7% 7.6%
2001 2.5% 11.8%
2002 2.2% 9.7%
2003 2.8% 15.8%
2004 1.8% 13.6%
2005 2.2% 9.8%
2006 2.0% 5.7%
2007 2.2% 12.5%
2008 2.3% 6.8%
2009 0.3% 3.2%
2010 1.8% 5.7%
2011 2.9% 10.9%
2012 1.5% 6.4%
2013 0.9% 3.6%
2014 2.0% 4.2%

A total of 1,941 major settlements took place in the federal jurisdiction over the study period and only 273 agreements (14%) of those had COLA provisions. In the provincial jurisdiction, only 17% (2,451 agreements) of 14,414 agreements had COLA provisions during 1977-2014. The annualized average share of settlements with COLA during 1980’s was 17% in the federal and 24% in provincial jurisdictions, whereas during 1991-2014 period, such average shares dropped to 11% and 10%, respectively [Figure 3].

Figure 3: Share of settlements with COLA – federal and provincial jurisdictions
The data table for the figure 3 is located below
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Figure 3: Share of settlements with COLA – federal and provincial jurisdictions
Years Federal Provincial
1977 100.0% 99%
1978 6.1% 23%
1979 36.0% 26%
1980 10.4% 35%
1981 24.1% 29%
1982 25.7% 20%
1983 3.8% 21%
1984 17.3% 17%
1985 21.4% 21%
1986 9.2% 15%
1987 19.4% 31%
1988 16.1% 23%
1989 7.9% 23%
1990 26.8% 32%
1991 22.6% 21%
1992 11.3% 21%
1993 10.1% 14%
1994 9.5% 13%
1995 6.5% 8%
1996 13.5% 13%
1997 24.0% 9%
1998 4.4% 9%
1999 16.3% 12%
2000 14.3% 7%
2001 6.4% 12%
2002 7.1% 10%
2003 21.9% 15%
2004 9.5% 14%
2005 10.0% 10%
2006 5.9% 6%
2007 17.9% 12%
2008 5.3% 7%
2009 3.7% 3%
2010 19.4% 4%
2011 6.9% 11%
2012 5.3% 7%
2013 2.6% 4%
2014 15.0% 3%

The proportion of employees with COLA coverage has also declined substantially over the 1977-2014 period [Figure 4].

Figure 4: Share of employees covered by agreements with COLA
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Figure 4: Share of employees covered by agreements with COLA
Years Share of major agreements
1977 43.6%
1978 28.3%
1979 44.9%
1980 46.3%
1981 49.8%
1982 43.6%
1983 34.4%
1984 32.5%
1985 34.7%
1986 38.6%
1987 38.1%
1988 37.7%
1989 38.0%
1990 37.3%
1991 36.5%
1992 26.6%
1993 23.1%
1994 15.4%
1995 12.2%
1996 11.2%
1997 10.4%
1998 10.9%
1999 11.4%
2000 11.0%
2001 15.3%
2002 16.1%
2003 17.1%
2004 13.1%
2005 12.6%
2006 10.3%
2007 9.8%
2008 8.7%
2009 8.6%
2010 7.4%
2011 7.8%
2012 7.3%
2013 7.4%
2014 7.5%

Between the late 1970’s and the early 1990’s, the federal share in all covered employees declined from 28% to 19%. However, the proportion of employees covered by a COLA clause in this jurisdiction dropped from 40% to 20% over the same period [Figure 5]. COLA coverage also declined among the employees in the provincial jurisdictions. For example, in 1980, 47% of employees in the provincial jurisdictions had a COLA clause in their collective agreements; by 2014 this proportion has come down to only 1%.

Figure 5: Employees covered by agreements with COLA - federal jurisdiction
The data table for the figure 5 is located below
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Figure 5: Employees covered by agreements with COLA - federal jurisdiction
Years Federal Provincial
1977 25.5% 99.5%
1978 16.7% 23.1%
1979 42.1% 31.5%
1980 42.5% 47.1%
1981 47.5% 31.1%
1982 33.4% 25.3%
1983 13.7% 37.7%
1984 24.8% 14.5%
1985 26.6% 24.2%
1986 25.9% 12.2%
1987 19.7% 55.6%
1988 25.8% 19.4%
1989 33.9% 26.8%
1990 30.4% 43.8%
1991 22.9% 14.0%
1992 27.5% 20.9%
1993 22.7% 13.8%
1994 21.6% 12.7%
1995 16.8% 5.2%
1996 16.9% 13.4%
1997 11.6% 8.8%
1998 19.7% 4.0%
1999 20.1% 12.7%
2000 19.5% 5.7%
2001 20.6% 21.8%
2002 20.5% 8.1%
2003 19.2% 14.5%
2004 20.2% 8.5%
2005 22.2% 6.7%
2006 23.1% 3.5%
2007 19.0% 9.7%
2008 19.0% 9.0%
2009 18.8% 3.1%
2010 20.4% 2.0%
2011 20.6% 11.3%
2012 20.3% 6.8%
2013 21.8% 2.5%
2014 21.3% 1.0%

Presence of COLA by sector

During 1977-2014, more than 25% of all private-sector settlements and around 10% of all public-sector settlements had COLA provisions during the last four decades. In both sectors, the share of agreements settled with a COLA clause declined over time [Figure 6]. For example, in 1980, the share of settlements with COLA in the public sector was 27%, whereas it was only 1% in 2014. In the private sector, 42% agreements had COLA provision in 1980, and the share declined to 13% in 2014. The decline of the proportion of private-sector settlements with COLA has been relatively mild compared to the public-sector ones, largely due to the stronger presence of COLA in the manufacturing industry, which is a private-sector industry.

Figure 6: Share of settlements with COLA - by sector
The data table for the figure 6 is located below
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Figure 6: Share of settlements with COLA - by sector
Years Public sector Private sector
1977 100% 98%
1978 13% 29%
1979 16% 42%
1980 27% 42%
1981 12% 51%
1982 14% 34%
1983 13% 31%
1984 4% 30%
1985 14% 33%
1986 8% 21%
1987 30% 31%
1988 20% 25%
1989 17% 25%
1990 34% 29%
1991 15% 35%
1992 18% 22%
1993 7% 25%
1994 4% 30%
1995 2% 15%
1996 2% 26%
1997 2% 20%
1998 0% 18%
1999 3% 26%
2000 2% 25%
2001 7% 19%
2002 4% 23%
2003 11% 28%
2004 7% 21%
2005 5% 26%
2006 3% 12%
2007 5% 19%
2008 1% 22%
2009 2% 6%
2010 2% 11%
2011 1% 27%
2012 2% 15%
2013 1% 10%
2014 1% 13%

In terms of proportion of employees covered by a COLA clause, both sectors experienced a decline as well [Figure 7]. For example, in 1980, the proportion of public-sector employees covered by agreements with COLA was 42%, while the proportion of such employees in the private sector was 44%. These shares fell consistently to 0.4% and 6% respectively, by the end of 2014.

Figure 7: Proportion of employees with COLA - by sector
The data table for the figure 7 is located below
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Figure 7: Proportion of employees with COLA - by sector
Years Public sector Private sector
1977 100% 99%
1978 14% 26%
1979 31% 51%
1980 42% 44%
1981 16% 60%
1982 21% 48%
1983 27% 35%
1984 6% 25%
1985 21% 40%
1986 12% 15%
1987 58% 45%
1988 22% 23%
1989 23% 18%
1990 52% 33%
1991 9% 44%
1992 24% 23%
1993 8% 23%
1994 7% 22%
1995 10% 12%
1996 1% 39%
1997 16% 17%
1998 0% 11%
1999 2% 31%
2000 6% 26%
2001 22% 11%
2002 1% 29%
2003 19% 27%
2004 7% 11%
2005 2% 38%
2006 3% 9%
2007 20% 10%
2008 1% 28%
2009 2% 6%
2010 2% 6%
2011 1% 41%
2012 10% 22%
2013 1% 5%
2014 0.4% 6%

Presence of COLA by industry

Among the major Footnote ii industries, manufacturing had the highest proportion of agreements (42%) settled with COLA during 1977-2014, followed by transportation (21%), as shown in Figure 8. Although, Education, health and social services had the largest share (37%) in total agreements settled during the study period, only 9% of those had a COLA clause in them.

Figure 8: Share of settlements with COLA in major industries
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Figure 8: Share of settlements with COLA in major industries
Industry Share of settlements with COLA Industry share of total settlements
Public administration 8% 16%
EHSS 9% 37%
Transportation 21% 7%
Manufacturing 42% 18%

All major industries experienced steady decline in the proportion of agreements settled with COLA annually [Figure 9]. The share of agreements settled with COLA in manufacturing was higher than that in any other industry. EHSS had a precipitous decline in settlements with COLA in 1992, and since 1995, there has been on average only one agreement settled with COLA annually.

Figure 9*: Share of settlements with COLA - by industry
The data table for the figure 9 is located below

* Figures 9 and 10 show three year moving averages.

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Figure 9*: Share of settlements with COLA - by industry
Years Manufacturing Education, health, and social services Transportation Public administration
1977 100% 100% 100% 100%
1978 34% 14% 17% 10%
1979 49% 11% 57% 9%
1980 48% 35% 25% 14%
1981 64% 12% 46% 4%
1982 35% 11% 51% 10%
1983 52% 14% 8% 10%
1984 41% 5% 21% 2%
1985 45% 10% 23% 11%
1986 36% 6% 14% 9%
1987 44% 34% 16% 21%
1988 42% 21% 12% 12%
1989 46% 22% 15% 12%
1990 49% 39% 32% 10%
1991 38% 15% 38% 10%
1992 39% 16% 11% 24%
1993 40% 7% 14% 2%
1994 39% 3% 29% 3%
1995 34% 1% 4% 2%
1996 40% 1% 17% 6%
1997 34% 1% 32% 0%
1998 33% 0% 8% 0%
1999 42% 0% 17% 4%
2000 33% 0% 26% 1%
2001 51% 3% 11% 9%
2002 44% 2% 17% 4%
2003 33% 1% 21% 32%
2004 49% 4% 7% 16%
2005 41% 0% 13% 1%
2006 25% 0% 14% 2%
2007 47% 1% 10% 9%
2008 38% 0% 6% 0%
2009 16% 0% 10% 0%
2010 36% 0% 16% 4%
2011 33% 0% 8% 0%
2012 38% 0% 7% 2%
2013 27% 0% 5% 0%
2014 24% 0% 6% 0%

* Figures 9 and 10 show three year moving averages.

While the proportion of employees covered by a COLA clause has substantially declined in EHSS, and in public administration, it remained fairly stable in transportation and in manufacturing since early 1990s [Figure 10]. One reason for this could be the duration of agreements. The average duration of agreements in both manufacturing and transportation tended to be consistently longer than in other industries. Employees, in these two industries, might have inclined to negotiate a COLA clause in their agreements as an insurance against hike in inflation over the period of their contracts which is relatively longer.

Figure 10*: Proportion of employees with COLA - by industry
The data table for the figure 10 is located below

* Figures 9 and 10 show three year moving averages.

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Figure 10*: Proportion of employees with COLA - by industry
Years Manufacturing Education, health, and social services Transportation Public administration
1977 89% 41% 82% 20%
1978 44% 29% 29% 19%
1979 52% 54% 76% 20%
1980 60% 51% 76% 19%
1981 73% 49% 76% 21%
1982 72% 48% 52% 16%
1983 62% 46% 9% 15%
1984 58% 43% 33% 15%
1985 56% 46% 37% 15%
1986 56% 53% 37% 23%
1987 55% 54% 22% 25%
1988 56% 52% 35% 23%
1989 58% 52% 49% 17%
1990 58% 54% 45% 15%
1991 57% 51% 45% 16%
1992 57% 16% 39% 24%
1993 57% 11% 35% 21%
1994 56% 5% 36% 2%
1995 56% 1% 37% 3%
1996 54% 1% 39% 4%
1997 54% 0% 34% 2%
1998 50% 0% 39% 2%
1999 54% 0% 41% 2%
2000 54% 0% 42% 2%
2001 50% 8% 41% 8%
2002 48% 11% 41% 8%
2003 47% 11% 35% 13%
2004 47% 3% 39% 8%
2005 48% 1% 38% 7%
2006 47% 0% 40% 4%
2007 49% 2% 38% 2%
2008 45% 2% 37% 2%
2009 46% 2% 37% 2%
2010 44% 0% 40% 2%
2011 46% 0% 40% 2%
2012 43% 0% 40% 1%
2013 43% 0% 40% 1%
2014 45% 0% 38% 1%

* Figures 9 and 10 show three year moving averages.

COLA clauses and wage disparity

In terms of annual wage adjustments, employees covered by agreements with COLA had some advantages over those covered by agreements without COLA, although such advantages were not substantial. The annual average wage adjustments for both groups tended to move hand in hand with the rate of inflation. As shown in Figure 11, the difference between the average wage adjustments mostly remained below 1.0% and since 2007, it has almost disappeared. This similarity in wage gains between agreements with and without COLA might have resulted partly from the fact that inflation was not high enough to trigger a COLA clause and consequently, additional wage increases were not realized. Footnote iii

Figure 11: Average wage-gains and inflation
The data table for the figure 11 is located below
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Figure 11: Average wage-gains and inflation
Years Wage-gains in agreement with COLA Wage-gains in agreement without COLA Inflation Difference in wage gains
1977 8.9% 6.7% 8.0% 2.2%
1978 8.3% 7.0% 8.9% 1.3%
1979 8.5% 8.2% 9.3% 0.3%
1980 11.2% 10.0% 10.0% 1.2%
1981 13.2% 12.4% 12.5% 0.8%
1982 11.9% 12.2% 10.9% -0.3%
1983 6.0% 7.6% 5.8% -1.6%
1984 5.2% 3.9% 4.3% 1.3%
1985 3.3% 3.5% 4.0% -0.2%
1986 3.8% 3.5% 4.1% 0.3%
1987 4.3% 3.4% 4.4% 0.9%
1988 4.4% 4.0% 3.9% 0.4%
1989 5.7% 4.9% 5.1% 0.8%
1990 5.4% 5.4% 4.8% 0.0%
1991 5.3% 4.6% 5.6% 0.7%
1992 3.6% 3.3% 1.4% 0.3%
1993 2.9% 2.2% 1.9% 0.7%
1994 2.0% 0.7% 0.1% 1.3%
1995 1.8% 0.5% 2.2% 1.3%
1996 1.7% 0.7% 1.5% 1.0%
1997 2.2% 1.2% 1.7% 1.0%
1998 1.9% 1.6% 1.0% 0.3%
1999 2.1% 2.0% 1.8% 0.1%
2000 2.8% 2.5% 2.7% 0.3%
2001 3.2% 2.8% 2.5% 0.4%
2002 3.6% 3.0% 2.2% 0.6%
2003 3.2% 2.7% 2.8% 0.5%
2004 2.7% 2.3% 1.8% 0.4%
2005 2.6% 2.1% 2.2% 0.5%
2006 2.6% 2.4% 2.0% 0.2%
2007 2.7% 2.8% 2.2% -0.1%
2008 3.0% 3.1% 2.3% -0.1%
2009 2.8% 2.8% 0.3% 0.0%
2010 2.2% 2.3% 1.8% -0.1%
2011 1.7% 2.0% 2.9% -0.3%
2012 1.9% 1.7% 1.5% 0.2%
2013 1.8% 1.6% 0.9% 0.2%
2014 1.9% 1.7% 2.0% 0.2%

In reality, only a proportion of agreements settled with COLA had their COLA clause triggered (Figure 12). During 1977-1981, when inflation was on the rise, 65% of COLA agreements had their COLA clause triggered. This proportion has declined to 50% during 1982-1992, when inflation was mostly in decline. Since 1993, since the inflation rate has been mostly low and stable, only less than half of COLA agreements had their COLA clause come into effect. This implies that most COLA clauses in agreements ratified in recent times had the trigger mark set too high compared to the prevailing inflation rate and the employees could not realize any benefit from the clauses. Consequently, the COLA clause was losing its relevance to unions. A COLA clause serves as an insurance to the union members against economic uncertainty, in particular a rise in inflation. Negotiating a trigger level that is too high for the clause to come into effect might have resulted from different motivations of the bargaining parties. Firstly, unions, given the trend of stable inflation, might have negotiated the ‘high’ trigger mark just to add one more layer of protection against an unlikely sharp unanticipated rise in inflation. Employers, on the other hand, might have also offered the COLA clause with high trigger mark knowing that the COLA clause will very unlikely come into effect. Should inflation remain below the trigger level, the COLA clause will not cost anything to the employer. Nonetheless, coming to an agreement over a COLA clause with the employees could help develop healthy labour relations at the workplace.

Figure 12: Proportion of COLA-agreements that had COLA triggered
The data table for the figure 12 is located below
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Figure 12: Proportion of COLA-agreements that had COLA triggered
Years Share of COLA-triggered agreements Inflation
1977 55% 8.0%
1978 56% 8.9%
1979 74% 9.3%
1980 72% 10.0%
1981 70% 12.5%
1982 64% 10.9%
1983 67% 5.8%
1984 59% 4.3%
1985 52% 4.0%
1986 40% 4.1%
1987 37% 4.4%
1988 39% 3.9%
1989 44% 5.1%
1990 55% 4.8%
1991 53% 5.6%
1992 38% 1.4%
1993 51% 1.9%
1994 52% 0.1%
1995 57% 2.2%
1996 59% 1.5%
1997 60% 1.7%
1998 51% 1.0%
1999 57% 1.8%
2000 56% 2.7%
2001 50% 2.5%
2002 55% 2.2%
2003 51% 2.8%
2004 43% 1.8%
2005 53% 2.2%
2006 47% 2.0%
2007 44% 2.2%
2008 42% 2.3%
2009 35% 0.3%
2010 33% 1.8%
2011 32% 2.9%
2012 56% 1.5%
2013 48% 0.9%
2014 47% 2.0%

In terms of wage adjustments, as expected, the employees who were subject to a triggered COLA clause, received higher gains than those with a non-triggered COLA clause, for the most part of the study period [Figure 13]. As mentioned earlier, among all agreements settled during the study period, only a very small proportion had a COLA clause in them. Within those settlements, almost more than half never had the clause triggered. This comes as no surprise since inflation has been stable and low enough to prevent the COLA clause from coming into effect.

Figure 13: Average wage gains in COLA agreements
The data table for the figure 13 is located below
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Figure 13: Average wage gains in COLA agreements
Years Wage-gains in agreements that had COLA triggered Wage-gains in agreements with COLA where COLA was not triggered Inflation
1977 9.6% 8.3% 8.0%
1978 8.0% 8.7% 8.9%
1979 8.2% 9.6% 9.3%
1980 11.3% 10.6% 10.0%
1981 13.6% 11.9% 12.5%
1982 11.3% 13.5% 10.9%
1983 5.2% 8.6% 5.8%
1984 5.0% 5.8% 4.3%
1985 3.2% 3.3% 4.0%
1986 5.0% 3.4% 4.1%
1987 4.8% 4.2% 4.4%
1988 4.5% 4.3% 3.9%
1989 4.6% 6.3% 5.1%
1990 5.4% 5.3% 4.8%
1991 5.6% 4.8% 5.6%
1992 3.6% 3.6% 1.4%
1993 3.8% 2.2% 1.9%
1994 2.2% 1.8% 0.1%
1995 2.5% 1.0% 2.2%
1996 2.3% 1.1% 1.5%
1997 2.7% 1.6% 1.7%
1998 2.3% 1.6% 1.0%
1999 2.4% 1.9% 1.8%
2000 3.8% 1.9% 2.7%
2001 4.2% 2.7% 2.5%
2002 3.0% 3.9% 2.2%
2003 3.5% 2.7% 2.8%
2004 3.2% 2.4% 1.8%
2005 2.9% 2.5% 2.2%
2006 2.7% 2.6% 2.0%
2007 2.7% 2.7% 2.2%
2008 4.3% 2.6% 2.3%
2009 3.3% 2.6% 0.3%
2010 2.9% 2.0% 1.8%
2011 1.7% 1.7% 2.9%
2012 2.2% 1.7% 1.5%
2013 1.9% 1.7% 0.9%
2014 2.4% 1.7% 2.0%

Other factors contributing to COLA’s declining relevance

On the whole, two major factors have contributed to the declining relevance of COLA over 1977-2014. First, in a low and stable inflationary environment, the risk of facing unanticipated inflation is quite low and therefore an ‘insurance’ against such risks (COLA) has lost its relevance. Consequently, wage negotiators seemed to have shifted their focus from COLA clauses to more relevant areas, such as job security, pay equity, pension and other benefits. Second, unions quest for other innovative clauses such as the ones that allow increases in wages in response to growth in GDP, or in oil prices.

Key findings

  1. The share of agreements that are settled with COLA annually has been declining steadily since early 1990s.
  2. The proportion of employees covered by a COLA clause has been declining as well.
  3. In the federal jurisdiction, the decline in the share of settlements with COLA has been relatively mild, compared to other jurisdictions.
  4. Among the major industries, the proportion of employees covered by COLA has sharply declined in public administration and EHSS. However, the decline has been moderate in manufacturing and transportation. This could be partly due to relatively longer contract duration in these industries.
  5. In terms of annualized average wage adjustments, employees covered by agreements with COLA did not consistently have any substantial advantages over those covered by agreements without COLA. The wage disparity between the two groups has almost disappeared over the last four years.
  6. The average wage gain recorded by the COLA-triggered agreements has been consistently higher than the one recorded by the agreements that never had the COLA triggered. However, over the last two decades, as inflation remained low and stable, more than half of the COLA agreements never had the clause come into effect.

Reference

  • Christofides, L. and Peng, A. (2010). Labor Contract Duration, Indexation, and Wage Adjustment: Interdependence and Inflation Propagation Mechanisms. Industrial Relations, Vol. 49, No. 2
  • Statistics Canada (2005). Collective Bargaining Priorities. Perspectives; Catalogue no. 75-001-XIE, pp-5-10

Footnotes

Footnote i

Major collective agreements cover 500 or more employees across Canada.

Return to footnote i referrer

Footnote ii

Manufacturing, education, health, and social services (EHSS), transportation, and public administration, in combined, represent 82% of all agreements settled during 1977-2014. For the purpose of this analysis, these four are considered major industries.

Return to footnote ii referrer

Footnote iii

Identifying the agreements that had a COLA clause but never triggered could provide more insight into the wage non-disparity between agreements with COLA and those without COLA. However, such data was not available at the time of this analysis.

Return to footnote iii referrer

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