The “Real” Economy Verses the “Paper” Economy and Our Pensions

Jim Stanford

Jim Stanford

Participants in the International Foundation of Employee Benefit Plans’ 47th Annual Canadian conference had a chance to listen to a keynote address by Jim Stanford, Unifor’s economist. Jim addresses the split between the Real Economy which produces useful goods and services and the Paper Economy which creates, sells and buys financial assets and the impact this has on the viability of our Pensions.

Jim drew attention to the Financialization of the Canadian and World economies. Quoting a definition for Financialization from G. Epstein, “Increasing importance of financial markets, financial institutions and financial elites in the operation of the economy and its governing institutions”, Jim characterized it as the over development and over importance of the financial sector (the “paper economy”) relative to the real economy.

real and paper

In the Paper Economy, the Stock Market sets values separate from need and use, whereas in the Real Economy a brewery produces product which have value and fills a real need.

Jim regretted that our pre-funded Pensions have contributed to the Financialization trend, creating a culture of stock marketing and assessing financial risks. This runs counter to the real economics of pensions. Future pensions will have to be paid out of real future production, not the paper of stocks and bonds.

The Myth of the Apple Tree

apples and paper

Financial apples and apples are not the same thing

Financial accumulation is not about “saving real apples”, Jim continued. In fact the reality is, financial markets hurt real growth. Countries with less Financialization invest and grow faster because money goes to real projects that make things rather than the moribund corporations in Canada which accumulate cash in the form of “dead money”. Money held but not used in the economy. Financialization does nothing to increase future apple production which will be shared between working and retired workers. In fact, financialization probably actually reduces future growth of production.

Looking at the three legs of retirement income in Canada, Jim noted the performance of Old Age Security (OAS), the Canada Pension Plan (CPP) and private and workplace plans and savings. Neither the OAS nor the CPP use financial institutions to manage their funds, both are reliable and give strong performance, unlike our RRSPs, which are controlled by financial institutions and have poor performance and are extremely volatile with wild swings in value.

For the future, Jim recommends concentrating on future growth of the Real Economy which will be shared by retirees and workers. Public plans (OAS and CCP) must be protected and expanded by public pressure. As for the third leg, we must do what we can to focus on efficiency and security. Pension Plans can and will play a role but RRSPs need to be replaced with something more secure and efficient.

The Collective Approach

By pooling risk and using good management, higher returns and lower fees make a substantial difference in the size of pensions paid than when financial institutions are extracting profits from retirement savings. The CPP is the best Defined Benefit program in the country and should be expanded but the financial institutions and business lobby groups would like to see it eliminated. Private sector employers feel no obligation to provide Pensions unless Unions put them forward in bargaining. West Jet has no pension for its employees, even though it earned over $260 million in 2013. This pressures Air Canada who does have Pension to cut or eliminate them just to compete.

Jim is clear that defending and expanding Public Pensions is primary, but we must be looking to expand the Real Economy so there will be increased resources to share in the years to come.

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Members at Berk’s Intertruck (Nanaimo) Accept Agreement With Improved Health and Welfare Provisions.

Berk’s Intertruck in Nanaimo is always bustling, keeping two shift of mechanics busy repairing trucks, trailers, buses and motorhomes. The Members have OK’d a new three year agreement which emphasised improvements to the Health and Welfare coverage.berks2

The wage increases were modest at one percent a year over the three year term with Employer retirement saving contribution increasing to $225 a month in 2014 and $250 in 2015. mechanics holding a Class 1 drivers license receive an extra $0.50 per hour. Shift premiums increase to $1.00 per hour for afternoon shift and $1.25 on graveyards. family Day was added to the Statutory Holidays. Mileage for use of personal vehicle for Company business was increased to the Revenue Canada standard of $0.54 per kilometre. Parts Persons now receive $90 per week to carry a Company phone for after hours service.

This agreement also improved other benefits. Long term disability is introduced for the first time, an essential coverage for mechanics. Short term disability increases to the EI max + $100. Major dental work is now covered 75%. Vision care saw an overhaul. Not only do members and their dependant now receive $300 every two years towards glasses but the Members’ safety glasses will be covered under the OVP discount plan that supplies single vision glasses for a mere $150 and progressives for $275 to the tune of $200 every two years. The boot allowance increase by $50 to $150 per year.

Rounding out the agreement is a Trades Retention provision of a $1,000 tool grant for Apprentices who stay one year after earning their ticket.berks1

The Agreement gives balanced improvements to a range of areas and keeps the Company competitive and the Members busy going forward.

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Plan Now for 2013 Retirees Conference


Attendees of the 2012 Regional Retirees Conference in Atlantic City, NJ.

Are you ready to have fun with IAM Brothers and Sisters and safeguard hard-won union benefits?  If so, join us for the 2013 Retirees Conference at Bally’s Las Vegas Hotel. In the past, an average of 750 Brothers and Sisters have gathered to reminisce and strategize essential topics such as Medicare, Social Security, organizing, mentoring and other important issues for workers and retirees alike. The conference will begin on Tuesday, November 19, 2013 at 2 PM and end on Thursday, November 21, 2013 with a dinner banquet.  Live music will be provided by our union brothers and sisters at the banquet. A small registration fee will entitle you to conference material, two breakfasts and the banquet. We have negotiated an excellent hotel rate.  For more information, click here for the call letter and here for the registration form and hotel information. Please share this information with any retirees who may be interested.  However, you don’t have to be a retiree to attend the conference; officers and current members are more than welcome to attend, as well.

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Stay Rock Solid!

Brother Stan gives the Directing Business Representative report at a DL250 meeting

Brother Stan gives the Directing Business Representative report at a DL250 meeting

Sisters and Brothers:

Many of you may be aware I have accepted the position as the Chief of Staff to IAMAW General Vice President Dave Ritchie in Toronto, replacing the retiring Tommy Lee.

Accordingly, it is, with mixed feelings of anticipation and regret, I announce my leaving District Lodge 250. I am looking forward to many new challenges and opportunities within our great Union, but I leave behind many great friends and allies who have supported me over the past 25 years.

To our officers, staff and membership throughout British Columbia I offer my sincere thanks for your support and solidarity throughout my time with LL692 and DL250. Everything I know about trade unionism and the fight for working families I have learned from you. Each member whom I have had contact with furthered my education and growth as a Business Representative and as your DBR.

As the elected Directing Business Representative of Machinists Union District 250 in British Columbia, I have worked with our members at all levels of the organization.  I am a trade-unionist with a lifelong interest in workplace rights, labour relations, and bringing a balance of power to workers. I have acted on behalf of workers at the bargaining table and as Lead Counsel in legal hearings.

I proudly vote NDP.

From the time when I was first elected to the position of Shop Steward at Finning (Canada) Ltd., to my most recent election as Business Representative and DBR of District 250, I have had the privilege of representing our membership in virtually every corner of the Province of British Columbia.

I received the support of many people along the way, and I continue to enjoy that support in my day-to-day work. And I know I cannot do this job alone, but together we can achieve anything we desire.

Unions are about people. We are about workers sticking together and standing up for what they believe are their rights. I am proud to be part of the Machinists Union and our Canadian Labour movement. I am proud to make our IAMAW workplaces better and to have so many wonderful opportunities every step along the way.

My new position allows me to work with our Canadian IAMAW membership in a broader scope across the country. I will be learning many new things, and meeting new challenges in this work, and am looking forward to working with our membership from coast to coast. I know in this new capacity, many of our paths will continue to cross as we build upon the work our forbearers began.

I will always remember and appreciate the Rock Solid support I have had from District Lodge 250 and our Union membership right here in British Columbia.

Brother Walter Gerlach will replace me as the Directing Business Representative of District 250 and as our IAMAW representative on the BC Fed Executive Council. Walter is a strong and dedicated Union representative. I have every confidence the District is in good hands.

I know the officers, staff and membership across B.C. will give full support to Walter in this new role, and  together you will continue to build our strong Union in this Province.

stan2smOnce again, I offer my thanks to all of you for many years of support, solidarity, and friendship. I could not have enjoyed the success I have without the Strength and Unity of the membership behind me at every step.

Stay Rock Solid! 

Stan Pickthall,
Directing Business Representative


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Brother Herman Giele Retires After More Than 30 Year With The Machinists


Herman Giele is a Journeyman Fabricator and former Shop Steward for Machinists at Port Machine Works in Port Alberni. He is a long time Member of the Machinist Pension Plan which will provide a reasonable retirement for Herman and his spouse.

Herman put in the majority of his time for Port Machine, coming to Duncan Iron Works after the closing of his former employer. Herman has always stood solidly behind the Machinists. His Brother and Sister at Local Lodge 692 recognized his service with a jacket, presented at Duncan Iron Works by Business Representative Alastair Haythornthwaite.

We all wish Herman the best in this new phase of his life.

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