For many workers, reduced hours or pay cuts beat pandemic layoffs. Just ask a WestJet pilot
WestJet pilots agreed to take a 50% hit to their compensation to help preserve jobs
After the airline industry was grounded in the spring when governments around the world introduced COVID-19 lockdown measures, WestJet pilots were facing significant and immediate job losses.
In total, about 1,200 positions were on the chopping block, but those in the cockpit made the choice to take a hit on their paycheques instead, agreeing to a 50 per cent pay cut and reducing the number of job losses to 450.
The WestJet agreement is just one example of the tradeoff that many workers and companies face as the pandemic causes severe financial stress for many parts of the economy. Introducing pay cuts or reducing hours for workers and executives is one way to keep companies afloat until business picks up.
"Our pilot group has done what we can to help our company survive," said Capt. Dave Colquhoun, the union chair representing pilots at WestJet and the company's discount carrier Swoop.
"We balanced saving jobs versus how much of a pay cut our membership was willing to take," said Colquhoun, a WestJet pilot himself.
Additional pilot positions at WestJet Encore, which are represented by a different union, were also lost.
Economists say that for some workers, taking home a smaller paycheque is better than no paycheque at all, considering the current job market.
"We've seen it in a lot of different sectors," said Charles St-Arnaud, chief economist with Alberta Central, the central banking facility for credit unions in the province.
"A lot of workers are making the decision that we're probably better to take a pay cut than being unemployed and not being able to find work again, or not finding work for some time."
Employers want to retain skilled workers
For employers, negotiating either reduced wages or hours can be one way of retaining employees, especially those with unique skills, training or certification.
"If you lay them off, how easy is it to re-hire?" said St-Arnaud. "You don't want to lose your workers, as you would like to be ready to pounce and start making money again" if business improves.
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However, economists say the prevalence of pay cuts is difficult to quantify because there are so many other factors impacting the workforce during COVID-19.
For instance, average wages in the country were actually higher this summer compared to 2019 because many lower-wage jobs have been lost during the pandemic.
At WestJet, the pay cut was the result of reducing the minimum amount of hours guaranteed to pilots and the suspension of a program where the airline matched the amount of company shares pilots purchased, up to 20 per cent of their pay. An interim deal had been in place after WestJet was purchased by Onex in 2019, while the two sides negotiated a replacement program.
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"It's a significant cut and may be the most significant cut in compensation across the industry in Canada," according to Capt. Tim Perry, president of the Air Line Pilots Association (ALPA) Canada, which represents pilots at 15 airlines in the country.
"It's absolutely drastic," said Perry, who is also a WestJet pilot. "It's hard to overstate the significance of something like that."
He said about half of all the pilots he represents are either furloughed or facing imminent layoffs, and that those who have lost their jobs can have difficulty finding other work.
"We have members who are losing their homes, who are lucky to find a job driving a truck in many cases, or worse off than that," Perry said. "It's taken an enormous toll on people's ability to cope and get by."
The airline sector has lobbied the federal government for a financial aid package specific to the industry.
The federal government has rolled out several programs offering liquidity and loan guarantees, such as the large employer emergency financing facility (LEEFF) and the business credit availability program (BCAP), which are offered to a variety of sectors.
Prime Minister Justin Trudeau has not directly addressed a bailout of the beleaguered industry, but has said he plans to keep working with airlines hit hard by the pandemic.