Quebec adamant in strike with high-paid public unions

Quebec's economy is reaping the harvest that its free-spending politicians have sown. Strikes by tens of thousands of public servants, which started last month, are the product of a stagnant economy, one that cannot afford to pay some of the highest wages in Canada, especially in a province that already has the highest taxes in the country as well as the highest level of unemployment.

Last year the provincial government realized that its labor contracts with its workers were bankrupting the province. A province with a population of 6 million had a deficit of more than $3 billion. Quebec announced that last month wages of public servants would be cut by up to 20 percent.

The government then found it is easy to give but hard to take away. The unions promised a so-called Common Front, which would call a general strike to protest the wage cuts, and they kept their promise. Some unions, such as the nurses', have refused to join the strike, but all the elementary and secondary schools and junior colleges in Quebec are closed, along with many government offices. The teachers have not scheduled a vote on discontinuing the strike.

In a press conference last Friday, Premier Rene Levesque said this will be the last week of striking. If the situation is not resolved by the week's end, he said, the National Assembly of Quebec will call a special meeting on Friday, at which time unions could be recertified or government strikers fired, in a move similar to President Reagan's handling of the air traffic controllers' strike.

The public servants in Quebec are among the best paid in Canada, and they have job security and benefits that would cause envy in a British or French worker. If you can work with the Quebec government for two years, you are guaranteed a job for life. A Quebec government employee can refuse to move outside a 50-kilometer (about 30-mile) radius of his house if he doesn't like a new job he is being offered, and he can keep asking for another job for six months. In those six months he doesn't have to work if a suitable job can't be found.

''The basic reason for this mess is that the government is broke,'' says Stephen Jarislowsky, a prominent Montreal businessman. He points to taxation which has reached a point where the government can't squeeze any more out of the system.

''The taxation on the individual here is so high,'' says Mr. Jarislowsky, ''that the fellow in Toronto earning the same amount of money has about 20 to 25 percent more take-home pay in the higher brackets.''

Those high levels of taxation have meant an exodus from the province, especially of the higher wage earners. More than 120,000 were said to leave last year, many of them from Montreal's English-speaking business community, who faced not only high taxes, but repressive language and schooling legislation.

The opposition Liberal Party in Quebec says 128 companies have moved all or part of their business out of the province since 1977. The survey adds that the Parti Quebecois government is hostile to businesses that aren't owned by French Canadians from Quebec. ''There is government hostility toward businesses not controlled by Quebec Francophones, or controlled from outside Quebec.''

A person who does own a business in Quebec has to pay tax at a rate of about 62 percent, compared with about 50 percent in Ontario.

And those aren't all the taxes. Provincial taxes make up about 40 percent of the price of gasoline. It is 55 cents a liter, about $2.10 a US gallon, the highest price in Canada.

''The Province of Quebec takes more out of a gallon of gas than OPEC does,'' one businessman grumbled.

Sales taxes are 10 percent. Real estate taxes are high, especially in areas where the houses are expensive.

The economic statistics for the province of Quebec are grim. The province has an official unemployment rate of 14.7 percent. Economists say it is higher, perhaps as high as 20 percent. In some regions the unemployment rate is 30 percent.

Public-sector salary levels run about 12 percent higher than those in private industry, and the salaries of those 300,000 civil servants make up about 52 percent of the province's budget. Education costs are 25 percent higher than in the neighboring province of Ontario. Quebec has the highest minimum wage in Canada, $4 an hour, which economists say is driving marginal businesses to locate in nearby Ontario or in neighboring states such as New York or Vermont.

Quebec has about 26 percent of Canada's population, but last year it accounted for more than 40 percent of the business bankruptcies in Canada.

The Parti Quebecois government gave away a great deal in its negotiations with the public-service unions in 1979. Then it was facing the referendum on whether Quebec should separate from Canada. It needed the support of those workers and it bought them off with fat contracts.

The Parti Quebecois made little attempt to negotiate with the public employees before their round of illegal strikes. The theory is that if the workers stay off long enough, the government can de-certify the unions, rip up the rich labor contracts, and start again.

The party blames the policies of the federal government, especially high interest rates, for its economic woes. It's been blaming the federal government ever since it came to power, not surprising for a party whose aim is to pull Quebec out of the Canadian Confederation.

The province's strong point is cheap energy. It has the cheapest hydroelectric power in North America, and the government has been counting on relatively high energy prices elsewhere to sell its excess electricity to markets in the Northeastern United States. But a combination of the recession and falling oil prices has meant Quebec has been left with a growing surplus of electricity and a treasury that is being emptied even further by servicing the debt on huge power projects, such as at James Bay.

The Quebec government has convinced France's nationalized aluminum company, Pechiney Ugine Kuhlmann, to build an aluminum smelter on the St. Lawrence River near Three Rivers.

Dealing with a socialist France has a romantic appeal for French-speaking Quebec. But in the long term the deal will create only 200 jobs and the Quebec government may have to dip into its nearly empty coffers to provide some of the development money.

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