Demonstration by public sector workers in Toronto, 1988. Photo by Ron Bull/Toronto Star.

The following is an excerpt from Invested in Crisis: Public Sector Pensions Against the Future by researcher Tom Fraser. Fraser traces the rise of the province’s mega-pension-funds by melding history, geography, and political economy to situate this growth in the context of Ontario’s deindustrialization, the rise of finance, and the global politics of the built environment. The book delves deep into the sordid stories of the public sector pension fund investment world: the massive real estate projects, the infrastructure privatization debacles, how unions fight back, and what needs to be done so we can all save for a better future. For more information, visit www.btlbooks.com.

As Canada’s welfare state apparatus expanded in the postwar period, so too did its public sector labour force, which became a key terrain of labour organizing from the 1950s through to the 1970s. This totally changed the face of organized labour; by 1975, half of Canada’s labour movement was employed in the public sectors. The Canadian Union of Public Employees (CUPE), representing workers in the municipal sector across Canada, grew 140 percent in its first decade following its foundation in 1963. A thousand people were joining CUPE a month. The centre of gravity in organized labour was changing—public sector unions grew rapidly while union decline in the private sector, a by-product of deindustrialization, began to set in through the 1970s. This dramatically changed the gender dynamics of the labour movement, as the public sector had a far greater preponderance of women employees than the industrial private sector.

This shift in union coverage from the 1970s onwards was paralleled by a shift in pension coverage away from defined benefit (DB) plans and towards what are called defined contribution (DC) plans, a process that really got cooking in the 1980s. In contrast to a DB plan, in a DC plan, workers’ and employers’ contributions are invested via individual accounts and the worker receives whatever is in that account at the moment of their retirement. The risk of poor investment performance,........

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