Public sector wages growing out of line
So it turns out Toronto Mayor David Miller is the Neville Chamberlainof municipal politics, an appeaser who will assuredly, and rightly,lose his job in the next civic election.
So it turns out Toronto Mayor David Miller is the Neville Chamberlain of municipal politics, an appeaser who will assuredly, and rightly, lose his job in the next civic election.
For now, though, let’s consider the symbolism of Miller’s deal with the Canadian Union of Public Employees, bankable sick days and all. It stands for the fact that, at all levels of government across Canada, public sector wages and benefits continue to grow way out of line with private sector standards. And the consequences for our economy are very negative.
One is the sheer cost: Public sector wages and salaries — not including rich benefits — grew 56 per cent to $161 billion annually in the decade to 2007, and they’re still growing. So is the disparity with the private sector.
Back in 2000, the Canadian Federation of Independent Business calculated that a typical federal public worker had a 15.1 per cent advantage over a typical private sector worker in salary alone. Counting benefits, the advantage was 23.3 per cent. Today, the advantage gap has increased to 17.3 per cent for wages and 41.7 per cent for wages and benefits. Similar gaps can be found in both the provincial and municipal public service sectors.
Interestingly, employment in the public sector has actually grown through the recession, compared to the dramatic plunge in private sector jobs.
Money spent on public sector wages and salaries that’s over and above private sector levels is money that isn’t being spent on things we could really use, like improved public services or economic infrastructure. You could make the same argument about questionably useful government services. After all, do we really need health workers in local government working full time on wellness programs?
Money spent padding the public sector may be good for consumption, but there are much more productive ways to create wealth and economic growth. Indeed, a bloated public sector contributes to a stagnant economy that values bureaucracy more than innovation, hardly what Canada needs coming out of a severe recession and into a much more harshly competitive world.
And in comfy, cosy Canada, where government offers high-paying jobs for life, what’s the incentive for people to start businesses, to take real risks without financial safety nets and create growing enterprises? There’s also a matter of fairness.
Why should taxpayers labouring in the private sector happily take pay cuts and/or layoffs in order to subsidize above average wages and benefits for garbage collectors or office bound bureaucrats?