Tip public sector wages in favour of taxpayers

Premier Dalton McGuinty is being more than a little disingenuous when he calls for a public sector wage freeze without making it mandatory. We’ve been hearing the same message for two years, to little avail.
That’s not to say the goal isn’t worthwhile: wages typically make up 50 to 60 per cent of the tax dollars spent by governments, so that’s where the cuts have to be made to get spending back under control. That’s especially true if the goal is to maintain programs and avoid large tax increases, in which case something’s gotta give. That something is the civil service salaries.

The restraint advocated by both the federal and provincial governments finds a receptive audience: most of us have no problem seeing government workers as overpaid and underworked. Fair or not, that’s the perception. Layoffs and wage freezes (if not outright cuts) are an easy sell to the public. Public service compensation now outstrips the private sector by some 30 per cent when wages, benefits and pensions are factored in, and it’s now time to begin reversing that trend.

Public sector unions, seeing the writing on the wall, are quick to argue that private sector compensations should rise rather than rolling back what’s paid to government workers. A nice idea, but one detached from current economic reality, and an issue government has no direct control over, unlike their own budgets.

To be fair, governments do have to stop corporate tax cuts, increasing rates by a few percentage points. There’s no point in cutting wages only to pass the money on to large corporations that have been hording revenue rather than using it productively in the economy.

The other union tactic, painting a dire picture of service cuts, also has little credence. Indiscriminate layoffs could theoretically see needed frontline workers let go, but that’s an unlikely scenario. There are ways of judiciously reducing the size of the civil service with minimal impacts. Lowering wages would free up money to tackle deficits and to funnel money where it’s needed.

Making cuts and wage freezes work requires the public to think about service levels and what they’re getting for their money: wage increases and program spending that have routinely outstripped inflation has left us paying much more while getting little or nothing more in return. For example, look at this week’s debate in Kitchener over firefighting services. The city expects to pay $29.3 million for the fire department this year, 55 per cent more than the $18.9 million budget 10 years ago, but residents are no safer today than they were a decade ago. The same can be said about a host of other services, municipal, provincial and federal.
In short, we have government, but not a commensurate increase in service.

Between 2004 and 2011, the number of employees in the public sector grew by 20 per cent, to 3.6 million from three million.

The total number of employees in the sector is more than 20 per cent of the national workforce of 17.2 million, according to figures from Statistics Canada.

Salary figures indicate a growing gap between civil service wages and the average earnings of private-sector employees. The discrepancy is likely to increase, as average industry wages will remain stagnant or decline dramatically in some industries as layoffs take hold. Even though the recession is officially over, unemployment remains high and private-sector wages depressed.

Yet, as we’ve seen in this area, government employees continued to receive multi-year deals worth, on average, three to four per cent a year. With no bottom line – politicians seem to have few qualms about dipping deeper on their repeated trips to the well – governments simply pass the increases along to a public forced to pay taxes, a far cry from the situation faced in the private sector.

Few would begrudge civil servants a decent wage, but when those supported by public money are making more than those paying the freight, friction is bound to follow. It’s with that reality in mind that elected officials have to counter years of excess, waste and concessions. McGuinty calls for freezes, but does not make them binding. If history is any indicator, voluntary restraint will not work. Measures will not be carried out uniformly across provincial government lines, let alone translate into similar restraint at the municipal level. All the efforts will be hampered by arbitrators who’ve typically undermined the public interest.

This is not simply a tirade against government workers. We want services, so we need people to provide them. Those people should be paid a decent living wage. The trick will be to decide what services we really need – hint, fewer than we’re spending money on right now – and what constitutes “decent.” As the annual sunshine list and other revelations of public sector wages reveal, however, we’re a long way past most people’s concept of appropriate compensation. The 30 per cent overage is a good benchmark against which to measure rollbacks.

Fairness is important, certainly, but the priority is fairness to the average taxpaying resident – all other interests take a back seat.

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