Manitoba’s Unsustainable Government Pay Premium : Manitoba taxpayers foot the bill for unusually high public servant salaries

Commentary, Public Sector, Ben Eisen


In Canada, government work is generally a very attractive proposition. Federal and provincial public administration workers generally enjoy attractive benefits, generous pensions and high salaries. Over the past twenty years, such work has become even more lucrative, as public sector salaries have grown much faster than general wage levels across the economy. Nowhere is this more true than in Manitoba, where provincial public servants are now among the highest paid in the entire country. Manitoba’s sky high public servant salaries represent an unnecessary burden for taxpayers and should be brought down to earth as quickly as possible.
A comparison with neighbouring Saskatchewan illuminates Manitoba’s problem. In 1991, the average wages for public servants in these two provinces were very similar; Saskatchewan’s were slightly higher, but both were between $660 and $680 per week. Since that time, salaries for public servants in Manitoba have grown significantly faster than in Saskatchewan. By 2008, the average weekly wage for Manitoba’s public servants had grown to $1,129; that’s about $90 more per week than in Saskatchewan. This means that the typical public servant in Manitoba now earns about $4,500 more per year than his counterpart one province to the west.
When one considers that Manitoba’s public service employs approximately 16, 000 people, the cost of this generosity to public employees comes into focus. If the Manitoba government brought the average cost of its public employees into line with Saskatchewan, taxpayers would save $80 million every year. In other words, the premium paid to Manitoba’s public servants over neighbouring Saskatchewan costs about $250 per year in taxes for a typical family.
This rapid growth in wages has caused the public servant “pay premium” to become larger in Manitoba than anywhere else in the country. This pay premium is simply the difference between the average wage earned by provincial public servants and the wage earned by the average worker in the economy. Such a premium exists in every province, but it is much larger in Manitoba than anywhere else. For example, the provincial public service pay premium is approximately 31 per cent in Saskatchewan and 24 per cent in Alberta. In Manitoba, the gap has grown to 50 per cent. While government work is lucrative throughout the country, no province even comes close to matching the pay premium that is enjoyed by Manitoba’s public servants.
In their capacity as employers of public servants, government acts as an  agent of the taxpayers, who ultimately foot the bill. Governments have a responsibility to approach wage negotiations from this perspective, and should strive to get the best possible deal for the those they represent. The available evidence strongly suggests that Manitoba’s government, as the guardian of the public purse,  has not driven hard enough bargains on behalf of its citizens over the past twenty years. By dramatically slowing public administration wage growth for the foreseeable future, Manitoba can begin to reduce the size of its inflated public sector pay premium and can begin to bring the cost of employing public servants back under control.