Civil Servant Wages Rose at Nearly Double Average Rate

Media Appearances, Public Sector, Frontier Centre


Wage increases doled out to federal and provincial public servants have nearly doubled those given to private-sector employees in the past decade, according to a new report that calls on governments to take a closer look at efficiency among their ranks of workers.
The Frontier Centre for Public Policy, an independent Prairie-based think-tank, analyzed the Statistics Canada reports for all 20 industries the national agency tracks and found that federal public servants’ wages rose by 59%, far outpacing the average worker. Provincial government workers came in at a close second with a 55% rise. Overall, wage growth for federal and public administrators dwarfs the 30% economy-wide weekly-wage growth, and shows the civil servants have seen faster boosts than any other industry.
Perhaps more striking than the ballooning of federal and provincial salaries are the savings the Frontier Centre estimated taxpayers could have taken advantage of had the growth rate slowed just a bit: $2.6-billion in 2009 alone.
"Provincial governments across the country and the federal government are facing a very severe fiscal crunch, and we simply need to find a way to deliver government services as efficiently as possible," said report author and policy analyst Ben Eisen.
"Data like these suggest to me that we need to look very carefully at what’s driving this unique wage growth … we need to look and determine whether we are in fact overpaying people."
Public wages come at a great expense to taxpayers, the report reads, and should the expenses outstrip the tax dollars and other revenue that comes in, the government could run into financial problems.
About 574,000 government workers are enjoying these consistent wage increases, Mr. Eisen writes in his paper. The study excludes health care and education workers and looks solely at administrators, he said.
While the report is merely a number crunch and does not explain the disparity between the public sector and others (real estate and leasing, mining, and oil and gas are tied for third with a 46% wage increase), there are some theories, he said. Economic forces could be driving talented staff into the public sector and thus increasing the value of their work, he writes. But political scientists and economists have said there are political reasons for government workers getting "unusually large annual raises."
"In short, public-sector unions are able to exert influence over government policy to extract ‘economic rents,’" which is an economic term for compensation above the market value of labour.
Unlike in the private sector, governments don’t worry about losing customers, he writes.
But are bureaucrats really the "fat cats" many think they are?
The common view that government is a cushy place to work is misguided and unfair, said John Gordon, national president of the Public Service Alliance of Canada, which represents 180,000 federal workers. "The fact of the matter is, people come into the public sector and say ‘Jeez, there’s work that I’m expected to do and for the remuneration I get, it’s absolutely unbelievable," he said. "The workload increases every day, and politicians … buy into that ‘fat cat public service’ perception."
Public employees deserve the pay raises, he said, and they face many of the same strains as private-sector workers– if not more.
The sector had freezes through the 1990s, he said, and are not always riding above the private sector, a point echoed by Andrew Jackson, chief economist at the Canadian Labour Congress. The most recent data show the private sector seeing faster rates of pay raises in 2010, coming out of the recession, he said.
"There are periods in which the public runs ahead of private and private runs ahead of public," he said. "Typically in the aftermath of downturns, the public goes behind."
The Frontier Centre says the government should consider salaries when balancing the budget. Cutting salaries is always seen as a drastic measure, Mr. Eisen said, but governments are implementing salary freezes instead.
Last spring, Ontario Premier Dalton McGuinty announced a two-year freeze on public-sector wages for one million service workers to help dig out of a $19-billion deficit.