Savvy parents should start advising their children to become bureaucrats, not doctors.
That’s because Canada’s public servants have been enjoying wage increases lately that are far better than what the private sector has been offering its workers.
A new study from the Winnipeg based Frontier Centre for Public Policy reveals that between 1998 and 2009 average weekly wages for federal public servants grew by 59 per cent; for their provincial counterparts, by 55 per cent. (The groups cited include bureaucrats, but not teachers, nurses, doctors and Crown corporation staff.) That’s much higher than the 30-per-cent average wage growth over the same period for 20 categories of workers whose wages are tracked by Statistics Canada.
Even when the category with the next highest rate of wage growth is considered -a 46-per-cent growth rate for real estate workers and those in the mining and oil extraction industries -the gap is significant.
Workers in Canada’s finance and insurance sector received an average increase of 33 per cent; in the manufacturing sector, 19 per cent; in forestry and logging, 11 per cent.
The trend reflected by the outsized wage increases for public servants is challenging for governments, increasingly burdened by deficits and debt.
While some political leaders have been talking up the notion of publicsector wage restraint, they haven’t followed through. In Ontario, for example, Premier Dalton McGuinty last March called for a voluntary two-year wage freeze for public sector workers as he projected a record $21.3-billion deficit for the province. It was reported recently that tens of thousands of Ontario public sector workers have won pay increases over the two years totalling $126.4 million, prompting observers to declare the McGuinty wage policy a complete failure.
While the negotiating mandate in British Columbia is for zero increases in the next two years, the civil service wage bill has been rising over the past decade. In fact, a $1-billion bonus pool was offered to public servants to buy labour peace during the 2010 Olympics.
Economics professor Herb Grubel, a one-time Reform MP who teaches at Simon Fraser University, noted last year in an online commentary: “If the incomes of public sector workers were equal to those in the private sector, fiscal deficits of (federal and provincial) governments would be lowered by at least $19 billion.”
Ottawa’s deficit last year was $55.6 billion.
The public sector accounts for about 20 per cent of all workers in Canada, with 292,000 federal employees and 282,000 provincial ones.
According to Grubel, “the existing gap is due entirely to the higher levels of unionization of the public sector, and to the disproportionate power the public sector unions have in raising the incomes of their members.” He explains that public sector workers have no competition in the private sector. In addition, politicians face serious consequences if strikes by public servants inconvenience the public.
It’s also a fact that unions can, and do, sponsor damaging public campaigns during elections against political parties that would rein in their wages and benefits.
Grubel blames the existing situation on politicians “who gave public sector employees the right to strike without making any provision to prevent the observed, inefficient and unfair outcome. Unions and their members simply and understandably have been taking advantage of the opportunities offered them by the politicians.”
Grubel believes the right of public servants to strike should be withdrawn and their wage increases tied to those in the private sector.
And, “to eliminate the existing gap,” he recommends, “the publicsector increases should be a fraction, say 50 per cent, of private sector increases until the levels of the two sectors are equalized.”
But can you imagine what would happen if Prime Minister Stephen Harper, so keen to win every conceivable riding to better his chances for a Conservative majority government, tried to tamper with public sector wages? He’d never do it.
It is because politicians are so loath to act decisively on behalf of taxpayers that the gap between public and private sector remuneration has been growing ever larger.
As researcher Ben Eisen, author of the Frontier Centre report, points out: in 1998, the average annual wage for an Ottawa bureaucrat was $9,950 higher than the pay packet of the average Canadian worker. By 2009, the differential had grown to $25,000.
Nor does this take into account the much better job security enjoyed by public servants, who rarely get laid off or declared redundant. Or their benefits, such as fully indexed pensions. Taxpayers have every right to be up in arms.