A study by the Canadian Federation of Independent Business that was released on Monday indicated that public sector wages are 10 to 15 per cent higher than comparable jobs in the private sector.
Wages for professions such as police officers and firefighters were not taken into account, as there is no comparable private sector positions. However, positions which are part of both public and private sectors were compared for the CFIB’s “Wage Watch” report, the sixth in the past 30 years.
CFIB vice-president Ted Mallett outlined the differences between the two sectors.
“In the private sector, (compensation is) market tested,” he said. “If wages go up too much, businesses struggle, they end up closing doors or cutting back. If wages are too low, then the business doesn’t attract the right kind of labour and it suffers as well.”
The report takes its data from 2010 information contained in Statistics Canada’s 2011 National Household Survey. It compares more than 200 occupations in public and private sectors.
In 2010, private sector wages were still suffering from the 2008 economic downturn, which dealt a severe blow to many businesses. Wage increases were non-existent for most employees in 2009 and 2010. Meanwhile, wage increases for government employees continued ticking along. While there has been a slight reduction in annual increases from the four per cent range to around two per cent, most public sector employees are likely making about 15 per cent more than they were in 2008.
In years past, public sector wages were often at or even slightly below comparable private sector wages. There was a reason for this — there was more job security in the public sector; there were generous benefits; and there was (and is) a fully-indexed pension plan, which long-term employees could often start collecting from as early as 55.
However, in the past 20 years or so, the wages paid to public sector employees have ballooned. This has happened as job security in the private sector has been substantially reduced.
While there was a booming private sector economy in B.C. from 2000 to 2008, many traditional well-paying jobs disappeared to contracting out, new technology or intense competition. Some new, well-paying jobs appeared, but in many cases, these require a very high level of education and skills that only a few people have.
The 2008 downturn intensified that trend and there has been only minimal replacement of many of the jobs that have been lost. Many people are no longer private sector employees, but have set up their own businesses in an attempt to keep the work coming in.
Taxes have not been reduced. In fact, they continue to go up — at all levels of government. While the federal government did lower the GST, there has been no comparable move by provincial or local governments.
Salaries paid to public sector workers need a closer look.
