With Canada's largest city again debating the merits of contracting out garbage collection, the conversation can't help but raise a stink on a related issue: the ever-widening earnings gap between government workers and the rest of us.
The Canadian Federation of Independent Business (CFIB) recently released a report that leaves no doubt about this wage gap. Public sector employees are making a lot more than you are for doing the same job. To add insult to injury, public sector employees are also working fewer hours than you to earn their above-market wages.
Whether it's the feds, the province, the city, or other public sector work in education, health care and transit, the numbers don't lie: a government worker takes home up to one-third more pay and benefits than someone doing the same work for a private business.
And if you work in the private sector, you also have the pleasure of knowing that your taxes are funding their extravagance.
This issue should be part of the budget debate in every city and province across the country, and it should be a bigger part of the national conversation about building and maintaining infrastructure. After all, why is Vancouver holding a referendum on a new transit tax when there has been little meaningful discussion on how effectively the region is using existing transit dollars? Why is there an assumption that transit can only be improved if taxpayers accept tax increases, or some other new "revenue tool"?
It's time to take an honest look at how public funds are spent. We need to permanently close the compensation gap so that we can focus on funding services that benefit all Canadians, and not use scarce money on wage top-ups and other perks for government workers.
We can definitely get better bang for the taxpayer's buck, and most importantly, closing the wage gap will level the playing field in the interest of fairness and equality.
Canadians with long memories remember a time when working for the government meant a trade-off: lower wages than the private sector, but better job security and benefits. The times have-a-changed. Today, much of the public sector is completely unmoored from private sector principles such as competition, productivity and rational budgeting.
If you fail to see the relationship between a booming public sector and fiscal disaster, I'm pleased to introduce you to Greece, where spending on government pensions is expected to increase at four times the average EU rate by 2050. Even after agreeing to "austerity" measures, Greece's public sector wage premium over comparable private sector jobs still increased from 9 per cent in 2009 to almost 15 per cent by 2011. Greece is an extreme example (six of every 10 taxpayers are employed by the state), but the lesson is this: when the public sector grows, the economy generally does not.
To prevent a slide of Greek proportions here at home, it's high time to implement some solutions that will inch the public sector in Canada towards accountability and fairness. Specifically, governments should:
- keep public sector wages frozen, or limit increases to the rate of inflation, until government wages are in line with private sector compensation levels;
- phase out defined-benefit pension plans, which place all the risk on the taxpayer, and none on the worker, if investments under-perform; and
- contract out services that are better handled by the private sector.
Beyond fairness and cost, the real issue is sustainability, especially with respect to public sector pensions. Defined-benefit pension plans (often indexed to inflation) are a luxury item that governments can no longer afford.
The public sector wage gap inevitably leads to funding deficits for the provision of essential services, since the lion's share of the cost for these services is consumed by wages and benefits. Fear-mongering tactics from public sector unions do nothing but distract attention away from the real cause of spiralling costs of public services: inflated wages and benefits. Services and infrastructure will erode without some sort of limitation on the most significant line item associated with the delivery of public services. The fact that the "sunshine list" of civil servants in Ontario making more than $100,000 now totals over 100,000 members illustrates just how pronounced the problem is getting.
This brings us back to the gap in costs to provide garbage collection in our largest city, Toronto.
In 2011, the city started experimenting with contracting out garbage collection. Since then, in the west side of the city, contractors have hauled trash for about $20/hour. The plan to privatize has yet to make its way to the east side, where municipal workers continue to do the exact same job for $27/hour plus benefits. The switch to private collection in the west is estimated to save the city $11 million each year, with no appreciable difference in service.
This same disparity plays out every day, across hundreds of different occupations, at a $20 billion cost to the national public purse. It's not all about trash, but Canadians are starting to recognize that trying to justify this continued unfairness and waste is most certainly a pile of rubbish.
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