Genevieve Simms
All quiet on the private sector front
A small-business lobby group recently issued a report questioning high public-sector wages. This report is quite timely given the economic downturn on the way. Will unskilled and unorganized workers see their wages significantly downsized during this next recession?
According to its website the Canadian Federation of Independent Business (CFIB) “has been a big voice for small business for over 35 years with over 105000 members.” The CFIB recently produced Wage Watch: A Comparison of Public-sector and Private-sector Wage its fifth such report. Based on 2005 earnings cited in the 2006 federal census the report found that municipal government employees across Canada earned on average 11 per cent more than employees working in similar jobs in the private sector. Out of a total of 186 occupations compared municipal government employees had a wage advantage in 140 of them while 46 of these occupations were paid higher in the private sector. Unfortunately the report failed to provide a breakdown of these occupations leaving one to guess which ones paid differently and by how much. Of note municipal public-sector employees in Calgary earned seven per cent more than those in similar private-sector occupations which was the sixth lowest out of 22 cities examined across Canada.
The CFIB lists two main problems with occupations that receive higher wages in the public sector. The first is that this “distorts the labour market by enticing workers to exit private sector employment.” In Calgary it is hard to imagine that the City of Calgary has been poaching employees from the oil and gas dominated private sector during recent boom years.
The CFIB says it fights to prevent abuse of power by unions. It cites the large presence of unions in the public sector (74 per cent of employees are unionized compared to only 20 per cent in the private sector) as the biggest creator of higher public wages. Without union protection though low wage unconfident uneducated and unorganized workers can easily be exploited especially in economic downturns. This is the underlying rationale of the CFIB report to abuse the weakest link — unskilled and unorganized occupations — to increase profits for small-business owners. The CFIB doesn’t seem to mind this kind of abuse.
Hypocritically the CFIB report fails to criticize high-priced lawyers accountants engineers or any other certified professionals. It is these types of occupations that are most likely to receive higher pay in the private sector. Highly organized and well-financed professional associations strictly control the number of graduates entering these professions. This inflates and distorts the wages of professionals. Unions are demonized by the CFIB but professional associations which are even more powerful are not even on the radar. It is quite evident that the free market the CFIB promotes so heartily is as selective as my grandmother’s hearing.
Though only garnering one sentence in the CFIB report senior management public-sector employees get paid significantly lower than those in the private sector. This subject is further explored in a report produced by the Canada West Foundation in 2007 titled You Get What You Pay For. The report stated that “for the public service to attract and retain high quality people pay packages must be at least somewhat competitive with the private sector. Currently however public sector pay is nowhere near competitive.” The mayor of Calgary and the city manager the report cites made $146000 and $332000 respectively in 2005 while EnCana’s CEO made a cool $18 million that year.
The second main problem cited by the CFIB is that higher public-sector wages are a “poor value-for-money return to taxpayers.” As a self-described guardian of taxpayer’s money it asserts “governments are losing control of the employment costs.” The reason given is that the market is not forcing governments to maintain fiscal discipline which results in higher taxes. The report does not question the astronomical private-sector salaries of CEOs jaw-dropping secretary bonuses high-on-the-hog expense accounts or the six-figure incomes of oilpatch workers. These bloated costs are passed on to consumers. This undisciplined spending is of no concern to the CFIB.
Why is the question of wages so important now? With Canada likely heading into a recession non-union low-income workers in both the private and public sectors are most likely going to take the brunt of the cutbacks. We need to value the contributions made by these citizens who clean our offices who secure our workplaces who cook and serve our food who look after our children etc.
The amoral market doesn’t do this; people do. Through democracy people can uphold and create standards that respect workers their families and our communities. This can be accomplished by legislating the creation of a living wage to support those workers who are not protected by professional associations or unions. Despite the CFIB saying that it works to strengthen the democratic system it is democracy that will undo all that the CFIB fights for.
David Wilson is an activist who believes in a more equitable and sustainable Calgary. He works for a community economic development organization.
