Public Sector Workers – The Recession’s Next Victims?
I fear that Tom Walkom of the Toronto Star is bang on when he argues that the next victims of the recession will be public sector workers.
As he writes:
“The federal government has already signalled plans to get tough with its workers. In Ontario, Premier Dalton McGuinty gave notice this week that the province’s public sector â€“ including nurses, doctors, teachers, police officers and judges â€“ will no longer be “sheltered” from recession.
New Brunswick plans to cut 700 civil service jobs, while Alberta’s provincial government is asking its teachers and health-care workers to accept wage rollbacks.
….Â the biggest target promises to be the unionized public sector. Approximately 70 per cent of Canada’s 3.3 million public sector workers are unionized.
Here, the hammer will again be the deficit. Governments, faced with declining tax revenue and on the hook for so-called stimulus spending, are already announcing plans to cut back. With few social programs left to slash, expect them to directly attack unionized public sector wage bills.
It will be mean and bloody-minded. Given the fact that almost everyone else in the country has already been whacked, it will also be darkly popular.”
While Walkom is probably correct that the right will not find it too hard to whip up sentiments against supposedly “cocooned” public sector workers, we should be careful not to buy into the idea that, as he puts it, “almost everyone else in the country has already been whacked.”
True, the private sector has borne the brunt of the recession, but much of the job loss impact was felt in manufacturing, resources and construction as opposed to private services.Â While private sector payroll employment fell by 449,000 or by 4.1% over the past year (October to October), over three quarters of the job losses were in the goods sector.Â While some private sector workers have obviously been hammered, the fact remains that well over 90% of private workers have probably not been directly impacted.Â Thanks to very low inflation caused by the crisis, average hourly pay has actually risen significantly for the great majority of workers who have kept their jobs. The stock market recovery already has the high rollers on Bay Street proclaiming the end of the recession, for them.
Meanwhile, it is something of a myth that the public sector has been completely unscathed. Between October and October, public sector employment fell by 54,500 or 1.6%.
And the growth of deficits has almost nothing to do with public sector workers. The major increases in spending have – appropriately- been onÂ EI benefits and on various stimulus packages directed to sustaining private sector jobs, especially in construction.
There are tons of misinformation being spread around by the likes of the CFIB about the superior pay and benefits of public sector workers.Â Controlling for education and skills – which are, on average, higher among public sector workers -Â there is only a small pay gap. And it is attributable to more equal pay for women compared to men in public services.Â Women in lower paid, lower skilled occupations do better in the public than in the private sector, and that is a good thing. Â At the high end of the pay spectrum,Â the public sector pays less, often far less.
Over the past decade 1999 through 2008 , public sector union members averaged pay settlements of 2.9 percent per year, slightly ahead of 2.6 percent in private sector, and only slightly ahead of inflation.Â However, private settlements were bigger every year in the decade 1989 to 1999, as well as in 2004 and 2005. Over the past two decades, public and private sector pay settlements have come out just about equal.
Pension coverage is much higher in the public sector. But those pensions are financed by worker and employer contributions comparable to those for large private sector plans, with shortfalls generally resulting in higher contributions or reduced benefits (ask Ontario Teachers.)Â It is a myth that taxpayers are on the hook to pay huge unfunded liabilities.Â To the contrary, some governments – including the federal governmentÂ – have scooped up public sector pension plan surpluses.
None of which is to say that the right and some private sector employers will not target public sector pay and benefits, as Walkom argues. But, amke no mistake,Â the true target is the wages and benefits of all workers.