Social Policy in Ontario

With the passage of Bill C-4, the Conservative government not only “stacked the deck” in terms of collective bargaining process, but it will also eliminate the only independent federal organization that provides comparative information on the compensation of federal public service workers.

Hidden among the dozens of measures targeted at undermining unions and public sector workers, the elimination of the Compensation Analysis and Research Services of the Public Sector Labour Relations Board went somewhat unnoticed. This means the Conservative government can just rely on the results it gets from hand-picked private sector firms before it embarks on bargaining wages and benefits for tens of thousands of federal public sector workers whose collective agreements expire this year.

So why is this a problem — and why should anyone who isn’t a federal public servant care? Aren’t these comparisons straightforward and shouldn’t public sector workers be paid the same as private sector workers?

In fact, pay comparisons are not straightforward and how public sector workers are paid affects all workers, but in different ways than most might immediately think.

There’s a lot of misinformation about differences between public and private sector pay, with the general perception that all public sector workers are overpaid, fuelled by flawed reports produced by business lobby groups. If the federal government just relies on their analysis, we’re all in trouble.

CUPE conducted rigorous analysis of public and private compensation using the most detailed occupational data available from the census. These results, published in detail in the Battle of the Wages report, found that when similar occupations are compared, overall average pay for public sector workers is very similar to the private sector (higher by just 0.5 per cent). While overall averages are very similar, pay scales are very different with public sector pay much more equitable than the private sector. There’s a smaller pay gap for women and pay is also much more equitable by age, region and occupation.

Lower paid occupations tend to do better in the public sector while those in higher paid occupations don’t make as much in the public sector.

Pay for women in the public sector is more equitable largely because of pay equity laws that rarely apply in the private sector. Men in the public sector are actually paid on average about five per cent less than men employed in similar occupations in the private sector.

Other detailed comparisons of public and private sector pay, such as those conducted by the Institut de la statistique du Quebec, have also found no evidence for a public sector pay premium.

Public sector pay is more equitable than the private sector largely because unions advocate and achieve more equitable pay scales — but also because the public would be unlikely to tolerate multi-million executive pay packages or the poverty wages much more common in the private sector. But that’s exactly where we’ll go if private sector pay is used as the model for public sector pay.

Attacking the more equitable pay scales of public sector workers is a tactic used by the federal and many provincial governments to undermine public services, create jealousy and divide workers — and one that would lead to lower wages for all workers, especially the lowest paid. That would have negative social repercussions — and would also be bad for our economy.

The Conference Board, OECD and IMF have all identified growing inequality as a major problem with our economy and as a barrier to stronger economic growth. Many, including those at the IMF, also consider it one of the factors responsible for the recent financial and economic crisis.

More equitable public sector pay should be a model for the private sector and not the other way around. This won’t happen overnight, but we can and should work toward achieving it in a number of ways.

Steps that would help achieve this include: increasing minimum wages; requiring governments and their contractors to pay fair wages and living wages, allowing shareholders to have a say on CEO pay, restricting tax incentives that reward excessive CEO pay, improving public pensions such as the CPP and other social benefits, providing adequate funding for public services, and strengthening instead of undermining unions and workers rights.

We should be under no illusions. The present federal government has shown little interest in measures to boost pay for workers or to improve income equality and in fact has gone in the opposite direction. But measures to improve wages and income equality are supported by a majority of Canadians — and that’s who our governments must ultimately be accountable to.

Toby Sanger is senior economist for the Canadian Union of Public Employees. David-Alexandre Leblanc is senior research officer for the Public Service Alliance of Canada.

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