Reality check: The wage gap between Ontario’s public and private sector
Watch (May 26): Hudak promises to freeze public sector wages.
TORONTO – There’s a bloated bureaucracy in Ontario full of highly-paid civil servants counting down the days to retirement so they can cash in their “gold-plated pensions” – so it seems Tim Hudak would have you believe anyway.
He’s promised to cut 100,000 jobs from the public sector (mostly through attrition) and implement a two-year wage freeze on all government employees – including politicians – that he says will save $2 billion a year.
“I am not going to stand by and let the government union leaders continue to put us into bankruptcy,” Hudak said. “Not on my watch.”
But what is the state of Ontario’s public service and how does it compare to Ontario’s private sector?
Who gets paid more and will a wage freeze actually accomplish anything?
Who gets paid more?
Public Sector workers, on average, get paid more and get larger raises than their private sector counterparts.
Data obtained from Statistics Canada shows the average hourly wage for a full-time public sector employee has increased from $21.49 in January 1997 to $34.01 in April 2014 – a 58 per cent increase.
In the same time, the average private sector employee has seen their hourly wage increase to $24.75 from $16.45 – a 50 per cent increase.Ontario private vs. public-sector wage rates, 1997-2014 (inflation-adjusted) »
Ontario private vs. public-sector wage rates, 1997-2014 (inflation-adjusted)
But there are reasons public sector workers are paid more – greater pay equity, a tendency to pay non-managerial staff more while paying managers less than they would make in the private sector, and public sector workers generally have more education than their private sector counterparts – that according to the Drummond Report.
An April, 2012 report prepared for the Ontario Public Service Employees Union by the Centre for Spatial Economics quotes Statistics Canada data suggesting only 20 per cent of private sector workers have a university degree compared to 41 per cent of public sector workers.
Further, 38 per cent of public sector workers have a post-secondary diploma, certificate or degree below the bachelor level compared to only 33 per cent of private sector workers.
Ontario’s public sector is leaner than every other province in Canada – the government has fewer public sector workers than almost any other province and also spends less per capita than any other province.
Labour costs do account for about “half of all Ontario government program spending,” according to the Drummond Report – a document frequently glorified by the Progressive Conservatives.
The same report though advised against “tactics geared towards short-term fiscal gains” like the two-year wage freeze Hudak is trumpeting.
Don Drummond notes in the report that wage freezes tend to damage labour relations and are “often followed by wage catch-ups.”