DIFFERENCES BETWEEN PUBLIC AND PRIVATE SECTOR PAY ARE MODEST OVERALL.
from ipolitics.ca
The Canadian Taxpayers Federation was quick to jump on the report of the Parliamentary Budget Office on federal government pay and compensation, saying that it provided “shocking numbers on the overly generous compensation of federal government employees.” Echoing similarly-exaggerated claims by the Canadian Federation of Independent Business and other employer groups at its recent pre-budget hearings, the House of Commons Finance Committee has just called for a review of public sector compensation and benefits.
There’s just one catch: independent studies show that any overall public sector pay advantage is very modest, and that the major beneficiaries of a more “generous” public sector are women in lower paid occupations. By contrast, many mostly-male managers and professionals in the private sector earn significantly more than their public sector counterparts.
“(T)he answer to the question of whether there is a ‘pay premium’ associated with employment in government is far from a simple one. On the one hand, some groups, such as senior managers and specialized occupational groups, such as information technology workers, are paid less than their private sector counterparts. On the other hand, women in government, especially those employed in service jobs, such as food services, tend to be more highly paid than women in the private sector. It is clear that employment and pay equity policies, coupled with decades of collective bargaining, have narrowed the pay differentials between men and women and between the highest and lowest paid workers.”
A 2006 report by the Treasury Board Secretariat comparing federal sector and private sector compensation similarly found that the average federal government pay premium was “small” and existed mainly for lower-paid workers. Managers and professionals in the federal government, particularly senior managers, lag behind the private sector. Only a handful of senior deputy ministers earn the $220,000 per year needed to break into Canada’s top one per cent of taxpayers.
In calling for lower public sector pay, business groups are really saying that they do not welcome calls to increase the pay of lower-compensated workers, or to equalize pay between women and men, let alone provide better pensions and other benefits.
One certainly does not hear them say that pay is too high for senior managers in business.
When it comes to pensions, many senior private sector managers do quite well. In his recent report on the federal pension plan for the Institute for Research on Public Policy, Bob Baldwin noted that many large companies continue to provide generous pension plans — but only to senior managers. One third of all private sector pension plans in Canada cover a total of just 22,000 employees.
It is true that the federal government pension plan has been quite generous. However, as Baldwin also notes, public sector workers typically contribute much more to their pensions than private sector workers, and the trend is to contribute to jointly trusteed plans in which employees take responsibility for plan funding.
The report on federal compensation by the Parliamentary Budget Officer attracted headlines and widespread negative commentary on the rising cost of total federal government compensation. Most media coverage, however, ignored the fact that federal compensation grew faster than private sector pay from 2002 mainly because the mix of federal jobs has been rapidly shifting towards professional, managerial and skilled IT positions and away from clerical and blue-collar jobs. Given that managers and professionals are usually paid more in the private sector, the federal pension plan may become increasingly important as a tool for employee recruitment and retention.
It is important to understand differences between public and private sector compensation. The fact that overall differences are very modest suggests that public sector pay practices are not increasing taxes, but are promoting greater equality.
And that is not a bad thing.
About SGNews Contributor
SGNews goes wherever the news is found.
SGNews
Credible.
Progressive.
Connected.
© Copyright 2013 SGNews Contributor, All rights Reserved. Written For:
StraightGoods.ca
Sorry, the comment form is closed at this time.