Warkentin: Public-sector wages must reflect public-sector realities

Comprising 54 per cent of our provincial budget, government of Alberta employees work hard to institute and administer the innumerable public-sector programs we rely on and appreciate.

Public-sector wages are the biggest cost to the Alberta taxpayer, and the services they provide are our province’s greatest asset, ensuring our students, seniors, disabled, sick, and so on, receive the quality services they deserve and expect.

For many years, as Alberta’s economy boomed, so did wages in the private sector as companies competed with one another to attract and retain a skilled and qualified workforce.

To ensure our public sector was also able to retain highly trained and skilled workers, and that those workers’ wages reflected the rapid inflation affecting housing and many other costs in Alberta, their wages were increased significantly as well.

Sadly, as our economy came to a screeching halt as a result of myriad issues, including COVID, oil and gas competitiveness and the global economy, the dichotomy between private sector and public sector wages has been upset.

Businesses, unlike the government, were unable to rack up debt and were left with no choice but to completely shut their doors and turn off the lights, or cut their workforce, reduce hours, and cut benefits.

On the flipside, our provincial government is facing massive pressures as revenues have taken a nose dive, while pressure to maintain spending and service levels has remained constant.

This pressure has Alberta facing a $24-billion deficit, which will place our total debt well above $100 billion, making our annual interest costs more than the combined budgets of the ministries of Seniors and Housing, Indigenous Relations, Culture, Multiculturalism and Status of Women, Labour and Immigration, and Economic Development, Trade and Tourism.

With no public appetite or ability to handle any additional levels of taxation, our government is left with the choice of either continuing to take on additional debt or reduce spending.

For better or worse, the biggest opportunity to reduce spending is through Alberta’s public service.

A 2019 Fraser Institute report found that Alberta government-sector workers enjoy a 9.3 per cent wage premium to their private-sector counterparts.

It’s reasonable to think that since COVID and the continued decline of our economy, this gap has widened further.

They are also more likely to enjoy many more non-wage benefits such as pensions, earlier retirement, additional time off, and added job security.

This isn’t meant to begrudge our government workers, but to make a case for wage parity between the private and public sectors, especially as our private sector struggles with business closures, layoffs, reduced hours and wages.

The government of Alberta is asking for a four per cent wage rollback, followed by a three-year wage freeze. This is in light of our current economic and fiscal situation, along with the 2019 MacKinnon report that found Alberta’s total wage and salary expenses per capita were $918, compared to $698 in B.C. and $609 in Ontario.

Wage numbers will likely change as negotiations continue, and it is impossible to accurately predict what will happen with private-sector wages during the same period.

Yet, undoubtedly, any reduction and freeze in government wages will go a long way toward achieving parity.

Amongst policy wonks, the potential of tying public-sector wages to the private sector through some form of indexing is a regular conversation worth repeating.

As Alberta (hopefully soon) sees another boom period and competition for workers drives up wages, it is fair that the wages for government workers increase accordingly.

Until then, it’s essential for our government to foster the economic recovery by avoiding any increase in taxes, or saddling future generations with unmanageable debt.

The concept of a “rainy day” has rarely been epitomized better than in our current situation. Truly, this is a situation where we all have to work together to get through this.

Reg Warkentin is policy and government affairs manager with the Red Deer & District Chamber of Commerce.

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