In 2006, the TREASURY BOARD OF CANADA released a 600-page analysis of federal employee compensation. It found that any lag federal employees once suffered has long since vanished. Between 1991 to 2003 the average public sector salary jumped by 15.8 per cent, compared to a 7.5 per cent jump among other unionized workers. In all but the most senior executive positions within the government, the report found, public sector workers enjoy equal or superior pay. Job growth in the public sector has been outpacing that of the private sector, too. Last year the gap widened further, with employment rising in the public sector by 4.3 per cent, compared to just 0.9 per cent in the private sector and among the self-employed.
The debate over who fares better is certain to rage on. One reason is the lack of detailed studies into public sector pay among all levels of government. Don't expect such probing self-analysis any time soon, says Malcolm Hamilton, an actuary with Mercer. Governments would rather not know how the salaries they pay stack up. "You seldom ask for your pay to be compared to others if you think your pay is high, and I suspect many of the treasury departments believe the pay is high and they'd rather not know." Another reason to keep their heads buried in the sand is the prospect of what such information would unleash. If a thorough study found total compensation in government exceeded that of other workers, there would be intense pressure to cut back on salaries and rich pensions. "There aren't many votes in that and there may be a lot of strikes," he says. "So it's not the kind of thing the government wants to deal with."
One tactic often used by union leaders to justify their demands is to highlight the outlandish pay packages of corporate executives in the private sector. But while they're right - CEO pay can be astoundingly high - when you go beyond those privileged few to look at the executives toiling away below them, the public sector is closing in fast. "It's just my intuitive feeling, but the gap has diminished," says Craig Alexander, deputy chief economist at TD Bank. "I'm not comparing CEOs to the head of government departments. But at most executive levels the gap between public and private sector executives has diminished over the years." Alexander has seen this within his own field. Senior government economists occasionally think of leaving the restrictive confines of the public sector for lush private sector salaries, until they sit down to calculate the value of their overall benefits and pensions, he says. In fact, Bay Street economists have a joke about those who have second thoughts about switching. "It's a test of the quality of the economist, whether they go through the exercise of including the benefits," says Alexander. The punchline: any economist worth his salt would realize the rich government pension and benefits are too good to leave behind.
