Debunking the fat cat myth: fed real wages stagnant over the last decade

Oh those fat cat public sector workers.

Last week we wrote about the ongoing campaign by right-wing organizations to portray the public sector as lazy, overpaid, and pampered.

The problem is, it isn’t really true.

The latest look at this issue is by the independent federal Parliamentary Budgetary Office in response to a request by the NDP’s Paul Dewar (MP – Ottawa Centre).

Let’s first go to the big raises our federal cousins have been hauling down. From 2001-02 to 2011-12 the net raise (after inflation) amounted to $130 million on a 10-year payroll of $354 billion. That’s NOT annual. That’s cumulative.

That means effectively federal wages were stagnant for much of the last decade, even though the first half saw decent economic growth.

If you break it down further, the last five years have seen a net loss in real wages relative to the consumer price index.

Unlike our provincial experience, the idea of wage restraint in the Federal government is to hold increases to 1.5 per cent, not zero. The federal Expenditure Restraint Act (2009) has since expired.

The numbers in the study do exclude RCMP officers and active military personnel.

The bigger net cost was the additional workers the Harper government hired during the same period. While the net cost of decade’s worth of wage increases was $3.19 billion (all but $130 million eaten up by the cost of living), the government spent another $3.22 billion on new employment. Before you go totally nuts about this, keep in mind that the annual federal budget was $276.1 billion last year. Or here’s another way of looking at it, the cost of hosting the G8/G20 summit in Ontario was $858 million, or nearly seven times what the real wage increase was for federal workers for a decade.

While jobs add to overall economic growth, the Feds have become less interested in the idea of stimulation and more into austerity. Since last year’s budget more than 10,000 federal workers have lost their jobs, likely leading to a second year in a row where the net cost of labour for the government is actually negative. That is, even with wage increases, the net cost has gone down because of job cuts.

That’s too bad. We have to note that Canadians have made economic advances on our American cousins because of a higher rate of overall employment. According to Statistics Canada, we gained 12 per cent in living standard to the Yanks between 1997 and 2011 (GNI – Gross National Income) largely because of this.

So what is our lesson today? One: Us public sector fat cats are a lot leaner than most think. Two: Cutting jobs (public or private) is hardly the solution to improving not just our economy, but our way of life.

Which, now that we think of it, sounds a lot like a campaign currently being run by the Canadian Labour Congress.

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