Monday, 1 May 2017 - 6:45pm

There are two rules of thumb in Canada when it comes to government employee compensation.

First, government employees tend to make significantly more than people doing similar work in business or the non-profit sector. Second, very few politicians in Canada are willing to do anything about the problem for fear of retribution at the ballot box.

Fortunately, there’s a solution to this unjust and age old problem that even Canada’s most timid politicians could embrace – the lost art of the ‘grandfather’ clause.

Some Canadians will think of Craig MacTavish when they think of ‘grandfather’ clauses – he would be a good example. MacTavish was the last player in the NHL that was allowed to play without a helmet.

You see, when the league required mandatory helmets in 1979, they did so by allowing current players to finish their careers without being forced to wear a helmet. By the time the 1990s rolled around, MacTavish was often the only NHL player skating around during a game without a helmet.

Governments could use a similar approach when it comes to employee compensation, negotiating union contracts that see future hires paid, say, 5 or 10% less than current government pay classifications. This approach could of course be adjusted by job classification depending on the size of the compensation gap.

For instance, back in 2012 it was noted that a government-run Tim Hortons at a Newfoundland hospital paid its employees $28 per hour to pour coffee; likely double what a privately-owned Tim Hortons would have paid its staff at the time. In this case, the government-run hospital could, going forward, reduce pay for future coffee pourers by upwards of 50%.

Overall, Canadian Federation of Independent Business data shows that federal employees’ salaries are about 13% higher than what people earn for doing similar work in the private sector. The gap is 6% at the provincial level and 9% at the municipal level.

However, that’s just the salary component. If you include the cost of golden pensions provided to government employees, the total compensation gap grows to an astounding 33% at the federal level, 21% at the provincial level and 22% at the municipal level.

Go figure, it’s expensive to pay for government employees to retire at 55 with a guaranteed full pension, indexed for inflation.

You might be asking – would any politician actually grandfather in more reasonable compensation levels?

Consider the case of Allan Blakeney, former NDP premier of Saskatchewan. During the late 1970s and early 1980s, Blakeney started putting new government employees (for many bargaining units) in less expensive pension plans. Conversely, employees who were already working for the government were allowed to stay in their existing golden pension plans.

So, if a socialist, union-backed former premier in Saskatchewan could successfully utilize this technique, why couldn’t our modern day politicians embrace the same strategy?

Do they really think government employees would be motivated to strike over the potential for future hires to see pay reductions? Not likely.

It’s time to grandfather in more reasonable compensation levels … if not, we need to start voting out politicians who are unwilling to address the problem.

 

Colin Craig works for the Manning Centre and is the author of The Government Wears Prada
This column was published by Sun newspapers (Toronto Sun, Ottawa Sun, Winnipeg Sun, Calgary Sun and Edmonton Sun) on April 30, 2017

Topic: 
Finance
Colin Craig
Director of Strategic Communication

Colin Craig is the Director of Strategic Communications for the Manning Centre and is the author of The Government Wears Prada. He has an MBA and a BA (Economics) from the University of Manitoba. Prior to joining the Manning Centre, Colin worked for the Canadian Taxpayers Federation in Winnipeg and was instrumental in shaping public policy decisions at the municipal, provincial and federal level.