High government pay unsustainable
July 9, 2012
We’ve all heard stories about executives at Crown corporations living high on the hog with huge pensions and benefit packages. The benefits in the government don’t stop at the top. The plain truth is that being a civil servant pays well — often better than the private sector.
The only people my age that I know who have pensions are government workers. All of this is great if you are a civil servant — except that everyone else has to pay the bill. And that bill is bound to raise an eyebrow or two more often than not.
Consider a couple of examples from 2010/11:
- a teacher in Burnaby paid $136,549
- an administrative assistant at the Vancouver Island Health Authority paid $92,131
According to Statistics Canada, the median income for families of at least two in B.C. is $68,500, which is pretty much half what the Burnaby teacher made.
Now, I’m sure these people in the examples are all hard workers — and with their handsome paycheques, let’s hope they are. This isn’t about hard work. Lots of people work hard and make important contributions to society.
At the heart of the matter are public sector salaries and how unions affect those numbers. On average, wages in unionized jobs are about 7.7% higher than in non-unionized positions, and the government sector is heavily unionized. While the government does provide many essential services, the problem is that it is not the wealth-creating part of the economy.
When a private company decides to pay higher wages, they know it means that they have to sell more, or be more efficient elsewhere in their operations. If not, they wouldn’t be in business for long.
In government, higher wages mean more taxes and more debt on the backs of other parts of the economy. If the number of public employees at higher and higher wages is allowed to grow, it becomes a self-fulfilling prophecy. The cycle continues, and the end result is that it isn’t sustainable — look at how government overspending has affected Greece in 2011.
Public sector employees should be paid a fair wage, but it should be comparable to the private sector.