Canadian cities spend too much on staff, says CFIB study

mississauga.com
June 9, 2015
By Rick Drennan

Canadian cities don’t have a revenue problem.

They have a spending problem.

And the wage gap between public sector workers and those in the private sector is the problem.

So says the latest report for the Canadian Federation of Independent Business (CFIB).

Municipal government workers across Canada are making $6.43 more per hour on average in wages and benefits than their private sector counterparts - a gap of 22 per cent, said CFIB.

These excess wages and benefits cost taxpayers $3.4 billion per year. If municipal workers, who earn more than $60,000 per year plus benefits, were compensated in line with private sector norms, the savings to cities could be spent on much-needed infrastructure improvements, such as public transit expansion, or given back to Canadians as tax cuts.

“When the Federation of Canadian Municipalities (FCM) meets this week (in Edmonton), they will, no doubt, point to a so-called “revenue problem,” and ask other levels of government for more money,” said CFIB executive vice-president Laura Jones. “But Canadian cities don’t have a revenue problem. They have a spending problem. And a lot of it has to do with employee compensation that is well beyond what’s fair and reasonable - an extra six bucks an hour is a lot more than pocket change.”

The municipal compensation gap varies across the country, says the report.

Municipalities in Quebec (23 per cent), Ontario (21 per cent) and New Brunswick (19 per cent) have the biggest imbalances.

Individually, Toronto (26 per cent) and Montreal (25 per cent) are the worst offenders.

Based chiefly on National Household Survey (NHS) returns from 2011, the findings reflect the representative census records of 132,790 municipal employees and 3.6 million private sector employees across Canada. Occupations that don’t exist in both the municipal and private sectors are excluded.

“Cities, big and small, are spending well beyond their means,” said CFIB research analyst Nina Gormanns. “When we look at inflation-adjusted operating spending by our municipalities, data show that it has increased at four times the rate of population growth over the past 13 years. The lion’s share of that spending is dedicated to wages and benefits for city employees.”

Every year, Canada’s mayors meet and call for more money so that they can continue overspending, says the CFIB in a press release.

Unfair, inflated public sector wages and benefits hurt all Canadians, and translates into higher taxes and fees at all levels of government.

“There’s only one taxpayer. Instead of looking for more handouts, municipal leaders need to look in their own backyards, and put their energy into getting a fair deal for their constituents in labour negotiations,” added Jones. “It’s simple: limit employee raises until the compensation gap is eliminated. The six bucks stops here.”