The current course of ever-expanding governments costing the productive private sector more and more is not sustainable. Courts that always decide against the majority of citizens are a big part of the problem. The only answer is for we the majority to demand smaller, more efficient governments and tax reductions that will boost economic growth and our standard of living. Photo Credit: Canadian Press/Justin Tang.
The long-awaited decision on the appeal of Bill 124 was announced this week by the Ontario Court of Appeal and, not surprisingly, the Court ruled in favour of the government unions and therefore against the interests of private sector taxpayers, who are the majority of citizens.
Bill 124 was the legislation passed by the Ford government in 2019 to limit the wage increases of public sector workers to one per cent a year for a three-year period as a means of reducing government spending and balancing the budget. Employee compensation and benefits consumes about half of all Ontario government program expenditures, so the courts deciding that this major component of spending cannot be constrained by legislation is very damaging to the government’s ability to contain costs.
Unions claimed this decision was a victory for all workers, which of course is totally untrue. Private sector workers are the ones who pay for public sector salaries, so they are the big losers here. The private sector still represents about 75 per cent of all workers in Ontario and they will be footing the bill for increases to government employee pay and benefits.
The unions also claimed that this was a big win for unionized workers, but that is also a lie. Private sector unionized workers in Ontario and Canada as a whole are dropping like flies as more economically competitive jurisdictions in the United States and elsewhere around the world attract businesses who move and leave their Canadian unionized workers jobless.
Developments in technology, which replaces people in many industries, and more intense international competition have led to unionization in the private sector declining for some time. Private sector unionization in Canada used to be about 30 per cent back in the 1970s but is now 14 per cent and falling. Unionization in the Canadian public sector is doing very well, however, at just under 80 per cent. In fact, the Canadian public sector at federal, provincial and municipal levels of government is one of the most unionized in the world. This does not bode well for most of us who are private sector taxpayers, nor the economy as a whole.
While public sector unions will always want more, it’s worth noting that government employees in Canada already make about 15 per cent more than the same job in the private sector. When things like gold-plated pensions, health and dental benefits, earlier retirements, shorter work weeks, more sick days and better job security are added in, the differential between comparable jobs in the public and private sectors can be as high as 50 per cent.
Another problem with public sector collective bargaining is that unions usually go for a one-size-fits-all solution so that if one group of government employees gets a certain percentage raise, that is used as a template for other government workers. For instance, it may make sense to give nurses a bigger raise because they are more in demand than other workers, but that raise will then be used as a minimum that should be applied to other workers as well which increases government costs excessively and is not justified by the demand for different types of workers.
Another consideration is that governments in Canada are growing in size, even though there is no good reason for this to be happening. At the federal level, Prime Minister Justin Trudeau has massively expanded the number of government employees by 40 per cent, with all the costs associated with that imposed on private sector taxpayers.
The only reason this has taken place is that government employees are reliable Liberal government voters, as they would naturally vote for the part that prefers big government. Government services have certainly not improved to justify that increase. In fact, most Canadians would agree they have deteriorated despite the fact we are paying for many more government employees.
Growth in the Ontario public sector has also expanded, but not to the extent of its federal counterpart. But the real problem is that public sector employment growth overall is outstripping that of private sector employment growth. When the number of people who are paying the bills is growing at a slower rate than those increasing the bills, we have a serious problem.
As the courts have continually ruled in favour of the public sector unions, the best route for governments who need to reduce their spending – which all Canadian governments need to do – is to reduce their total employment. History shows that the private sector has a much better record of adopting labour-saving technology than the public sector, which is not surprising considering that private companies need to stay competitive or they’re out of business.
Governments, unfortunately, have no such ultimatum as they have no competition and can by law force their “customers” – taxpayers – to buy their services whether taxpayers want to or not. Efforts to increase the use of automation technology and Artificial Intelligence would be the most effective way of cutting government spending without a further deterioration in services.
The current course of ever-expanding governments costing the productive private sector more and more is not sustainable. Courts that always decide against the majority of citizens are a big part of the problem. The only answer is for we the majority to demand smaller, more efficient governments and tax reductions that will boost economic growth and our standard of living. It’s time for we generally complacent Canadians to do a better job of advocating on our own behalf. Or face the very negative consequences of a lower standard of living and a weak economy.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
