According to Municipal Wage Watch, a CFIB backgrounder comparing municipal public sector wages and benefits to the private sector, city workers in Canada continue to pressure public finances through excessive wages and benefits.
Government workers at Canadian municipalities enjoy an average 22% compensation top-up over their private sector counterparts: broken down into an hourly wage, this translates into about $6.43 more per hour for the same work.
At a time when municipalities need to re-think traditional ways of financing their operations and how this affects taxpayers, cities are encouraged to take a serious look at the impact of escalating wages and benefits on their overall budgets, instead of their annual plea for additional transfers and “revenue tools.” CFIB has delivered a letter to Canadian mayors urging them to find savings within existing budgets rather than calling for additional funding from other levels of government.
Inflation-adjusted (i.e., real) operating spending by Canadian municipalities increased by four times the rate of population growth over the last 13 years. The lion’s share of city spending goes to cover employee wages and benefits.
When benefits are factored in, Toronto-area municipal workers enjoy the biggest comparative compensation advantage in Canada, at 26%. Greater Montreal’s civic employees bring home wages and benefits with a 25% top-up over equivalent private sector workers.
Cities frequently claim they have a revenue problem, yet this lack of restraint on wages and benefits, and overall operating spending, suggests they have a spending problem.
How to close the municipal wage gap
- Municipalities should compare wages, benefits, and working hours to private sector data and establish appropriate compensation levels.
- Bring government compensation in line with market norms by limiting future increases to the rate of inflation until public and private sector compensation levels are aligned.
- Eliminate early retirement provisions in pension plans and stop banking of sick days.
- Enroll new hires in defined contribution plans or shared risk models, rather than defined benefit plans.
Read the full backgrounder.