This article originally appeared in the Financial Post. Below is an excerpt from the article.
By Jack Mintz, May 12, 2023
The federal public servant strikes reminded Canadians that public-sector employees have a pretty good deal. On an apples-to apples comparison, their pay is higher on average than in the private sector. Their jobs are secure even in a recession. And they benefit from rich, inflation-indexed pensions. They may also get more vacation and paid-leave days compared to the private sector.
Now with work-at-home and a potential move to an eight-hour-a-day, four-day week, with no loss in pay, life seems pretty good in the public service. After all, taxpayers who have little clout when it’s not election time are put at the mercy of two monopolies — government and unions — whose costly collective bargaining agreements mean more taxes even if there’s no improvement in service delivery.
What has been less noted is that employment conditions for public-sector employees badly distort labour markets. In choosing where to work, people look at a job’s overall benefits, including job satisfaction. A public-sector job that provides a higher salary, more security, an indexed pension and fewer hours of work will look very good compared to a private-sector job with lower compensation. Of course, there are offsetting benefits to working in the private sector — a larger pool of opportunities to work in Canada or abroad, a more innovative environment and greater freedom for self-development in a less bureaucratic atmosphere that rewards success more generously. But as governments push up public-sector salaries and benefits, private-sector jobs become less appealing at the margin.