FINANCIAL POST COLUMN: Lightning strikes a greater risk for government employees than pay cuts

Since COVID-19 emerged in Canada we have seen countless stories in the news about struggling businesses having no choice but to cut employee pay. Cineplex, energy giant Cenovus, Chrysler, teams throughout the Canadian Football League, the Winnipeg Free Press, the list goes on and on.

But one sector of our economy has been noticeably absent from such headlines: the government. This led SecondStreet.org, which I oversee, to ask the federal government, all 10 provincial governments and the administrations of 13 major cities: when was the last time you cut employee pay?

Results from our survey showed government employees in Canada are more likely to be hit by lightning than suffer a pay cut.

The federal government told us there is “no data or any information that indicates that there has ever been a negotiated pay reduction” for federal employees. In fact, the federal government negotiated a pay increase for employees during the height of the pandemic. It must be amazing to work for an organization that only ever raises pay (and will even add to a mountain of debt to do so).

Provincial governments provided similar responses. The Quebec government said the last time they cut employee pay was 1982. Just think, we’re coming up to the 40th anniversary of the province’s last pay cut. Some Quebec employees will have worked their entire careers without ever feeling the pinch.

Alberta’s last pay cut seems to have occurred in 1994 and Prince Edward Island told us its last one was in the same year. New Brunswick said its data go back to the 1970s and there have been no pay cuts over the last 50 years.

Ontario doesn’t track the data the same way other provinces do. It could only confirm there haven’t been any pay cuts over the past five years. Perhaps the government keeps the data this way because it doesn’t want to know the answer to embarrassing questions like this.

This same cut-free history typifies city halls across Canada. The City of Calgary provided data from 1974 to 2020 showing no pay cuts during that period. Edmonton provided data going back to 1985 — again, no pay cuts. Mississauga, Ont., told us it has never cut employee compensation and the City of Ottawa provided data going back to its amalgamation in 2001. No pay cuts there, either.

Overall, the data are clear. When times get tough, politicians of all political stripes almost always insulate government employees while the rest of us face the elements. It’s true that governments have negotiated wage freezes on occasion, meaning real wages have temporarily not kept up with inflation. But out in the real world the rest of us have faced that sort of thing but also actual cuts in the numbers that show up on our cheques or in our pay packets.

Two points about addressing this phenomenon:

First, change is possible. The 1994 pay cut in Alberta was actually a negotiated five per cent pay reduction. The government simply told the unions they would have to take a pay reduction or there would be layoffs. The government didn’t blink and the unions accepted the pay reduction. Grumpily, to be sure — but they signed.

Second, government employee unions and politicians sometimes claim pay cuts can’t occur right now as the unions have contracts in place. But countless workers outside government also had contracts in place and agreed to reopen them in order to negotiate pay reductions to save their jobs. If government employee unions won’t be reasonable about the unique challenge our nation is facing and agree to reopen their contracts, well, layoffs are certainly a more drastic option for saving money but they do work.

Governments across Canada are awash in red ink right now, a situation that is simply not sustainable. Compensation costs typically represent half a government’s budget (more in the case of school boards) so it is hard to see how politicians will tackle their budget shortfalls without wage and salary cuts.

For government employees, pay reductions would help save jobs. For everyday taxpayers, government pay reductions could help prevent tax increases. If we don’t see concessions from government employee unions, maybe it’s time for the rest of society to go on strike.

Colin Craig is president of SecondStreet.org.

This column was published by the Financial Post on September 10, 2020.