Public sector pensions in the crosshairs

Recent comments from Treasury Board president Stockwell Day, regarding the need to bring federal spending down, have raised the hackles of public sector unions, who suspect the government’s oft-repeated statements about bringing the deficit under control without raising taxes means spending – including civil service compensation – is under the microscope.

One month before collective agreements in the public sector are set to expire, a study by actuary Pierre Girardin for the Montreal Economic Institute (MEI) notes the growing disparity between public sector and private sector pensions, and calls on the government to take this into account for the budget.

Girardin’s study compares the working conditions of public and private sector workers, noting that most public sector workers enjoy the benefit of job security while the average private sector worker will have three different employers over the course of their career. He concludes that even if the private sector worker is offered retirement plans equivalent to the government plan by each of his three employers – an unlikely scenario – the public sector worker’s retirement plan will still be worth 41% more at the time of retirement.

Not so, says Gary Corbett, president of the Professional Institute the Public Service of Canada, the nation’s largest union of scientists and professionals employed at the federal and provincial/territorial levels of government.

He asserts that quality pensions are the bedrock of compensation packages provided to public sector employees who do not have access to the perks and high salaries the private sector offers. In addition, public sector workers pay up to 40% of their pension plan contribution compared to an average of 29% for their private sector counterparts, and Corbett points out there is no funding crisis that requires a restructuring of public sector pensions or cuts in benefits.

Corbett’s view was echoed Tuesday on Parliament Hill by Public Service Alliance of Canada national president John Gordon. “If the recession has shown us anything, it is that Canadians need and expect more services from their national government, not less,” he said in a press conference. “They expect safe food and drugs, their environment protected, their military and veterans supported and their human rights enforced.”

“Our members are mobilizing in support of retirement security and quality public services, both of which are vital to Canada’s economic recovery – and worthy of government investment.”

However, Girardin says the discrepancy between the availability of retirement benefits amounts to one sector subsidizing the other at the expense of its own retirement security.

“This situation is unfair to taxpayers who work in the private sector, who in a way are paying for the generous retirement plans in the public sector while not benefiting from similar advantages themselves,” he says.

According to MEI president and CEO, Michel Kelly-Gagnon, the government needs to take a strategic view when constructing the budget.

“Spokespersons for the Common Front of public sector unions limit themselves to talking about wage differences,” he says. “Overall compensation is what needs to be examined to get a full picture. This type of analysis shows there is no gap to close for public sector employees compared to private sector employees – quite the contrary. The government needs to recognize this reality, especially in a situation of budget deficits.”

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