Government employee wages out of control
Ontario Premier Doug Ford and the province’s unions are in a boxing match, with the best interests of taxpayers hanging in the balance.
Ford has spent the last few years in court defending Bill 124, which was introduced to limit the growth of the wages of government employees for a three-year period to one per cent per year.
While there’s been a lot of hoopla about whether the legislation is constitutional, it’s worth remembering the original purpose of Bill 124 – to help eliminate Ontario’s massive budget deficit and to ensure less debt is passed along to our children and grandchildren.
Its purpose was also to bring the wages of government employees, who, according to the Fraser Institute, on average earn 13.4 per cent more than their private sector counterparts, back into the realm of reality.
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Bill 124 was designed to save taxpayers $9.7 billion over the course of three years, and it played a crucial role in the Ford government balancing the books in Ontario last year for the first time in nearly 15 years.
Those who oppose Bill 124 argue that it unfairly cuts the wages of government employees. But its opponents are wrong. The law allows government employees’ wages to rise one per cent per year over each of the three years.
This wage cap was implemented in 2019, just before the pandemic. Just months later, tens of thousands of Ontarians lost their jobs, saw their pay cut or had their small businesses go under.
A huge swath of the province would have been incredibly grateful to have job security and modest wage growth, as government employees did.
But union bosses are far from grateful.
The unions took the government to court soon after the bill’s passage, arguing that Ford’s 2019 law was unconstitutional. Ontario Superior Court Justice Markus Koehnen sided with the unions, arguing that Bill 124 infringed on workers’ constitutional right to collective bargaining.
The Ford government plans to appeal the ruling.
Whatever the outcome of the Ford government’s appeal, the general purpose of Bill 124 must be carried forward.
The Ford government introduced Bill 124 because government employee wages were out of control. The legislation was a modest effort to help begin the process of bringing the wages of government employees in line with the wages of their private sector peers.
If Bill 124 is ultimately found to be unconstitutional, Ford needs to get tough with the unions and make it clear that government employees’ sky-high wages need to be brought back down to earth. If wage restraint needs to happen through negotiations, so be it. Regardless, government employee wages need to be brought in line with the private sector.
According to Ontario’s Financial Accountability Office, the province spent $48.2 billion on government employee wages in fiscal year 2021-22. That represents 28 per cent of total program spending in Ontario.
If those wages were in line with the private sector, Ontario taxpayers would save $6.5 billion annually. That money could build five new hospitals or give every Ontario taxpayer a 13 per cent income tax cut.
The big government unions have taken advantage of Ontario taxpayers for too long. Ford was right when he said it was time to end sweetheart deals. Bill 124 was his pathway to achieving that goal.
But regardless of the vehicle, the goal of bringing government employee wages in line with reality must live on. Ford needs to spend the next four years getting tough with union bosses.
Jay Goldberg is the Ontario & Interim Atlantic Director for the Canadian Taxpayers Federation.
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