New Fraser Institute study finds ‘Ontario is worse than California’

A new Fraser Institute report titled “Comparing Public and Private Sector Compensation in Ontario” released Wednesday found that Ontario’s public sector workers earn more, retire earlier and are less likely to lose their jobs compared to their private sector counterparts in 2011.

On the day that new Ontario Premier Kathleen Wynne takes part in her first Question Period in Queen’s Park and deals with an array of issues, the conservative think tank published its study that discovered civil servants earn 14 percent more than private sector workers, while 77 percent are covered by registered pension plans.

When it comes to retirement, government employees exit the workforce 1.3 years earlier on average. In 2011, only 0.7 percent of public sector workers lost their jobs, which is less than one-fifth the job-loss rate in the private sector.

“As the Ontario government struggles with deficits and finding ways to constrain spending, public-sector compensation is one area that should be closely scrutinized,” said Niels Veldhuis, Fraser Institute president, in a press release. “The fact is government workers in Ontario enjoy a wage premium over their private-sector counterparts.”

Amela Karabegović, Fraser Institute senior economist and study co-author, argued that much of the compensation is due to political factors and monopolies. She added that in the private sector wages are determined based on market forces, competition and profit constraints.

“Overall, the public-sector workers in Ontario enjoy higher wages-and likely higher non-wage benefits-than comparable workers in the private sector,” noted Karabegović.

Study co-author Jason Clemens compared the province to the state of California, a part of the the United States that is facing tremendous debt levels, a budget deficit and an exiting populace due to the high tax rates.

“Pick a joke about governments going bankrupt and California is the punch-line, but Ontario, on every measure we’ve looked at, is worse than California,” stated Clemens in an interview with the National Post. “If the government is going to tackle this deficit, they don’t have a choice — they’re going to have to deal with wages and benefits.”

The report does not issue recommendations that the Ontario Legislature should take, but it will issue a paper in March that will look at the various ways Queen’s Park could curb public spending on compensation. One of the methods could be tying government pay to similar jobs and wages in the private marketplace.

Ontario’s debt is roughly $240 billion and its budget deficit stands at $13 billion. The province also maintains a 7.7 percent unemployment rate and a debt-to-GDP ratio of 35 percent.

Meanwhile, the state of California’s debt level is $388 billion and Governor Jerry Brown claims his plan will balance the budget this year. The Golden State has an unemployment rate of 10.8 percent and a debt-to-GDP ratio of 19.3 percent.

Former Premier Dalton McGuinty announced late last year that he was stepping down from his post after nine years of being the province’s chief. His resignation came following a series of scandals, including a $1 billion eHealth scandal, $1 billion power plant cancellations to save five political seats, handing out bonuses to 98 percent of the province’s government workforce, the costly and scandalous ORNGE and spending money that it didn’t have.

Despite his policies and lack of popularity, McGuinty was able to win two majority governments and one near-majority government (minority).

Wynne, who has been a key cabinet minister in the McGuinty government, won the Liberal nomination last month and defeated Sandra Pupatello during a Grit convention in Toronto.  Many expect Wynne to continue the policies of her predecessor, except without the instrumental McGuinty ministers, including Finance Minister Dwight Duncan and Energy Minister Chris Bentley.

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