A National Post editorial highlights the new “two nations“:
Canada’s new haves and have-nots
Envy flourishes in hard times, and there is already considerable evidence that a healthy crop of the green stuff is developing as world economies plumb ever-lower depths. U. S. Senator John Kerry this week vowed to introduce legislation to punish bankers who entertain clients in a manner he considers too lavish, even if the bank is healthy and profitable. Vandals in Germany have taken to torching luxury vehicles, just because they represent wealth.
In Canada, there is every prospect for similar resentment to arise, as it becomes evident that the recession is dividing the country into a new class of haves and have-nots. But this isn’t traditional class warfare: The have-nots are workers in the private sector who have no protection against pay cuts, lost jobs and disappearing pensions. The haves are those who work in the public sector, and are insulated by government from any danger.
The startling results revealed by Quebec’s Caisse de depot et Public-placement du Quebec this week — a $40-billion loss for 2008, the worst-ever performance for any public-sector pension plan in Canada — illustrates the situation nicely. Since public sector pensions typically are guaranteed by the government, taxpayers are likely to be on the hook for much of the cost of fixing the damage.
Canadians in the private sector, on the other hand, have seen their pensions erode steadily, often to the point of disappearing. Many are underfunded. Most have lost heavily in the market downturn. Few companies any longer guarantee a fixed benefit, having pushed employees off on to “fixed contribution” schemes that depend on the success of investments.
Public employees need not worry about any of this. Their jobs are safe, their salaries are protected, their pensions are guaranteed.
There was a time when public employment came with a trade-off: In return for security, salaries were lower than in the private sector. That’s no longer the case. A report by the Canadian Federation of Independent Business, released in December, found that public-sector workers make from 8% to 17% more than workers in similar jobs in the private sector. With benefits and shorter work weeks, the gap grows to 30%.
There have been few signs that governments at any level intend to expose their employees to the same uncertainties confronting the rest of the country. While there has been talk of hiring freezes, reduced pay increases and the re-examination of bonus programs, the worst that most public employees face is the continuation of the status quo. An expected salary hike may be reduced somewhat, or put off for a year or two. Empty positions may not be filled immediately. Travel and other perks may be few and far between. Other than that, life goes on, cushy as it ever was.
Public servants aren’t to be criticized for having taken advantage of the protection offered by government, or for successfully negotiating such excellent terms. All Canadians had the same opportunity.
But Canadians can be expected to ask whether, in the current environment, employment by the government should continue to carry protections so much greater than those available to other workers.
Is it really the responsibility of those Canadian taxpayers who face the risks of the private sector to ensure the ironclad safety of those who don’t? A family scraping to cover the mortgage can be forgiven for wondering why it should be responsible for making up the pension losses of government-protected employees.
The challenges facing the country have already forced broad changes in the hopes and expectations of millions of Canadians. Life will not go on as most of us had planned. As accommodations are made, it’s a good time to question whether public employment should continue to guarantee the sort of perks that most of us won’t see for the rest of our working lives.