Monday, March 4, 2013

Public Sector Salaries

This morning, I was looking over the comments from the public hearing for the City of Langley’s proposed 2013 – 2017 Financial Plan which includes the 2013 budget. One citizen talked about how he only learned at the City’s open house that the largest cost in the operating budget was staff salaries. I found this a bit surprising because generally labour cost are the largest operating expense for any organization. This citizen also thought that the tax increase this year should be 0% which if I read between the line means that he believes that public employees should have a wage freeze. Collective agreements aside, I don’t think that this is a reasonable expectation.

I’ve worked in the private sector my whole life in both unionized and non-unionized positions. The general annual wage increase that I’ve received over the last decade has always been no less than 2%. This is about the average rate of inflation. I had a look at the collective agreement that covers staff at the City of Langley. Over the 2007 to 2011 period, the general annual wage increase was 3% to 4%. Giving the slow economic recovery, while 3% to 4% isn’t an opulent increase, I believe the next collective bargaining period should have wage increases around the 2% mark. I certainly don’t believe that people should be making less money the longer they have a job. I know that many people also believe that public workers are on the gravy train, but if you look at the collective agreement, salaries range from $47,174.40 to $88,732.80 per year for the most senior employees. Of those senior employees, the highest paid workers are engineers and planners. The median annual salary for senior employees is around $60,000. Certainly you make less money working at a coffee shop, but the median annual income for households in Metro Vancouver was $67,090 in 2010 (which is the last year I could find information.)

One of the things that I always find interesting is that some people feel that public employee shouldn’t be paid well. I believe that we should be trying to attract talented people to the public sector at local level. To attract those people, you need to have a competitive salary. Also, I always thought that if public employees are underpaid, they would be more susceptible to bribery and corruption like in other countries.

All that to say, municipal operating budgets are always likely to see around a 2% annual increase largely due to labour costs. I’m actually alright with that in principle, but I do believe that the public salary annual growth should be slowed to around 2% per year. The problem is operating budgets are paid for with property tax which isn’t tied to economic productivity, so municipalities always have to fiddle with the property tax rate.

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