Bloated Public Sector or Bloated Rhetoric? …You Decide….

Yesterday I sent a letter to the Winnipeg Free Press about an August 31st op-ed decrying Manitoba’s supposedly “bloated” public sector. The op-ed was just begging for a response. Let’s hope the letter gets printed, but in case it doesn’t, here’s the scoop.

The op-ed in question, authored by Eisen and Wensveen, is a shortened version of a report they did for the Frontier Centre for Public Policy. Both versions talk about Manitoba’s “unusually large” public sector, but upon examination of the data contained in the report, their alarm is difficult to justify. Assuming that their calculations are correct, they show Manitoba to be in upper levels of the middle of the pack. Their calculations show municipal public-sector employment and provincial and municipal-sector employment as percentages of total employment. If one removes the extremes from their data (Alberta and B.C. at 16 and 17% respectively; Newfoundland at 31%) Manitoba, at 26% is keeping close company with many provinces who are hovering between 22 and 27%. 

But the fact that Manitoba does not stand out at all one way or another is not even the most worrisome part of their report. The authors do not explain why public-sector employment is in itself a bad thing. Their main argument is that public-sector employment causes unemployment in the private sector, which, if it were correct, would amount to no more than a red herring; it wouldn’t change aggregate unemployment numbers. They do not put their hypothesis in the context of the current recession which has seen the private sector shrink, with huge losses in employment. If it weren’t for public-sector employment, the economy would have shrunk even more than it did and the private sector would find it that much harder to recover.

Comparing public-sector wages and benefits with the private sector, as the authors do, sets off another smoke bomb. The public sector by nature includes highly-trained professionals such as nurses, teachers, engineers etc. who have to be paid higher salaries, especially when compared to “the lower wages, fewer benefits and less security” the authors admit are features of private-sector employment. The fact that these workers earn decent wages and benefits should inspire private-sector workers to demand more from their employers, not demand that others lose ground. 

The authors also do not consider that Manitobans derive real value from the services provided by the public sector. In order for their conclusions be meaningful, they would have to include a comparison of the quality and quantity of services provided by the provinces’ public sectors. The median Canadian household realizes benefits from public-sector services that are equivalent to 63% of their private income. Significantly, the public sector gives low-income earners the tools they need to look after their families – thereby softening the debilitating blows of the low-wage, precarious employment the authors seem to be wishing on us all.

Lynne Fernandez is a political economist with the Canadian Centre for Policy Alternatives Mb.

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Filed under Employment, public sector, Wages

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