Enhanced CPP vs Personal Investing

[mariomike]

"The reason why the private sector doesn’t have public sector pensions is because the private sector can’t afford such high pension benefits. Hell, the public sector can’t really afford it either. It is time for the public sector to wake up to reality."

Reminds me of those "I pay your salary" citizens we used to run into.

 

[Brad Sallows]

Either everyone can enjoy public sector wages and benefits (ie. the economy can function that way), or not everyone can.  If not, and if there is significant inequality in terms and conditions, it means some people are overcompensated at the expense of others (ie. we pay more for some goods/services than what they are worth).

I assume that if it were possible to compensate everyone at public levels, we would already have done so.

 

[mariomike]

Either everyone can enjoy public sector wages and benefits (ie. the economy can function that way), or not everyone can.  If not, and if there is significant inequality in terms and conditions, it means some people are overcompensated at the expense of others (ie. we pay more for some goods/services than what they are worth).

I assume that if it were possible to compensate everyone at public levels, we would already have done so.

Front-line workers deserve their wages and benefits. Especially now that the cities they serve and protect are the explicit targets of terrorists.
I do not consider it a profit making business.

I support early retirement for front-line workers. Not only is it fair, it is also a public safety issue. An older worker should not be forced to run a code on a child at 0400 hours with the parents screaming at them.
If that means paying a little more for an electric toothbrush or a haircut, I do not begrudge it. 

 

[a_majoor]

The sad fact of the matter is public sector employees make an average of 13% more than their equivalent private sector counterparts, and the spread increases to 33% once wages and benefits are added in. Someone needs to pay for this, but the people paying earn less, only @20% have pensions from work and fewer still have defined benefit pensions.

The short answer is the people expected to pay for these generous benefits are fare worse off to begin with, and will be for the forseeable future. Now if public sector wages were in line with their private sector counterparts, there would be a $19 billion reduction in government spending, which shoudl give you a real idea of the magnitude of the problem (and the scale of resources that could be reinvigorating the economy if that money was in the private sector).

 

[Old Sweat]

The sad fact of the matter is public sector employees make an average of 13% more than their equivalent private sector counterparts, and the spread increases to 33% once wages and benefits are added in. Someone needs to pay for this, but the people paying earn less, only @20% have pensions from work and fewer still have defined benefit pensions.

The short answer is the people expected to pay for these generous benefits are fare worse off to begin with, and will be for the forseeable future. Now if public sector wages were in line with their private sector counterparts, there would be a $19 billion reduction in government spending, which shoudl give you a real idea of the magnitude of the problem (and the scale of resources that could be reinvigorating the economy if that money was in the private sector).

It seems to me that back in the early seventies the government, check that, PM Trudeau justified big wage hikes to the Public Service (but not the CF) as an attempt to shame the private sector to paying their employees decent wages. Economics 101, anyone? (I was in CFHQ at the time and remember it. I also remember the press gushing over the golden age for the Public Service as there was so much money to be spent and so many careers to be built in the process.)

 

[Edward Campbell]

There was, until the late '60s, an explicit social contract: public servants were, relatively, poorly paid but they had a near "iron rice bowl," job security that no private sector employee could ever imagine. Then Trudeau upset the apple cart ~ the low wages were replaced with negotiated contracts and ever increasing wages which, eventually, covered the CF, too. But nothing was ever exchanged for the higher and higher wages; public sector employees (municipal, provincial and federal) still have "iron rice bowls," but they are, as other have pointed out, now paid far more than their private sector confreres.

What we have is a new "class" divide: well paid public sector workers with excellent job security and great pensions and relatively poorly paid private sector workers with no useful job security and lousy pensions. The latter pay for the former. I doubt it is sustainable.

 

[Neill McKay]

I'd like to meet one of these highly-paid public-sector workers.  In my profession (engineering) there's considerably more money to be made in the private sector.  (The gap between the two offers -- public and private -- from which I chose when I joined the civil service was about 14 per cent.)

But apart from wages, I accept that the benefits in the public sector tend to be better than those in many private-sector workplaces.  However, having worked in the private sector with no benefits of any kind -- not even sick days -- I think the solution is for private-sector employers to improve the lot of their workers, rather than for the public sector to join them in a race to the bottom.  By and large the civil service, in New Brunswick at least, is a reasonable and enlightened employer.  While acknowledging that there are exceptions, my experience has been that private sector employers tend to lag behind.

 

[Bruce Monkhouse]

The sad fact of the matter is public sector employees make an average of 13% more than their equivalent private sector counterparts, and the spread increases to 33% once wages and benefits are added in. Someone needs to pay for this, but the people paying earn less, only @20% have pensions from work and fewer still have defined benefit pensions.

You have anything to back this claim up?

 

[KJK]

Bruce,

I just look to the recent Canada Post strike and their compensation package. No formal education gets a starting wage of $27/hr moving up to $36-37 hr with seniority. I believe they also get 21 sick days/year and 6 personal days with a defined benefits pension if memory serves me correctly.

I work in the oilfield as many of you know. We have postions here that require 2 years of college to start at $25/ hr, 7 sick/personal days a year and a defined contribution pension plan. This on top of working under extremely adverse weather conditions far from home living in a camp. We consider ourselves lucky to be be working for one of the few private companies that still offer a pension at all. Yes our wages can go much higher than CP but not without a lot of education or a lot of hours worked. I might add that what we are doing is also considerably more dangerous than delivering mail.

I can't provide any stats to back this up right now but I have heard the numbers T is using before. I just can't remember where. 

My $.02

KJK

 

[KJK]

Here is a CBC article showing SK government liquor store cashiers making roughly twice what a private liquor store cashier would make + benefits + sick days + an indexed pension. It is from 2006 but I doubt things have gotten better for the taxpayer.

http://www.cbc.ca/news/canada/saskatchewan/story/2006/10/05/liquor-stores.html

KJK

 

[Edward Campbell]

You have anything to back this claim up?

There is all kinds of data out there: almost none of it authoritative. Much of the data compares apples and oranges ~ we do not, for example, have private sector law enforcement and many (most) jobs in the public sector are in large, unionized work-forces whereas many, many jobs in the private sector are in small, generally non-union work-forces.

But I can try to make some broad generalizations based on the data that I have seen:

1. The greater the education requirement the less likely there is to be a pay differential ~ most "journeyman" people with PhDs in chemical engineering make more in the private sector than they do in the public sector. In other words, the government sectors reward brawn and undervalue brains ~ physicians and pharmacists in the public service make too little, hospital food service workers make too much; university professors make too little, cleaners make too much, and so it goes; and

2. The pension schemes are growing towards being 180o out of phase ~ this is becoming a major bone of contention in the "class" divide.

The military has, for 30+ years, benefited from the public service wage inflation. I cannot remember exactly when it happened but, circa 1970, our (military) pay scales were 'bench marked' against civil service equivalents (and we got a series of large pay raises to 'catch up') and their benefits packages were 'enhanced' to look more like ours (public service annual leave, for example, went from a minimum of two weeks to four weeks - a benefit which had been unique to the military and which was awarded, in part, to compensate for low wages and unique conditions of service).

But it is an important argument because if government employment is too attractive is will exacerbate our productivity problems. Government work - even the defence of the realm and the safety of the public - is, broadly, economically unproductive. We must have some public services, and they must be provided in an efficient and effective manner (which, broadly, means good, adequately compensated people are required) but we must, also, have a strong private sector to pay the bills. The 'gap,' between the two should be biased towards the risk-taking private sector; currently it is not.

 

[Fishbone Jones]

Ken Lewenza, President of the CAW, stated last week that CAW workers average $55.00\ hr. Their pension is nothing to sneeze at either.

There are lots of similar unionized private sector workers in the same boat. Want to talk about 'iron rice bowls' to use Edward's phrase, try fire a private sector, union employee.

Public sector employees don't have a lock on this.

This should properly be more a discussion about union and non-union employees. Not public\ private sector.

 

[dapaterson]

In other words, the government sectors reward brawn and undervalue brains ~ physicians and pharmacists in the public service make too little, hospital food service workers make too much; university professors make too little, cleaners make too much, and so it goes; and

[off topic]

I would challenge you to find a single Canadian university professor who is not a public employee.  Despite university's claims of independence, they are public institutions de facto, if not de jure, as without the generous governmental funding which flows unconstrained and uncontrolled they would not exist.

[/off topic]

 

[Edward Campbell]

Ken Lewenza, President of the CAW, stated last week that CAW workers average $55.00\ hr. Their pension is nothing to sneeze at either.

There are lots of similar unionized private sector workers in the same boat. Want to talk about 'iron rice bowls' to use Edward's phrase, try fire a private sector, union employee.

Public sector employees don't have a lock on this.

This should properly be more a discussion about union and non-union employees. Not public\ private sector.

That's why I mentioned the large (unionized) vs. small (non-union) work-force issue; you are correct, of course, large unions have the clout to protect their employees ~ but that may be changing.

 

[Edward Campbell]

[off topic]

I would challenge you to find a single Canadian university professor who is not a public employee.  Despite university's claims of independence, they are public institutions de facto, if not de jure, as without the generous governmental funding which flows unconstrained and uncontrolled they would not exist.

[/off topic]

Certainly true, but it does not alter my perception that the public sector undervalues brains and overpays brawn.

 

[Redeye]

Ken Lewenza, President of the CAW, stated last week that CAW workers average $55.00\ hr. Their pension is nothing to sneeze at either.

The $55/hr rate (and various similar rates) generally factor in the value of benefits including pensions - it's not their hourly wage.  That would translate to $114,400/year.  Having worked as a financial planner in a GM town with lots of them as clients, even the white collars make nothing near that as salary.  A line worker at GM's Oshawa plants before the mess in a couple years ago would bring home a gross of around $50,000-$55,000/year, plus overtime perhaps.

 

[mariomike]

Regarding the "iron rice bowl". As ( then ) Mayor Lastman put it, "Jobs for life". “I knew it was time to stop that. We tried to take it away from them because they had us by the balls. We fought like hell but couldn’t get rid of it. You don’t know what we had to go through." “Try and fire them, you can’t.”
Star Feb 16 2011

For management, it was a different story. I remember when T-EMS fired 10 supervisors in a single day.

 

[Fishbone Jones]

The $55/hr rate (and various similar rates) generally factor in the value of benefits including pensions - it's not their hourly wage.  That would translate to $114,400/year.  Having worked as a financial planner in a GM town with lots of them as clients, even the white collars make nothing near that as salary.  A line worker at GM's Oshawa plants before the mess in a couple years ago would bring home a gross of around $50,000-$55,000/year, plus overtime perhaps.

CAW workers at the Big Three make approx $35\ hr before shift premium and overtime. That's $72,000.00\ year base.

 

[Redeye]

CAW workers at the Big Three make approx $35\ hr before shift premium and overtime. That's $72,000.00\ year base.

Unless they have gotten a lot of raises lately, I don't think I ever saw one that made that much.  However, it's not impossible.  $55/hr as a wage, however, is.

 

[Fishbone Jones]

Unless they have gotten a lot of raises lately, I don't think I ever saw one that made that much.  However, it's not impossible.  $55/hr as a wage, however, is.

I'm only restating what their own President said on the news last week. He mentioned no tie to benefits either. Take it up with him. The $35\ hr figure came from their own literature. Look it up.