Hefty public-sector pay hikes are fading.
Wage growth in the public sector is rapidly easing, and now lags increases in the private sector. Public-sector wage settlements slowed to just 1.3 per cent on average in the third quarter from 1.8 per cent average in the second quarter, Human Resources and Skills Development Canada figures show.
Public-sector hikes have outstripped increases in the private sector for the past four years, prompting howls of outrage from some who see them as examples of government excess. This year, though, that trend seems to be reversing. The third-quarter 1.3-per-cent pace is much less than the private sector's 2.2 per cent increase.
The slowdown reflects moves by governments at all levels to trim budgets, including labour costs. Several provinces, such as Ontario, are trying to freeze wages. In September, the Quebec government settled with about 107,000 public-sector employees for wage increases averaging 1.2 per cent -- far below the 1.9-per-cent current rate of inflation.
In the first nine months of this year, wage hikes have averaged 1.7 per cent in the public sector, the federal government said in its monthly workplace bulletin. If that rate continues, it would mark the lowest annual increase since 2004.
The third-quarter results are based on a review of 26 settlements that cover 144,850 employees in the public sector, and 28 settlements that cover 187,710 employees in the private sector.
Sluggish wage growth among workers of all stripes will continue into next year, the Conference Board of Canada believes. In a report last month, it said private sector employers are planning increases of 2.9 per cent for 2011, compared to 2.3 per cent in the public sector.
Public pay increases have stoked plenty of debate between those who believe they represent serious government overspending, and others who say wage growth helped sustain the economy through the recession as many businesses were floundering. Both sides dispute each other's calculations on the difference between private and public-sector salaries.
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