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Business group blasts 'outrageous' generosity with public-service union

The Conservative government finds itself accused of being too kind to public servants after agreeing to a tentative deal with a major union that would see wages rise 5.3 per cent over three years.

In an open letter to Prime Minister Stephen Harper, Finance Minister Jim Flaherty and Treasury Board President Stockwell Day, Canadian Federation of Independent Business president Catherine Swift condemns the terms as "outrageous" and a lost opportunity to save money by freezing salaries.

Ms. Swift said the deal - which must still be approved by union members of the Public Service Alliance of Canada - contradicts Mr. Flaherty's recent comments that Ottawa is entering a period of restraint.

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"When you say Canadians need to tighten their belt, we believe that should include ALL Canadians - not just those in the private sector," Ms. Swift writes. "We have also in recent months seen what happens in countries such as Greece, other European countries and various U.S. states and municipalities when government spending becomes so out of control it effectively bankrupts the country, state or municipality. Let's act on this issue now so we do not face this kind of crisis in the future in Canada."

The criticism puts the Conservatives in an usual spot, given the government has had many dust-ups with the public service - including this summer's resignation by the head of Statistics Canada and tussles over the release of government documents. There had been some speculation the Tories might use the expiring public-sector contracts as an election issue, but the deal announced by Mr. Day made clear that the government is not insisting on wage freezes to lower the deficit.

Using data from the 2006 census to compare specific jobs in the public and private sectors, the CFIB claims federal public servants receive 17.3 per cent more than private-sector workers to do the same job. The study found provincial public servants received 7.9 per cent more.

The study concludes that the gap is even wider when total compensation - including benefits and vacation - are factored in.

The tentative deal reached between three of five bargaining units with the Public Service Alliance of Canada calls for wage increases of 1.75 per cent in 2011, 1.5 per cent in 2012 and 2 per cent in 2013.

Other studies show the wage deal struck by Ottawa is largely in line with what's being offered this year by the public and private sectors.

A report released Tuesday by TD Bank Financial Group estimates annual wage hikes in most sectors will be at 2 per cent or less over the next few years. TD Bank deputy chief economist Derek Burleton says that means most wages will barely keep pace with inflation. Mr. Burleton said high unemployment means there is little need for most businesses to spend more on workers.

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"In most areas, wage pressures are very tepid," he said.

Statistics from the federal Labour Department tracking 15 wage deals reached in July, 2010, found increases averaged 1.8 per cent annually over the contract term. These included Vale's deal with mining and refinery workers worth 1.9 per cent a year for six years, and Essar Steel Algoma's deal of 2.2-per-cent increases annually for three years.

Nonetheless, Ms. Swift and the CFIB have proven to be an influential voice with the Harper government. The CFIB led the charge in campaigning against higher Employment Insurance premiums. Ms. Swift was on site in Ottawa last Friday with the Finance Minister when he announced Ottawa would be scaling back its planned increases to premiums.

With a report from Tavia Grant in Toronto

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