Labour Matters

The Caledon Institute of Social Policy has a brief research note showing that taken together, Employment Insurance premiums and Canada Pension Plan contributions net of federal non-refundable tax credits have increased only modestly in real terms since 1995, and have been essentially flat since 2002.

The research note also points out that Canada's social security contributions (so-called 'payroll taxes') are quite modest when stacked up against other OECD countries.  For a single worker earning an average income, Canada's social security contributions as a share of average gross earnings placed it 24th out of 32 countries, below the US and well under the OECD average.

The Canadian Union of Public Employees has released an extensive analysis of public-sector and private-sector wages entitled, Battle of the Wages: Who gets paid more, public or private sector workers?  The report joins several other recent studies critical of the Canadian Federation of Independent Business’ own analysis of census data purporting to show large positive pay differentials in the public sector.

Using detailed occupational data compiled from Statistics Canada’s 2006 census, CUPE's study finds that average salaries for comparable occupations in the private and public sector are similar on the whole, with a small overall public-sector pay premium of 0.5% entirely due to a smaller pay gap for women in the public sector.  Women working public-sector jobs on average earn 4.5% more than their private-sector equivalents, while men are paid on average 5.3% less in the public-sector than in similar occupations in the private sector. 

Women belonging to similar age groups and working identical jobs as men tend to be paid less, but the pay gap with men is significantly smaller in the public sector than in the private sector. 

On the whole, lower-paid occupations, many of which are female-dominated, tend to be better paid in the public sector than the private; for higher-paid occupations, in which men are over-represented, pay tends to be higher in the private sector.  The study notes that forcing public sector wages to follow private-sector norms would increase inequality between men and women, and between high and low-income earners, with very little overall savings for government.

CUPE's report also touches on pension and benefit cost differentials, and contains an annotated bibliography of studies of public and private-sector pay differences in Canada, the United States and western European countries. 

The Center for Economic and Policy Research (CEPR) has published a short research note offering a comparative analysis of the decline in unionization among OECD countries.  Using Gosta Esping-Andersen's three worlds of welfare capitalism typology, John Schmitt and Alexandra Mitukiewicz find that the change in union coverage and union membership rates is strongly influenced by national political traditions (social democratic, Christian democratic or liberal market).  Intended to respond to facile arguments about inevitable union decline amidst the universal forces of 'globalization' and technological change, the note reveals a broad correlation between changes in unionization rates and welfare state type, without delving into the specific political and economic variables that might be responsible (e.g. changes to labour law, financial deregulation, degree of 'deindustrialization', etc).  A useful piece nonetheless, and an addition to CEPR's growing list of research studies on (predominantly US) unions.

Unions are working people’s anti-theft device, so goes the bumper sticker.  In a new book entitled, Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers, award-winning journalist Ellen Schultz has written an indispensable account of the organized kleptomania confronting workers’ pensions in contemporary corporate America.  

Schultz, one of the Wall Street Journal’s investigative reporters “put on earth so that they and the Wall Street Journal editorial writers would cancel each other out,” provides a richly-detailed and deeply-informed account of the systematic looting of pension plan assets that frequently passes for pension fund management in the corporate world.  With the connivance of pension regulation, income tax law, actuaries and the pension consultant industry, companies have been able to turn their pension plans into cash cows pumping up share prices and executive compensation.  Schultz's account reveals how firms have managed to monetize pension surpluses to convert pension fund assets into corporate earnings, while a relentless assault on pension benefits for employees and retirees  -- in good times and bad -- has subsidized the ballooning costs of executive pensions. 

Schultz offers a service not just in documenting how firms are managing workplace pensions for their own short-term interests rather than plan members.  She also adds another chapter to the story of how inequality was able to grow so dramatically in the last 30 years.  We already have numerous accounts of how financial engineering and corporate restructuring devastated workers and communities while richly rewarding executives (most recently Jeff Madrick's dramatis personae entitled Age of Greed).  Schultz's book focuses on the particular part played by corporate pension funds in this sordid history.

While she describes the US, Schultz writes that “the retirement industry has exported its tactics, using them to achieve similar outcomes in retirement plans in Canada” and elsewhere.  We need a similar exposé for this country.  Until then, the book is instructive at a number of levels and well worth a read.

A new Conference Board of Canada editorial presents unions in a modestly positive light.  By contrast, CBC has recently aired wildly anti-union rhetoric, earning itself letters of complaint from several unions.