The Star's Martin Regg Cohn's Latest Column, Apparently Public Sector Salaries Haven't Increased So Much

I was reading Martin Regg Cohn's latest column on Ontario public sector compensation and I got to wondering about some of his stats, where they came from and what they mean:

"Since the Liberals took power in 2003, average public sector wages increased by 28 per cent compared to the provincial average of 24 per cent, while inflation was 17 per cent. With wages soaking up $55 billion a year, it is mathematically impossible to get a grip on public finances without focussing on public servants in the short term."

Now first I'll point out that the public sector is quite large in Ontario, so if the public sector wages have increased by 28% versus 24% for the provincial average, the private sector average will be somewhat lower than 24%, maybe only 21%. So minus the 17% inflation that would be only a 4% increase for the private sector versus 11% for the public sector. Looked at that way, things don't seem as comparable.

Further, what public sector wages does this 28% stat refer to? All public sector workers in Ontario, including federal and municipal? Over the past few years many municipal workers (excluding fire and police) haven't done that great (I think Hamilton's city workers are on a 1.5% salary increase per year although I should check that). Ontario teachers are coming off a four year deal with approximately 3% salary increases. I would be curious to know what the stat for teachers is since 2003. Plus for physicians, how do they fit in? Are they included in the public sector wage stats? Their increases over the Dalton McGuinty era has been nothing short of stunning compared to private sector increases.

One last point about these stats, I'm guessing they are not reporting on pension benefits. Given that we're in an era of ultra low interest rates, the cost of providing defined benefit pensions in the public sector is high compared to the defined contribution pensions or no pensions in the private sector. Factoring in the present value of these pensions would no doubt further warp the 28% stat.