Saturday, April 9, 2011

Me too clauses no barrier - Public employees deserve a raise

Education Minister George Abbott suggested in the media this week that teachers could not receive a pay increase because several public sector unions had negotiated "me too" clauses. This would mean that any increase to teachers would have to be replicated in some other public sector agreements. (See Vaughn Palmer -

About time public employees get a raise, I say.

In the period between 2000 - 2010, the Cost Price Index increased 19%. Public sector wages increased 17%. Private sector wages increased 25%. And of course MLA salaries, in just 2007, increased 29%.

Public sector workers have taken an unfair pay cut this last decade, while private sector employees have beat inflation and politicians have felt fine giving themselves an extravagant pay raise.

Public sector employees support our local economies. Fair increases to public sector workers will mean increased spending at small businesses in our local communities. This is especially needed in the face of reduced consumer spending due to the HST.

And how is the economy doing? Here is one recent report from the National Bank of Canada: (

In January, the Canadian economy advanced at its fastest pace in 14 months. Between March and September, economic growth in Canada has been soft but since then the economy is running at a spectacular 5.6% annualized growth and is accelerating month after month (top chart)....

Consequently, the overall Canadian economy is poised for accelerated growth in Q1, running at a 4.2% annual pace so far in the quarter (middle chart). It turns out that this compares to the January BoC forecast calling for 2.5%. Moreover, the BoC also significantly underestimated Q4 2010 real GDP growth (2.3% vs. outcome of 3.3%). As a result, the level of Canadian real GDP at the end of Q1 2011 is 0.6% higher than what the BoC was expecting to see (bottom chart). While it is true that events in Japan will impact auto production in Q2 2011, we would expect a strong rebound in the second half of 2011 as the Japanese supply chain is restored. The fact of the matter is that the Canadian expansion is not threatened in an environment where the U.S. job market is strengthening.

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