NUPGE's Larry Brown says tax cuts benefitting mainly the wealthy are the cause of current government deficits and it will be unfair and damaging to the economy if public sector workers become scapegoats and are forced to pay the price in lost jobs and pay cuts.
By Larry Brown
National Union of Public and General Employees (NUPGE)
Ottawa (3 Nov. 2009) - Let’s start with the most obvious of facts. Canada, like most of the world, is still struggling with the effects of the Great Recession.
Technically, the recession may be over, although that’s not certain, but its effects are still being felt. But, does the fact that our economy tanked, and most governments are facing deficits, justify an attack on the wages and jobs of public employees?
Apparently so. It’s pretty easy these days to find commentators – and governments themselves – assuming that public sector jobs and wages are automatically due to be slashed. The Toronto Globe and Mail ran a story recently by Derek DeCloet with the headline Civil servants: It's time to share the pain, which captures that particular point of view and displays all the meanness and spite that underpins it.
Mr. DeCloet is particularly worked up by the fact that Ontario public sector workers got a wage increase late in 2008. He finds it offensive that Dalton McGuinty's government gave more money to public employees at a time of “deflation fear, market panic and widespread carnage in the private sector.”
Deflation fear, market panic and widespread carnage in the private sector?
Oh, of course, public sector workers should definitely pay the price for that. What could be clearer? Public sector workers must have caused all of these things, right? Of course they didn’t. Well then why is it a reasonable leap from "deflation fear, market panic and widespread carnage in the private sector" to an attack on public sector wages and jobs?
Far too many workers lost their jobs or had to take a wage cut over the last year. That’s an awful situation and, not incidentally, those people and their families are going to need the support of strong public services more than ever.
But the vast majority of workers in the private sector did not lose their jobs and did not take a pay cut. This ‘carnage’ was not visited on every private sector worker. So how can it be remotely logical to say that because the minority of private sector workers suffered as a result of the collapse of the private sector all public sector workers should pay the price?
Public sector employees serve everyone from the richest to the poorest. It would be silly to argue that, because the CEOs and senior bank officers helped themselves to huge wages and bonuses during this recession, public employees should get the same huge salaries and bonuses. It’s equally inane to argue that, because too many private sector employees lost jobs or wages, the public sector ought to follow suit.
The deficit argument
Ah, but we have a fiscal deficit, so we can’t afford public sector wages or jobs or services, some argue. Well, wait a minute. Were taxes cut in Canada, federally and in most provinces, over the last couple of decades? Of course they were. Were taxes cut by large amounts in Ontario? Of course they were.
A certain Premier Harris comes to mind, and the McGuinty government has cut taxes too, even though it has been proven over and over that the greatest benefit by far from personal tax cuts goes to the wealthy. There is no real argument about that any more.
And our corporate tax rate has been cut and slashed and cut again so that companies in Canada pay substantially less in taxes that they used to. The fact is a large portion of the current deficits are the result of falling revenues caused by tax cuts over the last decade.
If we had a fair tax system we wouldn’t have core deficits – even in this Great Recession. So if tax cuts, which benefit the wealthy and the corporations, are the main cause of our deficits, why is it an automatic assumption that we need to resolve those deficits through cuts to public services, and especially the wages and jobs of public sector workers?
To read some commentators, or listen to some governments, you would get the impression that for public sector workers to defend their wages is unfair and unacceptable when there is a deficit. But the alternative is this: taxes are cut for the wealthy and the big companies, governments get into deficits, and the public sector worker is expected to take wage cuts as a result. The public sector employee is expected to bear the cost of the tax cuts, in other words.
Theoretically, everyone shares in the tax cuts, although for most Canadians the effect of two decades of tax cuts is unnoticable. But for public employees, the price of that tiny ‘benefit’ is the loss of wages or even their jobs. Public sector workers are asked to pay a special price for the privilege of serving the public; they get to lose their jobs or some of their wages if the government decides to cut taxes. We’re all in this together? Not with this approach.
Singling out workers
It is interesting that the argument about public sector restraint always focuses only on people who work for the government.
Governments buy a lot of things. When did you ever hear a commentator argue that times are tough and so governments should pass a law requiring the suppliers of computers or desks or staples to cut their costs and sell these things for less? When did we ever see the landlords that rent to the government required by law to cut their rents?
If times are tough, the people who have to answer for that, apparently, are only those who work for a living, not those who sell things or do consultant work or provide office space for rent.
Finally, the argument that now is the time for governments to cut the wages or the jobs of those who work for the public is economically idiotic.
Marc Carney, the respected Governor of the Bank of Canada, has noted that the economic recovery is weak and tentative and has relied on public sector spending so far. If it weren’t for the public sector we would still be in very scary shape. The private sector hasn’t started to pick up the slack yet. Most agree that stimulus programs must be continued. And Mr. Carney has argued that consumers need to start spending for the recovery to take hold.
But what is the sum total of plus $2 billion and minus $2 billion? Zero, if my calculator is working. So if governments spend $2 billion on officially labelled stimulus packages and then cut $2 billion under what are called restraint measures, it’s the same thing as not doing anything to stimulate the economy. Everyone agrees that would be a dangerous move.
Public wages boost local economies
Where do our commentators think public sector workers spend their money? They spend it in their communities, giving a boost to local businesses and local economies. The economy needs families to start spending again, and if the ability of public sector workers to be consumers is cut, the economy will flag even more than it has.
It has been said, by wise observers, that common wisdom isn’t very common. Thus, the common wisdom that it’s time to cut the wages and jobs of public sector workers isn’t very wise after all.
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE