In recent years, municipal employees’ wage growth has constantly outpaced other unionized sectors. Since wages, salaries and benefits make up more than half of the operating expenditure for most municipalities in Canada, ever-growing municipal wages are putting pressure on local public finances.
In this edition of Graphic Intelligence, we look at the evidence of fast-growing municipal employees’ wages by using comprehensive data on collective bargaining covering 500 or more employees provided by Employment and Social Development Canada. Wage growth of municipal employees saw an average real wage growth of 0.53 per cent a year since 2011. In contrast, non-municipal public-sector workers saw, on average, a negative wage growth of 0.16 per cent during the same period, most likely due to government spending restraint. Clearly, that wage restraint hasn’t carried over to the municipal level. In comparison, the unionized private sector’s average wage growth has seen a paltry annual average of 0.24 per cent since 2011.
Wages and productivity should go hand in hand. When workers’ productivity increases, companies demand more workers. Higher demand for labour, therefore, pushes wages up. However, there is little evidence that increases in municipal employee wages reflect increases in productivity. Instead, the mechanism of collective bargaining between unions and some public employers to solve their disputes seems to influence wage growth.
To read more about the municipal wage growth changes, read the “Fast-growing Municipal Wages Point to Need to Revisit Labour Laws” op-ed by Parisa Mahboubi & Jacob Kim.