Talk is abound that civil service pensions are about to be reduced by the federal government in the coming spend thrift budget. Public Service Unions are crying bloody murder. The government, in a fiscal nightmare of partially its own creation, has NO other choice. There are five reasons I can think of that this is the right move, but I’m sure there are more.
1. We no longer have the money and we can’t cut anywhere else. The federal government has made it clear that it will not cut transfers to provinces, subsidies, and I doubt they will touch the defence budget. This means that reducing the operating expenses of the government is the only way out of a spiral of deficits and debts. Canadians no doubt will not tolerate cuts to healthcare our beloved socialist welfare state – reducing the cost of the public service is the last resort available to Ottawa.
2. Paying Public Servants more than the Private Sector is waste. If we want talented, bright, and experienced professionals to be attracted and stay in the public service we should offer salaries and benefits to them comparable to the private sector – NOT MORE. It’s just insanity to pay a group of professionals significantly more than the free market going rate. That is a needless waste of taxpayers money.
3. There’s a reason public servants retire earlier. According to a 2007 study, federal public servants retire earlier. No kidding. Who can blame them? If the pension was great enough why work longer? And hence the other problem this introduces for the federal government. A productivity gap emerges with how we are managing our public service. Public servants don’t work as long at the end of their career – this is the stage that is most generally the most beneficial for the government. In effect, the government is creating incentives for experienced high value workers to leave before they should.
4. Dropping Public Servant pensions will put pressure on reducing MP pensions. Public Servants aren’t the golden goose of pensions – Members of Parliament have those. The unions are right to point out that MPs should be willing to cut their own pensions before they go after theirs. Truly, I look forward to them pointing that out every time. Targeting public service pensions will put the needed pressure to reduce MP pensions that run in the +$100k range. Shouldn’t MPs have the wherewithal to secure their own retirements independently like millions of other Canadians? The truth is that pushing on this public service pension front, will also push MPs.
5. Lower Pensions mean higher salaries. I have to tell you that one of my greatest frustrations being a member of the modern day work force is the concept that many have that benefits should trump salaries. Employer after employer will use increases in benefits to justify lower salary increases. Dropping pensions will free up resources no doubt that should go to slaying deficits. But I would argue that it also gives future flexibility to increase the salaries of top performers in the public service who have gone unrecognized.