PUBLIC SECTOR EMPLOYMENT MOCKS THE PRINCIPLE OF EQUAL PAY FOR WORK OF EQUAL VALUE.

How to reduce the pay gap between regulated and unregulated sectors? Free-market wages can’t be raised by government decree to government levels. Doing so would, by definition, eliminate the free market, whose profits are needed for taxes to support the overpayments to the government-protected class. To honour the equal-pay principle, the government-protected class needs to draw down its numbers, through smaller government, privatization of Crown corporations and deregulation. What’s left of the public sector could then benchmark its salaries to private sector counterparts, so that a librarian, clerk or electrician working for a government receives the same pay as his counterpart in the private sector.

Ironically, the principle of “equal pay for work of equal value” is truly observed only in the freemarket precincts of the economy. Unlike the government sector, where often-coddled employees receive equal pay for work of lesser value, where they receive higher pay on the basis of seniority, and where positions are routinely handed out as rewards on the basis of political patronage, remuneration in the free market is based strictly on merit that comes of competition.

Take the retail sector, which represents 11 per cent of all workers. Because customers expect excellent service from the retailers who offer them goods and services, and because they can easily take their business elsewhere if retailers don’t deliver, employees who don’t perform are left behind — either dismissed or paid less when their work is perceived to have less value. This is the atomized free market: employers have numerous applicants to choose from and employees have numerous employers to work for. The result of a system where pay raises and promotions are based on the merit of the employees, and where businesses routinely go bankrupt when their staff fails to perform, is higher pay for work of higher value, lower pay for work of lower value, no pay for work of no value. The equal-pay principle can’t apply where an employee is secure regardless of his performance.

Income inequality comes in forms other than the equal-pay principle, such as in the one-percenter meme, and it extends beyond industries formally regulated by government. But not far beyond. The many sectors in thrall of government — those that contract to government, lobby government and receive subsidies from government — are very much home to the one per cent.

Income inequality is inevitable: Some people are more capable, some harder working, some luckier, some more willing to take risks, and they reap the rewards that can result. But much of the inequality, and many of its greatest excesses, come not of talent or luck but of government machination. That, too, is inevitable.