Wage ero­sion

The Compass - - EDITORIAL - This ed­i­to­rial orig­i­nally ap­peared in The Tele­gram

It’s prob­a­bly not much of a sur­prise: with dra­matic tax in­creases in the last pro­vin­cial bud­get, this prov­ince’s con­sumer price in­dex (CPI) has in­creased more than any­where else in Canada.

In a sin­gle year, the cost of liv­ing in this prov­ince has soared by 4.1 per cent, al­most tripling in­fla­tion in other prov­inces. The na­tional av­er­age for in­fla­tion across the coun­try was 1.5 per cent; New Brunswick, the next-clos­est to us, was just 2.3 per cent.

The cul­prits? Well, in­creases in the re­tail sale tax, the new gaso­line tax, and the tax on in­sur­ance. (The CPI doesn’t fully take into ac­count other tax and fee in­creases put in place by the gov­ern­ment.)

That’s truly sober­ing, but it’s also only half of the story.

Be­cause it’s not only what New­found­lan­ders and Labrado­ri­ans are pay­ing, but, at the same time, what’s hap­pen­ing to what we are earn­ing.

For that, you have to look at Statis­tics Canada’s track­ing of jobs in this prov­ince.

The Statis­tics Canada num­bers are par­tic­u­larly alarm­ing, given that kind of sin­gle-year in­fla­tion­ary in­crease. First of all, be­tween De­cem­ber 2015 and De­cem­ber 2016, the prov­ince lost 2,000 full-time jobs and 1,800 part-time jobs.

The peo­ple who lost those jobs will cer­tainly have a hard time get­ting by the con­sid­er­able in­fla­tion­ary in­crease in costs.

But with an in­fla­tion­ary in­crease of 4.1 per cent in the con­sumer price in­dex, even those lucky enough to keep their jobs are go­ing back­wards.

The av­er­age year-over-year in­crease in full­time salaries - com­bin­ing both the pub­lic and pri­vate sec­tors - was only 2.4 per cent, while for part-time em­ploy­ees (and there are al­most 40,000 of those in the prov­ince) it was even worse. Part-time em­ploy­ees, year over year, ac­tu­ally saw their wages slide back­wards by 8.3 per cent.

In real terms, the av­er­age hourly wage for part-time em­ploy­ees fell from $17.20 an hour to $15.77 - in a sin­gle year.

The Statis­tics Canada job met­rics in this par­tic­u­lar sur­vey don’t cap­ture it, but there’s sub­stan­tial anec­do­tal ev­i­dence that there’s a sig­nif­i­cant re­duc­tion in part-time hours as well, which might ex­plain the drop in hourly wage.

Put it this way: in a year with a sig­nif­i­cant in­crease in the cost of liv­ing, wages have not kept up for full-time em­ploy­ees.

For part-time em­ploy­ees, the picture is more fright­en­ing: an 8.3 per cent de­cline in av­er­age hourly wages, a drop in the num­ber of hours worked, and a more than four per cent in­crease in costs.

Most fright­en­ing of all? The 3,800 peo­ple whose jobs have dis­ap­peared, but who are also see­ing the in­crease in the cost of liv­ing.

These are alarm­ing met­rics - and the sit­u­a­tion may get even more alarm­ing as the prov­ince moves ahead with what Pre­mier Dwight Ball has threat­ened will be a tough bud­get this year.

The op­tions for tax­a­tion are nar­row­ing and our pro­vin­cial gov­ern­ment’s tab is still grow­ing.

You can’t get blood from a turnip.

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