Low unemployment rate puts pressure on growth of public-service wages

Ontario’s low unemployment rate and competitive labour market will put more pressure on public sector employers to raise wages, says the province’s fiscal watchdog.

In a report released Wednesday, the Financial Accountability Office said there are 645,000 workers employed by the provincial government or about 11 per cent of Ontario’s workforce.

This includes 88,000 employees working for Ontario g overnment ministries, 341,000 workers in education, and 221,000 in the hospital sector.

But that tally excludes hundreds of thousands of others on the public payroll such as doctors and those working at universities and social assistance agencies.

Financial Accountability Officer Peter Weltman’s report said the wage tab for the government increased by an average of 2.2 per cent annually between 2010 and 2017, down from increases averaging 6.7 per cent a year from 2001 until 2009.

Weltman added that over the past two years that average has jumped to 4.4 per cent annually “driven by sharp increases in both wage rates and employment growth.”

“Going forward, a variety of factors will make restraining the pace of government wage growth more challenging,” the independent watchdog said.

“Recent collective bargaining agreements in the Ontario public sector have provided for higher wage rates for public sector workers, averaging 1.9 per cent over the next several years,” he wrote.

“In addition, Ontario’s historically low unemployment rate and an increasingly competitive labour market are contributing to more unfilled public sector positions, particularly in hospitals.

To fill these vacant positions, government employers may be under further pressure to boost wages to compete for workers.”

Last month, the province’s unemployment rate was 5.9 per cent, which is making it challenging for employers to find workers.

Indeed, Weltman noted “the vacancy rate for hospital jobs has increased more dramatical- ly, rising from 1.9 per cent in 2015 to 2.8 per cent in 2017, suggesting that hospitals may be experiencing increasing difficulty hiring new workers.”

Newly elected Progressive Conservative Premier Doug Ford has vowed to reduce government spending by 4 per cent — or $6 billion annually. But Ford has repeatedly promised that “not one” public service job will be cut. The FAO report does not take into account minimumwage earners, who tend to work in lower paying service industries.

While the $14-an-hour minimum wage is scheduled to increase to $15 an hour in January, Ford pledged to scrap the raise to help businesses.