As Ontario's salary freeze ends, big raises get chilly reception
Liberals hope to stave off public backlash over executive pay hikes
Managers and top executives in the Ontario public sector haven't had a raise in five years, but with a salary freeze about to be lifted, they're aiming to make up for lost time in a big way.
Fourteen colleges are proposing raises of 30 per cent or more for their presidents. Metrolinx is proposing to boost its CEO's salary by as much as $118,000 a year. The province has approved a new merit-pay program that could see 80 top executives at Ontario Power Generation earn an extra $8 million from 2019.
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Such six-figure raises are not likely to be terribly popular among voters comparing their own paycheques, while watching their hydro bills skyrocket. It has the potential to create yet another pocketbook political problem for Kathleen Wynne's Liberal government.
The context of how Ontarians feel about economic issues right now is crucial.
The broad statistics show the province's economy is actually doing quite well. Ontario's GDP grew 2.5 per cent in 2015 and although the final figures aren't in yet, it's on track to grow at the same rate in 2016, well above the growth rate in the Canadian economy as a whole. The province's unemployment rate is down to 6.4 per cent, and hasn't been this low for nearly a decade.
But those rosy figures mask a few key realities on the ground.
First of all, individual voters don't experience a single "Ontario economy," they're affected by the local economy where they live. The economic growth of the province as a whole is being driven predominantly by a boom in Toronto. The small cities and rural areas of Ontario are limping along. The unemployment rate also shows significant regional variations within the province.
Pollsters are telling me they're finding a general financial disquiet among a significant chunk of Ontario's population. Look at the results of an Ipsos poll last December suggesting 65 per cent of Ontarians feel the national economy is in good shape, but only 45 per cent describe the province's economy that way, and only 27 per cent expect things to get better in the next six months.
Workers seeing only slim wage gains
The economic indicator that has arguably the biggest implication for the public mood toward wage increases for civil servants is what's happening to their own wages.
According to Statistics Canada, average weekly earnings in Ontario rose a total of just 7.8 per cent from 2011 to 2015 (the latest year for which figures are available). Average hourly wages rose by even less. Meanwhile, the costs of running a household — mortgage or rent, child care, transportation, and, of course, hydro bills — keep going up.
A voter who's seen his or her wages barely keep up with inflation over the past five years is hardly going to have much sympathy for a public-sector CEO who's in line for a 50 per cent salary hike, even if that salary has been frozen for five years.
The PCs are clearly hoping to fuel such sentiments among voters. PC transportation critic Michael Harris appeared at a news conference Wednesday at a podium adorned with the sign, "Will You Get A $118,000 Raise This Year?"
The NDP is also picking up on these themes. "Most Ontarians haven't seen a real increase in pay in years," said the party's finance critic, John Vanthof, in a statement Tuesday. "It just isn't fair for the executives of our public utilities and institutions to be raking in huge salaries, raises, and bonuses while so many Ontarians are struggling to put food on the table."
Salary freeze impact mostly symbolic
The freeze on public sector managers and executives was always more important for its symbolism than for its savings. The government estimated back in 2012 that it would cut costs by just $12 million a year. That's about 1/10,000th of the provincial budget. But the government needed the freeze to give it the political capital to negotiate, or even impose, freezes among unionized public sector workers.
The Wynne government has put out rules to guide the executive salary increases once the freeze lifts this spring. If the Liberals feel the rules aren't being followed, ministers can reject the proposals, as Advanced Education Minister Deb Matthews did last week to the colleges.
"This plan strikes an appropriate balance between being able to hire and retain talent and ensuring public transparency and appropriate salary caps," said Matt Ostergard, a spokesman for Liz Sandals, who controls the government's purse strings as the president of Treasury Board.
The freeze on executive compensation ends March 31, which is coincidentally the deadline for the government to publish the Sunshine List of public sector workers earning more than $100,000, an event that annually generates salary envy among the 93 per cent of Ontario workers who earn less.