If government workers were compensated at private sector norms, Canadian families would have an extra $3,110 per year to put towards their own retirement, according to analysis released by the Canadian Federation of Independent Business (CFIB).
Taking into account wages and benefits, federal, provincial and municipal government employees are compensated between 25 to 42 per cent above the private sector, it said. If they were compensated at private sector norms, Canadians could save $27 billion annually, $3,110 per family (where both parents are working) or $1,555 per worker.
"It's hard for Canadians to buy the argument for higher payroll taxes when our governments have created a two-tiered pension system, where the majority subsidize the nest eggs of the minority," said CFIB's executive vice-president Laura Jones. "While small business owners agree on the need to help Canadians to save for their retirement, they reject the argument that the only solution is to hike payroll taxes on employers and their employees."
There is growing evidence an increase in mandatory CPP/QPP premiums would have a negative impact on Canadians, said the federation.
Respondents to a recent CFIB member survey in Ontario rejected the idea of a separate mandatory Ontario Pension Plan — 65 per cent said such a move would force them to freeze or cut salaries and 42 per cent said they would have to reduce staff.
A model being proposed by Prince Edward Island Finance Minister Wes Sheridan for a mandatory CPP/QPP hike premium could result in a loss of 500,000 person years of employment and a one per cent drop in wages, said the federation.
"Even polling done by public sector unions tells us that a majority of Canadians who are struggling to save for their retirement simply can't afford to," said Jones. "Hiking payroll taxes won't help them, but give government a pass on addressing overly generous public sector wages and benefits."
© Copyright Canadian HR Reporter, HAB Press. All rights reserved.