I’ve mentioned before how the Ontario Premier has imposed a wage freeze on nonunion public sector workers, and “asked” unionized public sector workers to voluntarily agree to a wage freeze. So far, surprise 
of surprises, the unionized workers are not giving McGuinty what he wants, nor are interest arbitrators imposing wage freezes into new public sector collective agreements.
I noted that labour relations people are not very sympathetic to government imposed wage freezes on public sector workers because they recognize that governments make choices about where to spend taxpayer money. For example, they can give corporate tax cuts or give wage increases to their employees. Understandably, the workers don’t usually take too kindly to being told they need to take a wage cut to pay for a corporate tax cut.
In an editorial in the Star today, the President of the Ontario Public Service Employees Union discusses there issues. Here are the hilights of his argument:
- the proposed wage freeze would save the government $1.8 billion per year.
- the government has introduced corporate tax cuts that cost the government $2.4 billion per year
- Canada’s taxes are already low compared to other advanced industrial nations: KPMG found that in 2010, Canada’s “total tax index” was 2nd lowest of its 10 competitor countries, and Toronto has lower tax rates for businesses than all U.S. and European cities studied
- Despite 10 years of corporate tax cuts at the Federal and Provincial level in Ontario, investment has actually declined. That refutes the conservative claim that tax cuts increase investment.
- Every dollar spent on a corporate tax cut creates only 30 cents of economic activity, whereas measures that put an extra dollar in the hands of low income workers boosts the economy by $1.70
The argument, therefore, is that policies that put money into hands of workers fuel the economy more so than do policies that lower corporate taxes.
Do you buy this argument? Or, do you believe that the Ontario government should attempt to pass a law ordering a freeze of public sector wages?