Saturday, March 20, 2010

CBC News - Politics - Union head furious with proposed civil service cuts

CBC News - Politics - Union head furious with proposed civil service cuts

Okay, so maybe he's not FURIOUS, maybe he's just angry, or disappointed or just plain upset, but there are some things that are taken as fact that shouldn't be.

Fact 1? Private contractors are getting paid three times as much as a unionized employee for the same work. I'm sorry to tell you this Bob, but when you factor in the EDOs, the vacations (that a contractor doesn't get paid for), the benefits, sick time, pensions, all of a sudden the average employee that is being paid $20 an hour costs the government another $6 or $7 in benefits. All of a sudden, your three times turns into two times the price, which leads me into point 2:

Private contractors give the government something that a locked in, wage earning, union dues paying public sector worker can't give the government - flexibility. The government can contract the private worker to do 1 specific job or solve one specific problem. After that job or problem is done, then they can tell the contractor to kiss off or they can choose to hire that contractor to solve another problem if they can. What it comes down to is that the government could use the same amount of money that it would cost for one employee (say $50,000), and access the skill sets of 6 different people on a temporary basis to get work done.

See Bob, there is something that happens in the real world that you maybe don't understand, but that you should come a realization about. In a marketplace, it isn't the workers or their leaders who necessarily determine what one hour of a person's time is worth, it is the purchaser of that hour. If a purchaser isn't willing to pay that price for a particular worker, then they may find someone else who will take what they are asking, very much like if a worker doesn't like what they are being paid, they can always go somewhere else and get closer to what they think they are worth. If the purchaser can't get anyone at the price they want, then they may have to reevaluate how valuable that work actually is to a person. Similarly with an employee - if NOBODY wants to pay what they are asking, then they have to reevaluate their own asking price to determine whether it is worth it to take a position at less than what they want to work for. This happens automatically in the marketplace, as purchasers and sellers come together to fill their needs.

Bob is obviously concerned that the government is going to start filling unionized jobs with private sector employees. He is SAYING that he is concerned because the government is paying as much as three times too much for these workers, but here's the thing that Bob is missing - the government's budget was set last spring, and will be set again at the same level of spending next Wednesday (24th). So what the government is saying is that they won't spend more than what they projected to spend despite not filling those extra jobs. That means (assuming Bob's math is correct) a two thirds less bodies to replace the 480 being lost through attrition this year.

What I'd be concerned with if I were Bob is how a private sector worker could do work that much more efficiently than one of my unionized workers that it makes sense to hire one.

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