After years of criticizing the government for squandering its oil revenues, it’s hard to avoid the temptation to say “we told you so.”
But the fact remains, this province now finds itself short on royalties and unable to sustain the extra public services and paycheques it has created over more than a decade of good times.
On Monday, the government announced an across-the-board hiring freeze. It’s the opening gambit in a plan to mitigate up to $4 billion in deficits over the next three years.
The unions, predictably, are restless. Canadian Union of Public Employees (CUPE) representative Wayne Lucas calls it an “extremely provocative” move that interferes with contract negotiations.
Carol Furlong is a little more willing to compromise.
“At the end of the day, I guess, there’ll be a price to pay and that price will be that the services will be somewhat reduced and it will take longer to get things done,” said Furlong, head of the Newfoundland Association of Public and Private Employess. “But from our perspective, if that means that we can save jobs, then that’s a better alternative.”
If Premier Kathy Dunderdale hopes to trim government ranks by attrition, however, it’s going to take a while.
In a Fraser Institute study of labour markets in Canada and the U.S. released last year, Newfoundland scored highest overall in terms of the ratio of public over private jobs.
The study found that public-sector employment represented 29.5 per cent of total employment — nearly double that of Alberta.
This is not a good thing.
But it’s not just a Newfoundland problem.
The Atlantic Provinces Economic Council noted in January 2012 that between 2001 and 2010, Atlantic Canada as a whole created nearly four times as many jobs in low-wage industries than it did in high-wage industries. A net increase of 11,000 new jobs in high-wage industries was primarily boosted by an expansion of the public sector.
In a nutshell, an explosion in public-sector jobs has masked a relatively modest growth in high-level private sector employment. That leaves government jobs significantly more vulnerable.
The premier has not helped the government’s image in this respect. Over the past year, she’s announced a steady stream of senior appointments, including one only hours after the announced clampdown on hiring.
The unions are right in one respect: the government has been sending mixed signals for months.
But they’re also right to be nervous. Because no matter how you slice it, the civil service is a bloated beast. It’s long overdue for some serious dieting.
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Newfoundland only has a government economy ---- much like the "centralized planning" system of the former Soviet Union, but without even a "Lada" to show for it.