Tuesday, March 10, 2009

Federal Politicians Should Adopt CAW Cuts...For Themselves

Canadian Auto Workers just renegotiated their contract with GM. The new deal would see them making significant concessions in a bid to help GM qualify for much needed government bailout money. Whereas public sector employees are typically seeing annual increases of 2-3% over the next three to four years, the CAW has negotiated a wage freeze until 2012 with no cost of living increases. Additionally workers would lose a $1,700 annual bonus and a week of paid vacation time. The deal also calls for workers to contribute more for their health care benefits, and that includes pensioners.

Some are arguing that it isn't enough, with the Toronto Star reporting that earlier this week Tory MPs on a parliamentary committee were "ridiculing" CAW President Ken Lawenza and economist Jim Stanford for the union's wages. Obviously GM is in serious trouble, with revenues insufficient to handle expenses...hence the need for the bailout. Its a situation politicians should understand well, given that Ottawa has just committed to spending almost $100 billion more than revenues will support over the next several years. The actual deficit figure is projected at $84.9 billion over 5 years, but with Jim "Mr. Magoo" Flaherty providing the projections...well pardon me for adding a bit of a cushion to Enron Jim's numbers.

Seeing as GM's fiscal state so closely mirrors that of our federal government, to say nothing of the provinces...perhaps our government could show some real leadership on this issue? How much do-re-mi are federal MPs willing to forgo in wages and benefits to help Canada weather this economic storm? Would members of parliament be willing to freeze their wages for the next 3 years? How about cutting back on travel expenses?

We have 308 MPs on the federal payroll. GM has cut their labour force by about 3,000, going from 10,000 to 7,000. Why not reduce the number of seats in The House by 10%? I'm sure we could get by with 270 or so MPs. We could cut back on pensions paid to retired politicians as well, and pare the number of Senators.
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GM workers do earn decent cake, no question. Their hourly rate of around $34 per hour equates to an annual salary of about $70k without taking any overtime into account. Still its not even close to what a backbencher in Ottawa makes, about $150,000 with additional compensation for committee work and a slew of perks. Some bristle at how well auto workers are paid, for a job that requires no special education or training...similar in a lot of ways to politicians. There are no special degrees or certification needed to vie for a seat in Ottawa either.

This global economic crisis is claiming a lot of victims, with hardly any industry or market segment being spared. About the only growth industry left is politics. Ottawa is planning on racking up a major debt load as it continues business as usual for those employed in the industry that is Canadian government. Perhaps its time for Stephen Harper to lead by example. It would seem the truly conservative thing to do.

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