Thursday, November 27, 2014

Merci au Canada

For another lesson in economic incidence (the legal/contractual obligation to fund something tells nothing about the actual outcome; i.e. who actually pays it). A lesson Jon Ortiz of the SacBee is missing in his short piece;
A California-style plan to reduce public-pension debt has sparked protests in Canada’s Quebec province, including firefighters who have blocked the Port of Montreal.
Of course, it's all about us.
Canada’s CBC News reports that about 5,500 employees are on a one-day strike over Bill 3, which would require provincial workers pay half the cost of their retirement plans, much like the 2013 law signed by Gov. Jerry Brown. 
Some Quebec labor contracts currently require employers shoulder up to 70 percent of the cost. 
To which we say, ne plus y penser. That's just a bookkeeping detail. Here's the economic reality;
Public employers face a combined $4 billion unfunded pension liability, according to Quebec government estimates.
And Quebec government employees are going to pay (probably) every dollar of it in reduced take home pay. Here's why;
The union actions today follow news on Tuesday that Quebec provincial officials plan to ax about 1,500 jobs. The province employs about 60,000 workers.
Whether 1,500 is the right number of lost jobs can be disputed, but if it isn't, it can be changed. The taxpayer, even in Quebec, isn't a bottomless well. If Quebec's public employees prefer to take some of their compensation in the form of a deferred pension benefit, fine. But, they are the ones who will, eventually, pay for it.

Read more here:

No comments:

Post a Comment