More than half of Canada’s pensioned workers are now government employees, after the recession took a toll on private-sector jobs and accelerated companies’ needs to cut costs. In the public sector, is a similar scenario in store?
For the first time, the majority of Canadians who have workplace pension plans are government employees, according to new data that highlights the growing disparity between private and public sector workers as the baby boom generation nears retirement.
The recession, and in particular the massive job losses in factories that it caused, accelerated a long decline in pension plan membership in 2009. The number of private-sector workers with pension coverage declined by 2.1%, to just below 3 million (Statistics Canada). That means that more than half (3.03 million people) of the country’s pensioned workers are in jobs in the civil service or at government funded institutions such as universities and hospitals. A decade ago, public-sector plans represented 46% of all pension plan membership in Canada.
The numbers are likely to add fuel to the debate about the country’s retirement system. While job losses in hard-hit sectors have helped to drive down the number of employees with pension plans, many companies have also looked to cut costs by eliminating so-called defined benefit plans – which pay the worker a guaranteed income upon retirement – for new employees at least. No such trend is evident yet in the public sector, although there is political pressure to do something to curb the wage bill at the federal and provincial levels as governments seek to cut billions from their fiscal deficits. About 80% of public-sector employees have a workplace pension plan, while just 25% of the private-sector employees do.
The pension statistics reflect the impact of the recession that began in 2008. The manufacturing sector posted the greatest drop in private-sector pension plan membership in 2009 with a decline of 3.6%, as a result of rapid job losses in automotive and other industries. Canada lost nearly 600,000 manufacturing jobs during the recession…
Overall membership in pension plans increased a modest 0.2% in Canada in 2009, with the public sector accounting for all the growth. Statscan said 39% of all Canadian workers have a workplace pension plan.
