If you want to know how hard times are hitting government workers, there’s a group of frank, friendly, tuned-in guys you could call up: Ottawa luxury car dealers. What’s it like selling cars in a city dominated by federal employees during a recession?
“There has been no recession,” says Paul Giacomin, owner of the capital’s 417 Infiniti Nissan dealership, as far as his bottom line is concerned; he calls Ottawa a “strong city.” “Business is up for us. Very up. In fact, it’s up about 30 per cent from 2008,” testifies sales manager Paul Renaud of Audi-Porsche dealership Mark Motors West. “This year has been great,” reports Neil Donnelly, new-car sales manager at Tony Graham Lexus. “We’re having a record year. By far. I made three different forecasts at the start of the year: a totally optimistic forecast, a semi-optimistic one, and a flatline, which would have been fine, since we also set records in ’08. We’ve blown through the most optimistic one.”
Not everybody is so ebullient; some Ottawa dealers in what the Europeans call the “executive car” class confess to merely matching or approaching 2008 numbers. But mostly the showrooms are busy, and it’s no secret why. “Ottawa’s a little isolated,” admits Renaud; when there’s a short-term economic shock, “you know government workers are gonna keep getting paid.” “We didn’t have that good a year, but definitely, being in a government town helped a lot,” says Bel Air Lexus Toyota sales manager Marc Durocher. Infiniti’s Giacomin attests that dealers in government-dominated Quebec City are doing almost as well as he is; others aren’t. “Rightly or wrongly, this city hasn’t managed to attract private sector jobs, and as a result we’ve been very much shielded from the impacts that might have happened elsewhere.” Donnelly echoes him, right down to the adjective: “I would say we’re definitely shielded.”
It’s not new for people to use bubble, or shield, or island metaphors in talking about government towns like Ottawa. But these days, the nation’s capital feels like the town the recession forgot. Unemployment stands at just 5.6 per cent, well off the national rate of 8.6 per cent. The Teranet-National Bank house price index grew in Ottawa by a healthy 2.8 per cent in the 12 months leading up to August; for the country as a whole, it was down 3.4 per cent. Indeed, Ottawa stands better than average in almost all the categories of the RBC Economics “City Scorecard.” Even measures that have declined are healthier: non-residential building permits may be down 22 per cent from last year in Ottawa, but that’s still better than the national number of minus 26 per cent.
Rarely in recent Canadian history has the sense of separation between the public and private sectors been felt so keenly, and not just in Ottawa. On Nov. 4, Ontario Premier Dalton McGuinty admitted that public sector workers had been “sheltered” from economic chaos, saying that, “By and large it’s been a private sector recession, not a public sector recession.” He even mused about repeating the despised “Rae Days” exercise of 1993, when civil service and government employees were forced to take 12 days of unpaid leave.
Whether or not “Dalton Days” are ahead, the numbers confirm his take on the “sheltered” public labour force. Statistics Canada says that over the 12-month period between October 2008 and October 2009, Canada lost almost half a million jobs. Nearly 450,000 of these were in the private sector, where employment was off a full four per cent for the year. The figure for the public sector was just 1.6 per cent, and more than half of that drop-off was recorded in the last month of the sequence. For most of the past year, the public sector was fighting the recession to a draw; indeed, despite the slight net job loss, public sector employment has risen in more months than it has fallen.
And it’s not just job security, but wages as well. Another barometer of relative economic health in the public and private camps is the federal Labour Department’s tracking of major collective bargaining settlements. For the third quarter of 2009, annualized wage increases in the public sector resulting from new union deals outpaced those in the private sector by 2.1 per cent to 1.5 per cent. For all of 2009 so far, the public sector is ahead 2.5 per cent to 1.9 per cent. Those may not look like big differences, but don’t forget the power of compound interest. Over a three-year collective bargaining agreement, a 0.6 per cent yearly advantage translates to almost two full percentage points.
Economists reassure us that such disparities tend to even out over the long run, or else the queues for public sector jobs would get longer and longer without limit.
Nonetheless, the recession has arrived at the end of what was already a pretty good run for the public side. Between 2004 and 2008, across Canada, employment in public administration jobs grew faster (2.9 per cent per year) than employment in the economy as a whole (2.2 per cent). Annual growth was also faster in public sector employee earnings (3.9 per cent versus 3.4 per cent). Both federal and provincial employees came out well ahead of Joe Private on both measures, and the data on union wage settlements confirms the story: public sector workers gained more at the bargaining table not only in 2009, but also in 2008, 2007, and 2006.
