Ontario needs more public sector workers and might have to raise wages to attract them: FAO

Ontario will need more than 138,000 new workers in the public sector, long-term care, home care and child care over the next five years and may need to increase wages to attract enough people, the province's financial watchdog says.

The Financial Accountability Office (FAO) released a report Wednesday on public sector compensation and said Ontario is already facing high vacancy rates in those sectors and will need to both address those immediate challenges and ensure there are enough workers to fulfil its promises for the future.

The Progressive Conservative government has committed to building 30,000 new long-term care beds by 2028 and increasing the daily hours of direct care, as well as expanding the home care system and creating 71,000 new child-care spaces as part of the incoming $10-a-day program.

In a statement, a spokesperson for the president of the treasury board Prabmeet Sarkaria said, "Today, the FAO confirmed that salary increases for unionized public sector employees have been consistent over the last decade. It also shows that the number of workers in hospitals has increased and will continue to grow under our government, compared to the previous Liberal government."

The statement from spokesperson Ian Allen went on to reference steps taken to bolster the health care workforce, including giving nurses a $5,000-retention bonus and temporary wage enhancements for personal and development service workers.

"We'll continue to make sure that we make the right investments where they're needed so that the services Ontarians need and expect are there for them now and in the future."

But overall, public sector wage growth in Ontario is below inflation and below average raises in the private sector, as well as municipal and federal employees in the province, the report said.

"As higher wages attract entry into the workforce from other sectors, provinces or countries, or by those recently retired or out of the workforce due to other reasons, the province may need to increase wages beyond the FAO's base case assumption, to ensure sufficient staffing to maintain existing public services and meet program expansion    commitments," the report said.

The government does have some flexibility, financial accountability officer Peter Weltman said at a news conference, noting Ontario just reported ending 2021-22 with a $2.1-billion surplus.

"There is some fiscal room to manage or to certainly try to address some of the risks that we've highlighted in this report," he said. "How the government chooses to use that fiscal room, of course, is up to the government."

That law is set to save the province $9.7 billion on public-sector salaries and wages, the FAO said, though a court challenge could all but wipe that out.

The province's Superior Court heard arguments earlier this month from public-sector unions challenging the law as unconstitutional, arguing it infringes on their collective bargaining rights. The judge reserved his decision. 

If that law gets overturned and repealed, it could cost the province $8.4 billion over five years, including a potential $2.1 billion in retroactive payment to the majority of workers already affected by Bill 124. Contracts for about 30 per cent of public workers have not yet entered a three-year period of being affected by the bill.