Wage increases may be needed amidst staffing shortages: FAO

Ontario’s financial watchdog says wages may need to be increased to attract enough people amidst staffing shortages.

The Financial Accountability Office released a report Wednesday on public sector compensation and said Ontario is already facing high vacancy rates.

The province will need over 138,000 new workers in the public sector, long-term care, home care and child care over the next five years.

The Progressive Conservative government says it will build 30,000 new long-term care beds by 2028 and increase the daily hours of direct care.

It also wants to expand the home care system and create 71,000 new child-care spaces as the start of the $10-a-day program approaches.

But the report says public-sector wage growth in the province is below inflation and below average raises in the private sector. The same is true for municipal and federal employees.

“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.

Financial accountability officer Peter Weltman says the government does have flexibility, as the province reported a $2.1-billion surplus at the end of 2021-22.

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

Wage increases for most public sector workers have been constrained for the past few years under Bill 124, which caps raises at one per cent for a three-year period.

Interim Liberal leader John Fraser said there are several reasons for staff shortages, but the government should still repeal Bill 124.

“Bill 124 is not the only reason we have this challenge, but it is something that’s under the government’s control and the government has stubbornly refused to do anything about it,” said Fraser.