A country cannot spend more than it produces, and the European welfare states are being forced to come to grips with this reality. All of them, even the socialist states, are forced to cut expenditures in the face of runaway budget deficits and declining economies. Italy’s socialist prime minister, Mr. Bettino Craxi, has proposed to abolish disability and retirement pensions for persons over a certain income level, even though this means-testing type of socialism goes against the grain of socialist ideology. Greece and Spain have imposed compulsory wage restraints, while Sweden, where a socialist government under Olof Palme was returned to power last year, has introduced a budget that will reduce real wages by four per cent.
In describing the position of socialist regimes in Europe, The Economist observes:
It is post-double-oil-shock economic reality as well as electoral disillusionment that has steeled the Craxis and the Mitterrands. The defeat of the British Labour party last dune seemed to suggest that voters are unimpressed by parties that promise to spend their way out of a recession and to lower their country’s defences. Yet the French and Greek Socialist parties were both elected on promises of sharp left turns. The turns led so guickly to an economic precipice that both governments had to slam on their brakes (The Economist, September 2, 1983).
Retrenchment in the Provinces
Canadian governments are also struggling with the problem of increasing expenditures and declining revenues, and several have imposed some form of wage restraints on their public sectors. Those of Quebec and British Columbia have met with the strongest criticism for their drastic cutbacks.
The Parti Quebecois government led by Rene Levesgue, which was once strongly backed by labour, aroused the wrath of unions earlier this year when government employees’ salaries were cut by up to 22 per cent. (Prior to the cutback the average salary of public employees in Quebec was $27,282 compared with $22,287 in neighbouring Ontario. In B,C. the figure was an average of $24-,752.) Angry and defiant counteraction by Quebec labour unions had little effect except to widen the gulf of distrust between the Quebec government and the unions.
According to CLV Reports (September 5, 1983) the Quebec government service employed 89,341 people on December 31, 1982, a considerable decrease from the December 31, 1980 figure of 102,750. The Ontario government has 81,827 public employees, while the B.C. government employed 4-2,700 workers on March 31, 1982. In Quebec there are 13.8 government workers per one thousand inhabitants; for Ontario, 9.4, and for British Columbia, 15.25. In its recent budget, the B.C. government under William Bennett introduced severe cost-cutting measures and announced the contemplated firing of 25 per cent of government employees and the removal of seniority rights in the public sector. Despite these cutbacks the B.C. government’s deficit will climb to $1.6 billion this year.
Determined to ram its restraint legislation through despite the angry opposition of the New Democrat ic Party, the B.C. government has taken the unprecedented step of conducting all-night sessions. On October 6, Mr. David Barrett, leader of the NDP, was forcibly removed from the Legislature. Barrett, who is a former premier, accused the government of being out of control in an atmosphere of “insanity.”