The federal payroll is the government’s biggest single operating cost and some would argue is probably one the least scrutinized and poorly managed.
Some have estimated that the total compensation cost of the average public servant has reached more than $110,000 a year when pensions and all benefits are rolled in.
Parliamentary Budget Officer Kevin Page began the report more than a year ago and has examined the growth of the public service and the wage bill over the past 20 years. It counts the study among the major reports the office has undertaken.
The government spends about $43 billion in total compensation for all federal workers, from the public service to the military, RCMP and ministerial staff. The total was about $23 billion a decade ago, before the public service went on an unprecedented growth spurt.
The public service has see-sawed over the past 20 years between healthy raises during good times when surpluses rolled in, and wage freezes, cuts and layoffs during lean times. Salaries fell behind during the freeze of the 1990s, slowly catching up and then racing ahead of the private sector.
The Conservatives have taken aim at mounting compensation in their spending cuts. The government is wiping 19,200 positions off payroll, reforming pensions so employees shoulder more of the costs, capping wage increases, freezing operating budgets to rein in salaries, and eliminating severance payments for public servants who voluntarily leave or retire.
At the same time, the biggest run-up in the size of the public service and the wage bill came under the Conservatives’ watch, between 2006 and 2011.
The last major study of its kind was ordered as part of the Paul Martin government’s drive to clean up public management and improve transparency and accountability.
The massive study was led by James Lahey, who also recommended a major overhaul to improve the management of compensation, including regular reports to Parliament. The report was kept secret as a cabinet confidence and wasn’t released until the Conservatives came to power but none of the major recommendations were implemented.
His 2003 study found the average public servant in the core public service and separate agencies, such as the Canada Revenue Agency, earned about $53,300 in salary, and closer to $73,400 when all benefits were rolled in.
Lahey long insisted the system would work better if all the pieces of compensation were managed together. Costs would be better controlled if collective bargaining was expanded beyond negotiating wages, pay and benefits were kept in line with those of the private sector and there was more scrutiny or transparency thrown on the process.
“I do think there should be a holistic view of what kind of people do we want and how should we pay them, comparable to outside work, to achieve our goals,” said Lahey.
Many argue that compensation has to be a critical piece of the government’s plan to renew the public service and goes hand-in-hand with broader reforms in recruitment, retention, succession planning, training and development.
A recent study by the Institute for Research on Public Policy on federal pensions urged the government to rethink the public service pension plan, which is eating up about 20 per cent of the government’s total wage bill. The author Bob Baldwin said the plan is heading for the “tipping point” where public servants are paying so much for pensions that they will end up living a higher standard of living when they retire than when they’re working.
Baldwin said the public service plan is approaching this tipping point because benefits are so generous that the costs of providing them have skyrocketed. The contribution rates needed to pay for existing liabilities have increased 50 per cent since the 1990s and they are expected to continue to climb.
But pensions are just one part of the rising compensation costs that Canadians are paying for federal programs and services.
The government has a compensation policy that says it should neither lead nor lag the pay of those in the private sector to hire the talent it needs. Compensation includes salaries, overtime, pensions, health and dental plans, performance pay, classification and reclassification, vacation, leave, cash-outs and contributions to CPP and EI.
For years, critics have argued the problem is that Treasury Board ministers typically don’t get a “big picture view” of how the wage bill is spent. They approve salaries and benefits as they are ratified but don’t see them as an overall compensation package.
Original Article
Source: canada.com
Author: KATHRYN MAY
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