Parliamentary Budget Officer Kevin Page’s recent study into the $43.8 billion the federal government spent on compensation last year estimated the average employee costs $114,100 a year with pensions and benefits rolled in. It based that calculation on a workforce of about 375,500 employees.
But Treasury Board President Tony Clement challenged Page’s figures, arguing the study inflated the current and future per employee costs while low-balling the government’s expected savings from its ongoing spending reductions. He argued the average cost of a public servant is $95,000 based on a broader federal workforce of 420,000.
In a statement posted on its website, the PBO defended its calculations and explained they were based on annual compensation expenses and the number of total employees used in the Public Accounts, the government’s financial statements. The Public Accounts, which are audited by the Auditor-General, draws on financial transactions recorded by the Receiver-General and the detailed records kept by departments and agencies.
According to the Public Accounts, the government spent $43.8 billion on personnel last year, including all salaries for public servants, RCMP, military and reservists as well as “substantial employer-paid” benefits such as pension contributions, health care, employment insurance and other costs. This was based on 375,500 employees.
The PBO noted the government’s figure is lower because it excluded benefits and pensions from its calculations “regardless of the fact that these benefits represent a very real cost to taxpayers.” Salaries, without adding pension and benefit costs, were $40 billion.
The PBO said Treasury Board counted employees in its 420,000 head count that included Crown corporations and other agencies and their spending on compensation is not included in the Public Accounts. As a result, Clement’s head count is “substantially higher” than those presented in the Public Accounts and “does not correspond to the annual compensation expense cited by (him).”
Clement also disagreed with the PBO’s growth rate projections for future compensation costs.
The PBO estimates that the per employee cost could increase 4.4 per cent a year and reach $129,800 by 2015 as the government continues to cut the size of the public service. The report noted that if historical growth rate levels in compensation continue unabated, the cost of an employee could hit $132,400.
Clement disagrees. He said the government is forecasting a 2.4 per cent annual increase based on collective agreements in line with inflation and the public service’s demand for skilled workers. This increase, coupled with the government’s other yearly $7-billion reductions in the wage bill, will put the cost of the average public servant at $101,700 a year, not the PBO’s $129,800, by 2015.
The PBO said its projected growth rates were based on data in the Public Accounts, as well as public data released by Treasury Board.
Clement said the government is taking steps to reduce compensation costs by $7 billion 2015, such as eliminating 19,200 jobs; reformed pensions so employees shoulder half the contribution costs; capped wages increases; froze operating budgets to rein in salaries and stopped severance payments for public servants who voluntarily leave or retire.
Clement’s reaction to the study surprised some who expected the government would seize the report as an opportunity to examine the management of total compensation.
Linda Duxbury, a professor at Carleton University’s Sprott School of Business, said the debate over costs is the “wrong focus” because “public service is more than what it costs.” The government should be aligning its compensation strategy with the kind of workforce and talent it wants and need and the government is not well-positioned to get that talent in a tight labour market she said..
“If you want to compete for talent, people have to feel empowered, respected and allowed to speak. You don’t get talent in an environment of fear and control,” she said.
“You can treat employees with respect and compensate them less or pay them well and not respect them but you can’t treat them badly and compensate them badly. The government has to decide which model they want.”
Original Article
Source: canada.com
Author: KATHRYN MAY
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