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Guest Columns: Harper Government Needs To Get Serious About Out-Of-Control Payroll Costs

By on August 21, 2012

By Gregory Thomas, CTF. As the Harper government moves at a snail’s pace to get a handle on spending, it’s becoming obvious we need tougher action on trimming the federal payroll in order to balance the budget and deliver cost-effective government.

The world economy is weaker than Finance Minister Jim Flaherty hoped when he delivered his budget in March. In fact, year-end numbers released in May showed revenues down $3.5 billion just from the budget’s projections less than two months earlier.

In the meantime, Canadians watch the bills roll in, as the Harper Conservatives tiptoe through the modest cost-cutting exercise Flaherty outlined last March.

Consider the outrageous severance payouts and “workforce adjustment” benefits coming to federal government employees faced with job losses: the budget earmarked $900 million as part of a plan to reduce its headcount by 19,200 positions by 2015. That works out to nearly $50,000 in compensation for every job eliminated.

Many of these cuts in the federal payroll will result from government employees leaving of their own accord, either by quitting, retiring or going back to school. Until two years ago, these people were entitled to severance pay, ranging from three weeks’ pay after one year of service, all the way up to 22 weeks’ pay.

As union contracts have come up for renegotiation, the government has been eliminating this costly entitlement: by the time they’re done buying out the bureaucrats, the total tab is expected to hit $6 billion.

But that’s only part of the pain. Federal government employees take more days off than the rest of us do: 18 days a year, including short-term disability claims. That’s 2.5 times as many sick days as the rest of us take. On average, 19,500 federal employees are off the job “sick” on any given day, especially the days around long weekends.

But perhaps we should be happy they’re calling in sick, because it’s nearly as bad when they don’t. If federal employees happen to stay as healthy as the rest of us, then they just get paid out for all sick days they didn’t use in their career. The sick-day boondoggle is costing us over $1 billion a year – in cash. As of right now, taxpayers “owe” federal employees collectively about $5.2 billion for unused sick time.

The final piece of the federal government’s payroll headache is its so-called workplace adjustment program: it provides additional benefits for employees facing a layoff, over and above severance benefits and accumulated sick pay. Payouts range from 22 weeks of pay for someone with one year as a federal employee under their belt, to 52 weeks for a 30-year veteran.

Federal employees facing a layoff can retire without losing pension benefits and they’re protected from taking less senior or lower-paying jobs. And if they decide to leave and go back to school the government pays offers $11,000 towards educational expenses. So far, the Harper Conservatives have shown no interest in tackling workplace adjustment entitlements.

Despite dire predictions of massive public sector and private-sector job losses ranging from 40,000 to 100,000 jobs, the numbers so far tell a different story, with Statistics Canada reporting a year-over-year reduction of only 7,204 federal jobs across Canada. And Ottawa itself continues to boom: in the past year, 16,700 new jobs have been created just in the nation’s capital, where the unemployment rate sits at 6 per cent. 3,200 additional job seekers have joined the labour force, looking for work. And why not? With Mr. Flaherty forecasting annual federal spending to rise by $19 billion between now and the next election, the smart money is riding on the federal gravy train.

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Gregory Thomas is the Federal and Ontario Director of the Canadian Taxpayers Federation.
He can be reached at 1-613-234-6554 (office) or 1-800-265-0442 (toll free).

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