Proceedings of the Standing Senate Committee on
National Finance
Issue No. 79 - Evidence - November 7, 2018
OTTAWA, Wednesday, November 7, 2018
The Standing Senate Committee on National Finance, to which was referred Bill C-62, An Act to amend the Federal Public Sector Labour Relations Act and other Acts, met this day at 6:45 p.m. to give consideration to the bill.
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: Honourable senators, my name is Senator Percy Mockler, from New Brunswick and chair of the committee.
[Translation]
I wish to welcome all those who are with us in the room, and viewers across the country who may be watching on television or online. As a reminder to those watching, the committee hearings are open to the public and also available online at sencanada.ca.
[English]
At this point I would like to ask each senator to introduce themselves.
Senator Duffy: I’m Senator Mike Duffy from Prince Edward Island.
[Translation]
Senator Bellemare: I am Senator Diane Bellemare from Quebec.
Senator Pratte: André Pratte from Quebec.
[English]
Senator C. Deacon: Colin Deacon, Nova Scotia.
[Translation]
Senator Moncion: Lucie Moncion from Ontario.
[English]
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
[Translation]
Senator Forest: Éric Forest from the Gulf region in Quebec.
[English]
Senator Andreychuk: Raynell Andreychuk from Saskatchewan.
Senator Neufeld: Richard Neufeld from British Columbia.
The Chair: Thank you.
I would also like to recognize the clerk of the committee, Gaëtane Lemay, and our two analysts, Alex Smith and Shaowei Pu, who team up to support the work of the Standing Senate Committee on National Finance of the Senate of Canada.
Honourable senators, today we continue our consideration of Bill C-62, An Act to amend the Federal Public Sector Labour Relations Act and other Acts, which was referred to the committee by the Senate of Canada on October 16, 2018.
[Translation]
For our first panel this evening, we have invited people whose competencies, field of practice or research have made them experts on one or some of the matters addressed in Bill C-62.
[English]
First, we have Mr. Robert Paul Hebdon, Professor Emeritus, Organizational Behaviour, Desautels Faculty of Management of McGill University. Thank you for accepting our invitation, Mr. Hebdon.
[Translation]
From the law firm Goldblatt Partners, we welcome Peter Engelmann, Partner.
[English]
To complete the list on our first panel is Mr. Philip Cross, Senior Fellow, Macdonald-Laurier Institute.
Thank you, witnesses, for accepting our invitation.
I have been informed that each of you has a short opening statement. We will proceed with Professor Paul Hebdon first, then Mr. Engelmann and Mr. Cross. After you make your presentations, senators will be asking questions.
Professor Hebdon, please go ahead.
Robert Paul Hebdon, Professor Emeritus, Organizational Behaviour, Desautels Faculty of Management, McGill University, as an individual: Thank you very much, Mr. Chairman and members of the committee. It’s a pleasure to be here. I hope I can assist you in any way possible. I’m here to help. Hopefully, through the questions and answers, I can assist you. I’m going to try to be honest and answer what I know, not what I don’t know or what I think is speculation.
I’m going to try to be limited in my opening remarks, but I have to confess I’m an academic and I ramble. If you shut me off, I’m okay with that.
I’m going to open with what I think is a fundamental tenet of labour management relations. Probably many of you already know this, if not all of you, but I think it’s worth restating. I’m going to try to establish this tenet, which I’ll state in a moment, but I’m going to try to establish that it’s both held by practitioners, labour and management, by the experts in the field, and it’s supported by the academic literature, such as there is on the subject.
The tenet is simply this: A freely negotiated settlement between the parties is far superior to an imposed settlement, either by legislation or by an arbitrator, for that matter. When it’s freely negotiated, labour and management feel like they own the settlement and support it. If they are a union, they have probably voted on it. They are generally more likely to live with the terms of it if they’ve got their stamp on it.
The flip side of this principle, of course, is that if it’s imposed and they haven’t had a significant say in the provisions or the terms of it, you can have a demoralized public service, in this case. It could be harmful in any other ways too, such as grievances, confusion over the terms or this lack of ownership that exists. It can also affect trust between the parties and generally negatively affect the relationship between the parties, which is everything in labour relations. The relationship is really important for good labour relations.
I have my own research on this. I think there’s a paper cited in one of the documents that you have. That study, just briefly, started out as a C.D. Howe Institute report. I was contacted by Benjamin Dachis at C.D. Howe. Ben is an economist, and he put together this fantastic data set over 30 years. Our original report was a C.D. Howe report. We then turned that into two publications, one that you have there in the British Journal, and the other one is in the Berkeley Journal, dealing with more of the private sector.
I wanted to give you one conclusion that isn’t actually in the document that you have before you. From that report, it said — I don’t have the page reference — more specifically, a legislated settlement in a previous contract is associated with a 27 per cent point decrease in the probability of a bargained contract in the next round. In other words, we’re talking here about an imposed contract either through legislation or back-to-work legislation or something like that. The data we had didn’t specify which. It just said there is a legislated solution. That’s the coding system.
What we have here is much higher probability of failed negotiations once there’s an intervention in the next round of bargaining. It not only is negatively affecting the current round of bargaining; this rather long statistical study showed evidence in support that it’s negatively affecting the next round. I think you could probably reason yourself why. The parties, if they’ve just had an intervention in the previous round of bargaining, in the next round they are going to anticipate a further intervention and they’re going to hold back in bargaining, both management and labour.
By the way, throughout all of what I’m saying here, this is a principle that’s held by both labour and management equally. You can talk to any negotiator on either side of the table and they will say the same thing, I’m sure. Both sides hold back. This isn’t anti-labour, pro-labour or anti-management. It’s just that neither side is going to negotiate if they know the government is going to intervene or if there’s a reasonable possibility that’s going to happen.
What do the experts say? Very briefly, Alexander Sims wrote a report for the federal government in 1995. He was the chair then of, I think, the Alberta Labour Relations Board. I read this report a couple of times, and it’s very good. Amendments to the Canada Labour Code, which I understand are another issue that the Senate is dealing with — I don’t know if it’s the specific issues, but here’s what he said when he was confronted with the question of whether we should replace the right to strike with arbitration-imposed settlements:
An imposed change can be resisted and undermined in subtle but corrosive ways by those who feel that change was imposed without their consent. Our legislative framework, therefore, favours free collective bargaining and makes little attempt, except in exceptional cases, to impose solutions upon the parties.
One of the other experts says — and this is the Fryer report, which more directly bears on what we are doing. Fryer did two reports. The second one I’m going to cite is from 2000. It was on public service bargaining. Again, they’re great reports. I don’t have to talk about their expertise. I think it’s in the record.
Fryer was looking at the problem of the duality of government. They’re both employer and legislator. It’s very difficult for governments to separate those roles. It’s not just the federal government that has that problem; all governments across Canada have that problem.
When he did his analysis, Professor Fryer found that — let me give you the quote here. He felt there was an imbalance of power, and this came through. Particularly the union side identified this as one of the major problems of his report at that time:
It is this imbalance of power which seems to be the root cause of much of the feeling of powerlessness and frustration described in Chapter V.
This is the 2000 report.
A related finding is that frequent legislative intervention has eroded confidence in the system and trust between the parties. Another, equally serious consequence is that the players in the public service labour-management system can become so used to government intervention that they lose the ability to work out problems for themselves.
This is a corrosive effect that I was talking about. It came through in the data.
The imbalance of power also politicizes the system and has led some bargaining agents to attempt various types of direct political action.
So I can conclude by saying that I’ve looked over what I’ve seen as the four major issues that Bill C-62 deals with. To the extent that they encourage negotiations rather than legislated solutions, you can see where I’m coming from here. I’m in support of that. I think it’s a good idea.
One other thing. When we come to the question period, you have an expert here on sick leave. I happened to be on the union in Ontario when the whole sick leave system was changed dramatically in the 1970s. I was there. I was part of that. I don’t know if our experience has any benefit to you. I know the situation is a little different. Ontario had a massive payout, and that was an unfunded liability, and there was probably even more pressure to change to a proper sick leave system. I would be willing to talk about that later in your questions. Thank you.
The Chair: Thank you, sir.
Mr. Engelmann, the floor is yours.
Peter Engelmann, Partner, Goldblatt Partners, as an individual: Honourable senators, thank you for your invitation to comment on Bill C-62 this evening. My name is Peter Engelmann. I’m a partner at the law firm Goldblatt Partners. We have offices here in Ottawa and in Toronto, and we specialize in labour, human rights and employment law. Our clients include public and private sector unions in both provincial and federal jurisdictions. Here in the federal public service, we represent the Professional Institute of the Public Service of Canada, known as the institute, and also the Canadian Association of Professional Employees. We acted for both of these bargaining agents in challenging the constitutional validity of two of the bills that Bill C-62 is sought to repeal. Those were Bill C-4 and Bill C-59.
Today in the limited time I have for introductory remarks, I’m going to briefly review the context for those constitutional challenges that were filed by our firm on behalf of PIPSC, CAPE and other bargaining agents when it came to the sick leave provisions in Bill C-59 and address ways in which the legislation in question is unconstitutional and fundamentally upsets the balance of labour relations in the federal public sector.
Bill C-4, which was the one that made serious changes to the Public Service Labour Relations Act — now the Federal Public Sector Labour Relations Act and related acts — greatly reduced the ability of federal bargaining agents to bargain effectively with the government. I will highlight two of the most troubling aspects.
One was the change to essential service designations. By granting the government the exclusive right to determine whether any service is essential, the bill eliminated provisions that required the employer to bargain essential services agreements with bargaining agents, and the provisions that allowed either party to refer the issue to the labour board, if the negotiations failed, were also removed.
It also provided that any employee that had been deemed essential by the government needed to carry out both his or her essential duties and non-essential duties in the event of a strike.
The effect of the legislation is that one party, the employer, may unilaterally restrict the bargaining power of the other, the bargaining agent, through essential service designations that cannot be effectively assessed by a neutral adjudicator. Very similar legislation was found unconstitutional by our Supreme Court in January 2015.
Second, Bill C-4 upset a core aspect of collective bargaining in the federal public service by eliminating the option of either party to choose interest arbitration or conciliation/strike as the means of resolving bargaining impasses. The existing legislation provided that arbitration can only be relied upon where the essential service designation of the bargaining unit is above 80 per cent, or where both parties agree to it.
Otherwise, all disputes were to be resolved by conciliation/strike. That amendment prevented the historical preference of many bargaining units, certainly those of our clients the two professional unions, PIPSC and CAPE, who preferred to resolve disputes without service disruptions and through a neutral and fair process.
Moreover, even where interest arbitration is still permitted, another amendment to the legislation within Bill C-4 seriously undermined the neutrality of the arbitration process. The bill required an arbitration board to give preponderance to two factors: a) the necessity of attracting and retaining competent people to the public service; and b) Canada’s fiscal circumstance relative to its stated budgetary policies.
One can imagine a government running massive budgetary surpluses during a robust economic period while having a stated budgetary policy objective of reducing Canada’s debt. Gains for government employees would likely be impermissible, even in these circumstances, because of the government’s debt-reduction policy.
Bill C-59 further skewed the balance of power in favour of the employer by effectively removing the right to collectively bargain sick leave benefits and short and long-term disability programs. The provisions of the bill came as a complete surprise to all stakeholders at the time. There was a total lack of consultation, let alone bargaining.
By imposing restrictions on sick leave benefits, the Treasury Board unilaterally weakened the overall robustness of collective bargaining in the federal public service by essentially removing an important term of employment from an already narrow list of items available for bargaining in the public service. It also retroactively undermined collective bargaining by rendering meaningless all historical concessions of federal public service unions when bargaining over sick leave.
In that context, our firm filed applications with the Ontario Superior Court on behalf of the institute challenging the constitutionality of Bill C-4 and, on behalf of the institute CAPE and others, challenging C-59. It was increasingly clear, after this litigation was filed, especially in light of the Supreme Court of Canada’s decisions in Saskatchewan Federation of Labour and the Mounted Police Association of Ontario that many aspects of these bills that were introduced would be found to be unconstitutional by the courts, as they violated the freedom of association protection in section 2(d) of our Canadian Charter of Rights and Freedoms.
Thankfully, both challenges were adjourned due to an agreement of the current government to repeal the impugned sections of Bill C-4 and C-59. That’s why we’re here today, dealing with Bill C-62.
I want to say thank you again for allowing me to be here today. I look forward to attempting to answer any questions you may have of me. Thank you.
Philip Cross, Senior Fellow, Macdonald-Laurier Institute, as an individual: I am certainly pleased to be here. I was testifying to the House of Commons Finance Committee yesterday, and there I was the token economist and male. I had six women testifying with me. I embraced my role there. Here I’m just the token economist.
I certainly don’t have the expertise in labour law that my esteemed fellow witnesses have, but as an economist I’m willing to present the perspective of taxpayers, the people whose interests are almost never represented or considered in discussions with the governance of the civil service.
There is a growing gap between the federal government and private sector compensation and non-peculiar benefits. There was a time it was understood that civil servants received somewhat lower pay than the private sector in return for more job security. In recent years, this trade-off has disappeared. By any metric covering pay, benefits, pensions, leave or job security, federal government employees do better than the private sector workers who support them.
The average weekly wage of almost $1,600 in the federal public administration is the third highest of any industry, even excluding pensions that are worth 40 per cent of their pay. Every recent study finds the average federal civil servant is better paid than the private sector. A representative study found a 12 per cent premium after adjusting for differences in occupation, education, age, et cetera. However, rising compensation has not bought happiness in the federal workplace. Morale in most departments remains low as many workers grimly mark time waiting for their coveted pensions.
Two areas stand out among the many examples of diverging benefits in the private and public sectors are sick leave and pensions.
As outlined in A Sickness in the System, which I wrote for the Macdonald-Laurier Institute in 2014, sick leave benefits were used at almost the same rate of six days a year in the private and public sectors in the late 1980s. Since then, private sector sick leave has changed little while public sector sick leave benefits have risen to 10.6 days. It is telling that most of the increase was concentrated in select occupations and departments, suggesting culture and motivation was the main factor, not a sudden proliferation of illness or disability.
Nowhere has the gap between public and private benefits risen as dramatically as pensions. Prior to the 1990s, there was some comparability between defined benefit pensions in the public sector and the largest employers in the private sector. However, what began as a small gap in pension coverage has become a chasm. Fewer than 10 per cent of private sector workers now belong to a defined benefit pension plan, compared with 78 per cent in the public sector. Private sector pension plans are rare today because they became prohibitively expensive in the era of low interest rates that began in the 1990s, as well as accounting changes that prohibit private sector plans from taking investment risks. Public sector plans routinely indulge, conveniently backed by taxpayer guarantees.
The Chair: If can I interrupt, would you slow down a bit for the interpreters? They tell me they are having challenges.
Mr. Cross: I thought that’s why I provided this ahead of time, but okay.
It is noteworthy that the federal government unilaterally can make whatever changes it wants to employee pensions. Pensions are governed by statute and are therefore not covered by collective bargaining. The fact that the largest difference between the private and public sectors involves pensions that the federal government granted to employees without pressure from the negotiations shows how tinkering with the negotiation process will not result in the fundamental shift in the entitlement mentality needed for meaningful change.
The gap between public and private sector pay and benefits is not sustainable because the inevitable envy and resentment of taxpayers will some day force a roll back of public sector compensation. Pressure to rein in government spending on employee compensation will only increase as a rapidly aging population causes a shift in spending to health care and supporting retirement incomes.
However, restraining civil service pay and benefits will require an ongoing commitment by governments. As documented in a paper I wrote with Ian Lee of Carleton University, there have periodic bouts of restraint in the federal civil service over the years. One began under the Conservatives in the mid-1980s, another under the Liberals in the 1990s and a third under the Conservatives after 2011. In every case, once austerity ended, civil servants soon recouped all of their forgone pay and benefits and were better off than ever.
Is the civil service setting a standard for the private sector to emulate? A popular theory in the 1960s and 1970s, one does not hear this often any more. The reason is clear; year after year, for decades, the gap between the public and private sectors has grown, with no sign that the private sector has the capacity to provide either the pay and benefits or the job security enjoyed by civil servants. Firms cannot grant wage increases without undermining their competitiveness. The example set by the public sector is irrelevant to firms, especially those in export markets.
One of the problems in controlling total compensation of federal civil servants is that no single department is responsible for all the different forms of benefits, which include — take a deep breath — everything from negotiated wage settlements to annual increments within each classification group, promotions, employer pension contributions, health and dental benefits, the bilingual bonus, cashing out vacation benefits and even irregular payments such as pay equity and overtime.
Arbitrators tend to focus on negotiated wage settlements and ignore the total compensation package. As a result, for example, during the Mulroney years, negotiated wage settlements in the federal government were held to an average of 3.8 per cent a year, but total annual compensation rose 6.2 per cent. An important reform in 2014 was to have arbitrators evaluate total compensation and not just wages.
In conclusion, reigning in employee compensation is going to require ongoing and consistent vigilance about total compensation, not the quick fix of temporary wage freezes governments have favoured in the past. It will be difficult, but eventually taxpayers will insist. The process began tentatively in 2012 by increasing civil servants’ contributions to their pension benefits, raising the retirement age, and reforming sick leave benefits. The rollback of some of these reforms in Bill C-62 marks a reversal from the direction government policies inevitably will have to take in the long term. The corrective process will require sustained political willpower, the very opposite of what occurs in the process of arbitration and conciliation that is being reinstated.
The Chair: Thank you, Mr. Cross.
Senator Marshall: Thank you for all your presentations. Very informative, and I know with the time allocated to me, I’m going to have to pick one topic to ask questions on.
I wanted to ask about the government sick leave program, and I wanted to start with Mr. Hebdon because you mentioned the Ontario Public Service changed their sick leave program some time in the past. I would be interested in hearing about that. Also, I would be interested in hearing the other witnesses as to how you think the government should approach changing the sick leave program. So perhaps I can start with you, sir.
Mr. Hebdon: I’ll try to be brief. I didn’t mention that I was a practitioner. I had two careers. I was 24 years with — when I started it was called the Civil Service Association of Ontario, later OPSEU. I was on the union side. Then I was a neutral, I was an arbitrator for five years, and I’ve been an academic for another 25 years.
When I was with CSAO at the time, I think it was not OPSEU yet. It was in the 1970s, and there was a big problem with the sick leave plan. The government approached the union and said, “We would like to change it. We want to try to negotiate that with you.” We negotiated for a while. We didn’t have the right to strike in those days, so it went to an arbitrator. Although a lot of the outline of the changes made were between the parties, the arbitrator eventually rubber stamped what the parties had already agreed to in negotiations to a large extent. In other words, the arbitrator didn’t really fashion the solution to it.
Let me just say something about Ontario and their differences there. There were fairly massive payouts. People got paid the sick leave that they had accumulated, so there is a kind of difference with the federal.
Senator Marshall: You mentioned that in your opening remarks, but was it negotiated or was it imposed? Did the government say, “We’re changing the sick leave program, we’re buying everybody out and then you’re only going to get five days a year”? How was it done?
Mr. Hebdon: There isn’t an easy answer to that. It’s kind of both. There was an attempt to negotiate it, but negotiations failed. Under our system it goes to interest arbitration. The interest arbitrator, Judge Anderson of Belleville, was the arbitrator of the day; he imposed the deal. But the outline of it was already agreed to basically by the parties, but it was imposed by the arbitrator, not by the government.
Senator Marshall: Okay, and then the government paid everybody out and then brought in a reduced benefit sick leave?
Mr. Hebdon: For all new employees there was no payout. There was a transition for those employees that were already in the system, but there was no further accumulation; that ended.
It wasn’t even called a sick leave plan. They were called attendance credits. They were 15 days, a day and a quarter a month for coming to work. That’s basically what you got. You got attendance credits for showing up, which could be used for sick leave or a whole bunch of other purposes. It was called a sick leave plan, but it really wasn’t a sick leave plan at all. If the chronically ill — the people that have difficulties with illnesses, repeated illnesses — used up their sick leave days, good luck. You didn’t have it. It wasn’t a sick leave plan. It was horrible.
Actually the union favoured some of the elements of the change. We wanted a longer six-month plan basically that filled in between the long-term disability and the short term, because a lot of people that were actually genuinely ill had nothing.
Senator Marshall: But how did that go over in the public service? Because you were saying in your opening remarks that when you impose agreements, you have a different outcome than if it’s negotiated.
Mr. Hebdon: You’re right. I’m not going to try to tell you that everybody was happy with the change, but no one actually lost their payout, so we dealt with that one. What it was replaced with was a genuine sick leave plan that protected people when they got ill. So I was there and I felt some of the flack, as did the president and the general manager of the union at the time. But we were getting fairly good wage awards at the time too, which compensated people for this. There wasn’t a direct trade-off, but I think in the final analysis, it wasn’t that seriously opposed.
Senator Marshall: Mr. Engelmann, you represent some associations, so you would have a feel as to what would be a proper way to renegotiate or to change sick leave policy. Would you have any comments on it?
Mr. Engelmann: Yes. Obviously this should be done through negotiations. When you’re looking at trying to bring in new sick leave ideas and things that will help younger workers and workers with chronic illnesses who sometimes fall between the cracks of a traditional sick leave plan and that gap until you get to long-term disability, so some form of short-term disability, that’s exactly what is happening right now as we speak.
Because of the settlement of this litigation, the proposed repeal of Bill C-59, the government as an employer has been meeting with all of the federal public servants at a couple of different tables away from traditional bargaining so that they can really focus and concentrate on how to modernize the sick leave, trying to make it better. So they have experts and others, and that’s how it should be done. It shouldn’t be done through a complete lack of consultation and imposition of unilateral rules.
Quite frankly, that’s contrary to the Charter of Rights. We have known that since 2007. There was a case called B.C. Health Services, and it said that unilateral takeaways from collective agreements that have been bargained, that’s a non-starter.
As Professor Hebdon was saying, that’s not the way to build trust, move forward or make changes in the future.
Senator Marshall: That’s not the way to redesign your system.
Mr. Engelmann: No.
Senator Marshall: Do I have time to hear from Mr. Cross?
Mr. Cross: Just quickly, I think one of the things that is lost in the current negotiation process is only the views of executives in civil service are represented at the negotiating table on the side of management.
When I wrote my paper in 2014 for the Macdonald-Laurier Institute, I was inundated with feedback from middle managers, the people on the front lines, the chiefs and the unit heads who had to deal with the actual individuals. They knew who in their unit was phoning in sick when fishing season opened. I had one unit head tell me they wanted to suspend everybody in their unit on a Friday before a long weekend; 11 of their 15 employees phoned in sick. It’s that type of frustration of the people on the front lines who know what is going on. Their frustrations are not being addressed in this at all.
Senator Pratte: This question is for Professor Cross. As far as sick leave is concerned, when we compare the number of sick leaves taken by federal public servants to the private sector, is it fair to make this comparison with the whole private sector? Seventy per cent of people who work for the private sector work for small and medium enterprises. A lot of these — probably something like half — work for very small companies of 20 employees and less. So is it fair to make this comparison with the whole of the private sector, or should we compare — and I don’t know what the result of that comparison would be — with large, unionized companies?
In my view, it’s sort of obvious that for people working for the federal public service of 300,000, and it’s a professional organization and so on, working conditions would obviously — hopefully — be better than those of people working for very small businesses.
Mr. Cross: Why would I want to ignore the experience of —
I don’t think small businesses are 50 per cent of employees in this country.
Senator Pratte: I think they are half.
Mr. Cross: Let’s concede that it’s a considerable portion.
They are paying taxes. They risk losing employees to the public sector because they can’t match the benefits being offered, so why would I ignore that? There is some validity to this.
The other thing is that I know StatsCan did a study comparing the public and private sector. They found that a lot of the differences disappeared if you standardized and took account of unionization. The problem is that almost everybody in the public sector belongs to a union; very few in the private sector do. You then assume that the relationship between unions and management in the private sector would be the same as it was in the public sector, and that can never be the case.
The public sector is a monopoly. When postal workers go on strike, there is no other service. But if GM goes on strike, I can still go out and buy a Toyota. Competitive pressures exist in the private sector that don’t exist in the public sector. I think it’s quite naive to say, “Well, let’s model the relationship in the public sector and just assume that if we apply that to the private sector, it would be the same.” I don’t think that recognizes that there are real, fundamental differences between the private and public sectors.
As I was alluding to in my opening statement, the public sector will never be an example for the private sector.
Senator Pratte: I understand that.
Mr. Cross: The opposite has to be the case. Given that the private sector is limited in the benefits it can pay, why wouldn’t we tie public sector compensation benefits to be approximately the same as in the private sector?
Senator Pratte: All I’m saying is that we should refine this comparison to see where the difference comes from. If large corporations, for instance, provide higher remuneration and working conditions as good as the federal public service, then this tells us something. If we follow your logic, shouldn’t we then give federal public servants the same working conditions as people working for small and medium enterprises, which are at the lower end of working conditions, I assume? Maybe I’m wrong. Is that the logic?
Mr. Cross: No. It’s difficult to roll back benefits once they are paid out. That’s why I think I indicated it’s going to take years of restraint going forward.
Senator Pratte: But what is the target? If we do this, is the target to have federal public servants paid the same salaries, sick leave and pensions as people working for small and medium enterprises who are non-unionized and very often don’t have a pension? I understand they are taxpayers. That’s a good point. I’m just saying that if we’re going to roll back these working conditions, which would be very difficult, what is our target?
Mr. Cross: I think the target should be that we shouldn’t pay civil servants any more than we need to attract qualified, competent people to the civil service. There are advantages in working in the private sector, and even in the small business portion, that don’t show up in wages and compensation. There is a freedom of expression, thought and creativity. Some people just will not work in one sector, and others will not work in the other. When Statistics Canada got rid of its no lay-off policy just before I left in 2011, I knew people who burst into tears. They had no — they were never going to lose their jobs themselves. Just the idea of another person losing their job was so traumatic to them. These were people who were built for the civil service. They were never going to work in the private sector.
They are two different universes, and I’m not saying one standard should be the same for the other. But I do think there should be some market-based reality in the public sector compensation, and we should be paying no more than —
Private sector firms make this mistake too. You remember the pictures from 10 years ago when the last time GM was hiring people significantly. You remember the pictures — miles long of people. That was a clear sign in 2007-08 that GM was paying its workers way too much, and the long lines applying for civil service jobs and the absence of shortages within the civil service tells me, yes, the situation of labour inside the civil service is a lot different than in the private sector, which is having a lot of trouble finding people these days.
Senator Pratte: Thank you, Mr. Cross.
I have a short question for Professor Hebdon. You mentioned — and I agree — that negotiated settlement is always better than an imposed settlement. How do you account for the fact that many unions choose arbitration over conciliation/strike? I understand that’s a choice and therefore they agree with it, but isn’t it a bit surprising?
Mr. Hebdon: This is one of the few models in Canada where unions can actually choose the choice of procedure. We studied that, and there aren’t many other examples of it. In other jurisdictions, you either have the right to strike, or you’re an essential service and you don’t have the right to strike. Choosing is something almost unique. It was unique back to 1967 when the law was first introduced. It’s been a grand experiment.
There is a feeling that weaker bargaining units tend to choose the arbitration route over time, in the sense that if they had a strike, they didn’t have enough members or they wouldn’t be missed if they went out on strike, to put it simply. They didn’t have the bargaining power. So the choices are made for reasons other than whether they would rather have an imposed settlement or not. It’s really bargaining power.
Could I make a comment on Mr. Cross’s statement, or is that out of order?
The Chair: It’s not out of order. Please do.
Mr. Hebdon: I have published a little bit on the wage difference between public and private sector. I don’t consider myself an expert on that topic, but I have reviewed that literature, and fairly recently. I published a textbook on labour relations in Canada that updates that from time to time. All I can say is that the evidence is much more mixed than what Mr. Cross is presenting here. I would urge you to have a study done of that literature. I think you’d get a better picture of it than what you’re being presented here. It’s not accurate — less than accurate.
The Chair: Thank you for your comments.
Senator Neufeld: Thank you, gentlemen, for being here. Just yesterday, we had the union reps in. They talked an awful lot about the sick leave issues that you, Mr. Engelmann, brought forward and also about being able to negotiate.
We heard from them yesterday about Bill C-4 and Bill C-59 being terrible pieces of legislation. We have heard a little bit about that tonight again. Can you tell me, in your expertise, whether Bill C-62 fixes that right up? They were telling us about how unhappy civil servants were. Will they be much happier the day after this is fixed, if it goes through as it is?
I will ask each one of you to give me a little run-down on what you think. Will everybody be happy a week later with the changes? Will there be more productivity? Will all of those kinds of things take place? Will Bill C-62 be the answer to make it work? All we want to do at the end of the day is make it work.
Mr. Engelmann: I think what Bill C-62 does is it honours the commitment to settle two pieces of litigation that, in my expert opinion, the government was going to lose. The actions the government took by passing Bill C-4 and Bill C-59, not only on substance but on process, were contrary to the Charter of Rights and Freedoms.
I think there’s an expectation, because of the commitment made by the government in the settlement, that this would happen and that these two bills would be repealed. Will public servants be jumping up for joy because of that? No. I think there’s an expectation that will happen.
With respect to sick leave — and there are different views among the different bargaining agents and among their members about what is the best sick leave plan. I tried to answer this earlier. I think the negotiations and the consultations that have been going on with all the stakeholders — insurance providers, benefits providers, experts, et cetera — will give us a better sick leave program for everybody and ensure that people won’t fall through the cracks.
Will that make it better and the fact that it’s being negotiated? Absolutely, that will make it better. And people will be happy because, as Professor Hebdon said earlier, they will be negotiating, they will be consulted and they will have input. I think in that sense, a new sick leave plan will be better.
The Chair: Thank you.
Mr. Hebdon, do you have any comments?
Mr. Hebdon: Very briefly, I am obviously advocating for negotiations. I don’t have any insight, by the way. I have no contact with parties at all on this issue, but I sincerely hope that reason prevails and they’re able to negotiate a deal. I would urge the public sector unions particularly to take into account that this is a chance for them to show that negotiations work.
Mr. Cross: I don’t think the unhappiness and the morale problems in the civil service can be resolved at the negotiating table. I think there are much more fundamental problems, but it’s not the type of thing that’s being discussed at the negotiating table.
If I could add one footnote to Mr. Hebdon’s request about researching the comparability of benefits in the private and public sectors, I would ask the staff to particularly pay attention to the value. It’s very difficult for people to include the value of civil service pensions, particularly the unfunded portion that is subsidized by taxpayers that doesn’t even show up as a taxable benefit to civil servants.
The Chair: Thank you.
[Translation]
Senator Forest: Mr. Cross, when you compare categories in public enterprises and private ones, it seems quite clear to me that there may be large differences, whereas in small private companies, the owner may impose conditions. It is as though we compared the salary of automobile mechanics across Canada. If you compare an employee in a small enterprise, in a small village, and an employee on a mega-project up north, obviously both have the same trade, but I’m not sure it is really objective to compare the same trade in conditions that are completely different.
It would seem more logical to compare, for example, people in the public service with academics or employees in large companies such as Bell, and to choose an environment where working conditions are similar.
I found your statement of November 8 rather hard on public service employees. When it comes to sick leave, employees in the Quebec public service, contrary to those in the federal public service, can accumulate all of their sick leave days. In my opinion, in order to have a more precise picture, you would have to do a more precise breakdown of the workplace environment in organizations that resemble the ones we are studying.
[English]
Mr. Cross: Thank you. That was a thought I had in response to Senator Pratte’s question. I didn’t have time to articulate it.
I agree. It’s too simplistic to talk about the public sector and the private sector as if they are monoliths. One thing we found in our study is when we go through the private sector, one finds that things like motivation are a much greater determinant of sick leave use than being in the public sector or the private sector. Certainly there are instances in the private sector of low-level clerks, people in not very interesting jobs, who have very high use of sick leave. Professionals and managers in the private sector have two days, on average, and there’s not a lot of difference with senior people in the civil service.
I agree. That was one of the points we were trying to make in the paper that motivation and attitudes seem to be what drives sick leave use, and it’s not a matter of physical illness or disability. So I quite agree on that.
Mr. Engelmann: I want to say I agree. I think that you should look at apples to apples. Most of the unions we work for represent professionals, and I dare say that their absences from the office are probably not that much different than professionals in the private sector. I think there have been some very positive things about gains for public servants who have now found themselves in law firms. For example, we’re trying to attract more women into the private practice of law: today, 60 per cent of women coming out of law schools, the majority, but very few of them are partners in private firms. So what we’ve done is introduced maternity top-ups and longer leave provisions. We are catching up to the public service in that respect. It’s a good thing that the public sector leads on some of those matters.
But again, I’m listening. I’m not an economist, but we do interest arbitration work, and I must say that working for lawyers across this country, they’re far better off in private practice than in government. That’s true of many professionals, even when you account for the pension.
We need to compare apples to apples when we’re talking about these things.
[Translation]
Senator Forest: Mr. Engelmann, you have a lot of experience. You talked about the impact of the power to legislate, in the context of negotiation dynamics. Look at a situation that is still occurring in Quebec. I worked, for a long time, in the municipal field in Quebec, where working conditions cannot be negotiated, because all of the municipalities in Quebec are governed by a provincial law.
Overall compensation, including the pension system and sick leave, is 30 per cent higher at the municipal level than at the provincial level. I wonder whether in the course of your research you analyzed the negotiation dynamics, where a government may legislate in one case, and where the other one cannot. One of the reasons behind that gap is that a reduction of 20 per cent in public service salaries was decreed under the Lévesque government in the beginning of the 1980s. And that gap has always grown larger. Did you consider the impact of these different conditions: a government that can legislate the working conditions of its employees, as opposed to a business or another level of government that cannot do so?
[English]
Mr. Hebdon: I have to ask a clarification question. I wasn’t sure if you said municipal employees are paid 30 per cent less or more. More than the private sector. Okay.
Senator Forest: More to the public and private sector.
Mr. Hebdon: This is a very long, philosophical answer, but I’ll give you the short version of it.
The Canadian labour system is different than the U.S. I taught in the U.S. for eight years. In this respect, that the public sector started collective bargaining after 1945 when the Wagner Act came to Canada, they included the municipal employees. So municipal employees got full bargaining rights with the right to strike long before anybody did at the provincial or federal government levels. They got a head start. When I was with OPSEU we were always looking to compare to the municipal employees because they were paid more.
They had an earlier start. I have to say that the bigger cities were paid better, the smaller cities not so much. So it wasn’t across the board, either. That’s the short answer.
The Chair: Thank you.
[Translation]
Senator Moncion: I’d like to go back to Bill C-62 and discuss sick leave. What was the situation at the federal level before changes were made to Bills C-4 and C-59 — and when those bills were repealed and replaced with Bill C-62 — and what was the impact on negotiations and everything related to sick leave?
At the time, federal employees could accumulate sick leave — I don’t know if they still do so — but they did not have access to short-term disability insurance. I think they still don’t. I think they have long-term disability insurance, but there is a long wait period before they have access to that. My question has two parts.
First, regarding finances, I understand what Mr. Cross has to say on the topic of “sustainability,” because this is very expensive. Negotiations are currently underway with the Professional Institute of the Public Service of Canada, which is talking about three days of sick leave, with group insurance, which would dovetail with short-term insurance, and so on. I’m trying to see how all of this would work together. If the new group insurance comes into force, do we really need to undo everything that exists currently? If there is a new agreement, how will we put all of this together? I don’t know if my questions are clear.
Mr. Cross: I will answer briefly. I will yield the rest of my speaking time to my experts. There is a big divide between the younger employees and the older ones. The older public servants want to protect their sick leave bank, but that is not fair for the younger ones.
Let me tell you about my experience. I worked 36 years in the public service. After one year, I became ill, and was sick for about a year. At a certain point, I had no more sick leave. I had nothing left. Before going to the employment insurance office, I had no income for two weeks. I had no money left.
I learned my lesson. When I retired, I had more than a year of leave accumulated in my leave bank. I had learned that things can get quite serious. It’s very concerning, and it is unequal for the younger ones. We don’t hear the voice of the young people in the unions, at all, because the public service is very old, and those who have a lot of seniority want to protect what they have.
Senator Moncion: If we have a new collective agreement with group insurance, after three days of sick leave, an employee would move to the short-term disability plan, which would eventually transform into long-term disability. Is that not more beneficial than to go back to the former system of sick leave banks with Bill C-62?
Mr. Cross: It’s fair for the young people, but not for the older ones who have accumulated 200 days of leave.
Senator Moncion: But this is not leave; these are sick leave days. You only get to use them if you are sick.
Mr. Cross: Yes, but if an employee has cancer or heart disease, as many people do in our society, he will no longer have his bank of sick leave. In addition, even after using all of their sick leave days, they will still be eligible for long-term disability benefits. The system is designed for public servants with seniority. That is what I wanted to say.
[English]
Mr. Engelmann: I’m not sure if the system is best for older people. It’s good for older people who have not been sick. There are many public servants who have dozens and dozens of days accumulated. In their circumstance, if they have a chronic illness, they will have that period of paid sick leave until the long-term disability provision, which is 17 weeks. There is a two-week waiting period when there is no money, and then there is the 15 weeks.
My colleague is correct that for younger public servants who haven’t accumulated that sick leave credit, or for those that may have chronic illnesses and use it up every year, there is going to be a period of time when they have no money. Then there is going to be a period of time when they are on EI and they get a very limited portion. It says up to 54 per cent of your salary, but that is to a maximum of a certain amount.
Many of our union clients have short-term disabilities that they have been able to negotiate. They don’t even have sick leave banks; they go straight into short-term disability.
Senator Moncion: They become obsolete.
Mr. Engelmann: Some things are better for some and some things are better for others.
What the City of Toronto did when it wanted to move away from traditional sick leave banks is it gave its public servants a choice. They could remain in the old system or could choose to go to the new system with short-term disability. It is a large employer with many bargaining agents and many bargaining units. All new employees had to go into the new system that had a short-term disability process. No more banked sick leave. That was a nice way to do things and it was negotiated, as it should be.
What is happening right now is that a lot of options are being considered. I think different bargaining agents may have different priorities. Something that may be best for my client to institute may not be what the alliance or others want.
There may be some differences, but I think the most important thing is that we get some experts to look at this, that we try to avoid the situation that happened to my colleague here where there is a long period of time when there is no income or minimal income on EI, and look at options like short-term disability.
Senator Moncion: I agree with you but there is also the question of sustainability of these programs that Mr. Cross has brought forward. That is where I find there is a disconnect between — and it is a disconnect but it’s a normal one — where unions will look at it in some way. Not looking to reduce but looking to increase, as opposed to private companies where, at some point, we look at sustainability and we say we cannot sustain this over a long-term period. At some point we cut, but we preserve jobs.
It’s the way we bargain. That is the way we did it.
Mr. Engelmann: If I may, sick leave is costed, just like everything else, like all your other benefits, and you look at total compensation.
Senator Moncion: Is it costed in the federal government?
Mr. Engelmann: Sure, it’s costed and it will be costed. This is what is happening this year; this is why they have these different experts and they have these different insurance companies. There aren’t that many to choose from, but if you’re managing money you can choose the right company that has the best benefits at the best price. That is part of this negotiation.
The Chair: You’re certainly creating a lot of interest.
Looking at the time frame, we each have three minutes to ask a question and for a response so that we can move to the next set of witnesses.
Senator C. Deacon: I have to ask a question of Mr. Cross. You were in the public service for 29 years. Were you overpaid for each of those 29 years? You don’t need to answer.
Mr. Cross: Ask my boss.
Senator C. Deacon: I do like the discussion where it’s focused on apples-to-apples comparisons. As you said, Mr. Engelmann and Mr. Cross, I really look at productivity versus what people are being paid as being a key thing. I know that’s a challenge in the public sector, but I can’t look at benefit packages, sick leave and all these different items in isolation of the entire pay package. The productivity that we’re gaining — sometimes it’s better to pay people more, because you get more output than if you pay them less. Productivity is key.
It’s a tough thing in the public service, but I’d really love each of you to quickly point us in the direction of analyses of productivity as it relates to public services or publicly funded services, where the public sector funds the jobs but they’re not necessarily government employees.
Mr. Cross: I wish I could, but that is something that Statistics Canada has wrestled with for decades. At some point, we just gave up. We said that we were not going to try to measure productivity in the public sector. It can’t be done.
What is the output of this committee? It’s just so hard to define output. Statistics Canada defines the output in public administration by measuring the inputs. So the assumption is that there is no productivity growth, and that’s why they will not publish statistics on productivity. They say it is impossible to measure productivity in so many areas.
What is the output of Statistics Canada? The number of publications? Better knowledge? How do you measure better knowledge? Is the knowledge being used right?
The Chair: Thank you, Mr. Cross. Mr. Engelmann, do you have any comments?
Mr. Engelmann: I agree. It’s very difficult to measure, but I think we have a public service in this country we can be proud of.
Senator C. Deacon: We’re looking for quantitative versus qualitative.
Mr. Engelmann: It’s hard to measure, really. I’ve been a lawyer in the public service and private practice, and it’s hard to do that across the board. In every office, you have bigger producers and medium producers.
Senator C. Deacon: I agree. We have to focus on apples and apples.
Mr. Hebdon: One of my first papers published was on innovation in the public sector. It was a case of the provincial government in Ontario implementing a new system of online dealing with birth and death certificates people asked for. Productivity could actually be measured in that situation, because you have the actual number of items. I did that, and we showed that actually bringing in the new technology improved productivity.
But they are rare cases. I admit, this is not something easy to do at all. But there are some jobs you could benchmark that way.
Senator Duffy: Thank you all for coming. We have only a few minutes left, so I’ll cut to the chase.
We’re grateful to have your expertise. I wanted to raise a question of episodic illnesses. The Multiple Sclerosis Society has written to us about sick leave and people who are relatively young who have episodic illnesses, like MS. They feel adrift, not just in the public service but across the country, because they’re looking for someone to adapt an employment health care plan that works for people who are great for X per cent of the time and then, all of a sudden, are knocked down by disease. That’s something I hope the federal government and the experts will deal with.
The final point I want to make, related to the discussion tonight, is I don’t think anyone doubts the quality and dedication of members of the Public Service of Canada. I think, however, Mr. Cross hits on something when the perception out there is that government workers, including senators, have it pretty good, and the benefits, the pay and so on are pretty good. Was it $1,600 a week? Was that your number, Mr. Engelmann? That works out to $83,000 bucks a year. I know a lot of people in P.E.I. who would think that’s a pretty good paycheque.
All I’m suggesting here is that while we don’t have an answer, as a society, we must be careful not to create a situation where we have an “us and them,” because we don’t have to look very far to the south to see the kinds of societal cleavages we could have when we don’t have a system in which everyone feels they’re being treated fairly.
The Chair: Do you have any comments on that?
Mr. Cross: Briefly, regarding the $83,000 I mentioned, that’s just the average wage. That doesn’t include all of the benefits — the drug plans, the pensions and everything else.
When I was at StatsCan seven years ago, for internal budgeting purposes, we said the average cost of an employee was $100,000. That was seven years ago. That’s $125,000 today. That’s a lot of money.
The Chair: Thank you.
Are there any other comments? No.
[Translation]
Senator Bellemare: My question is addressed to you, Mr. Cross, and concerns your calculations showing that public sector employees take many more leave days than private sector employees.
How do you reconcile your results with those of Statistics Canada? According to Statistics Canada the absenteeism rate in the public sector is only 1.1 days greater than in the private sector, when you take three factors into account: employees are generally older, there are more women, and more unionized workers.
How do you reconcile your data with Statistics Canada figures?
[English]
Mr. Cross: I touched upon that earlier, and I’ll repeat that I’m aware of that study. My criticism of it is that it assumes that if the private sector were unionized the way the public sector is, it would behave the same. I tried to make the point that you can’t make that assumption, because the relationship between the unions and management in the public sector is much different than the relationship between unions and management in the private sector. In particular, there’s a check on strikes in the private sector. I mentioned that if GM goes on strike, I can buy a Toyota, but if doctors or teachers go on strike, there isn’t another teacher or doctor I can go to.
Public sector workers are in a position to extract much more. To simply say that if we had unions in the private sector, they’d get the same benefits, I don’t think so. People who say that don’t understand how the private sector works.
[Translation]
Senator Bellemare: In that case, perhaps we should increase the level of benefits provided by universal insurance for everyone, and have very high-quality portable universal insurance for everyone. That would be another option.
[English]
Mr. Cross: And firms leaving Canada to go to the United States is another option.
The Chair: With this, honourable senators, we will say to the witnesses, thank you very much for sharing your comments. You’ve certainly ignited interest as we look for Bill C-62.
We now resume our study of Bill C-62. We have before us the Parliamentary Budget Officer, Mr. Yves Giroux. He is accompanied by Jason Jacques, Senior Director, Costing and Budgetary Analysis, Office of the Parliamentary Budget Officer.
Mr. Giroux, I have been informed you have a short statement to be followed by questions from the senators.
Yves Giroux, Parliamentary Budget Officer, Office of the Parliamentary Budget Officer: Thank you for the invitation to appear today regarding Bill C-62. With me today I have Jason Jacques, Senior Director, Costing and Budgetary Analysis.
[Translation]
In 2014, following a request made by a member, the Office of the Parliamentary Budget Officer published two reports on sick leave in the federal public service. The first report presented a financial analysis of absenteeism in the federal public service based on results for the 2011-12 fiscal year. It estimated that the salary costs for sick leave paid for the year amounted to $871 million. The report also pointed to the difference between the expenses due to sick leave and the liability posted by the goverment for those leave days.
The second report presented a financial analysis of sick leave cost differences among 20 departments. That second report concluded that since the cost of sick leave does not represent an additional cost in many cases, because absent employees are not replaced, the relative cost is not significant financially, and I want to be precise, “according to the accounting definition” — because when you are talking about $800 to $900 million, it is significant, even to me.
[English]
In the 2018 Public Accounts of Canada, the government lists a future liability of over $1.7 billion for accumulated sick leave entitlements. Jason and I would be happy to respond to questions you may have regarding Bill C-62 or other PBO analysis. Thank you.
The Chair: Thank you.
Senator Marshall: Thank you for being here this evening. I read the two reports. I don’t know whether I should be looking at Mr. Giroux or Mr. Jacques because it’s before your time, but I think Mr. Jacques worked on the project.
When you read the reports, it leaves the impression that some of the data is unreliable. I looked at a couple of areas, like page 3 of the February 2014 report, which says:
. . . the PBO was unable to reconcile the data from TBS with the data provided by the departments . . . .
When you look further, page 5 states:
The data provided by TBS does not enable analysis to determine how significantly sick days have been over-stated due to the exclusion of disability leave.
So could you just speak to the reliability of the numbers that you had to work with and extend your answer to include if we wanted to see the numbers updated. Also, do you think that the problems with the Phoenix system would have a negative impact on trying to get a handle on the numbers that are more current?
Jason Jacques, Senior Director, Costing and Budgetary Analysis, Office of the Parliamentary Budget Officer: With respect to the reliability of the numbers, you’re bang on. I think it was one of the key limitations of the work that we did. I know at the time in 2014, we were quite surprised to the extent to which the government was not consistently tracking sick leave across departments and agencies. Some departments are doing quite a good job and they were able to share data with us; other departments were not. In some situations as well, once we actually started to poke and prod and tease out the numbers, we realized that even though titles were the same around the numbers, departments were actually tracking very different things which made it challenging for us to go beyond the aggregate level with respect to the overall findings.
With respect to a follow up and whether Phoenix would actually limit or inhibit doing follow-up work, I can say potentially. And again, just having followed the work of the Auditor General and looking at the observations made by the Auditor General in the 2018 federal public accounts, I imagine it would present a bit more of a challenge. That said, we’re certainly open to circling back and administering a survey back across departments and agencies to see what we can come up with.
I know something we said to this committee in the past is the public service is a large organization and there is a lot going on. And unless parliamentarians are paying attention to it and actually asking questions, there is a good chance it won’t necessarily be tracked into a meaningful level of detail.
Since we did this work in 2014, there has been quite a bit of work done on sick leave and quite a bit of attention paid to it. Especially looking at the proposed legislative amendments in Bill C-62, one would imagine, similar to what one of your previous panellists indicated, if there are ongoing negotiations right now that could have a fiscal impact of billions of dollars, there is better data actually supporting those negotiations.
Senator Marshall: Could I ask Mr. Giroux a general comment, since he is the new Parliamentary Budget Officer?
The Chair: Please do.
Senator Marshall: This is related to when you were talking about the reliability and availability of the information, Mr. Giroux. You’re new in the position, and I’m sure you’re not going to be surprised to hear me say this: Sometimes it’s a challenge to get information from the government. I know that the previous Parliamentary Budget Officer had been trying to get some financial data on the new Canadian defence policy: Strong, Secure, Engaged. I’m still looking for the information — I don’t know if you’re still looking for the information — but is that something that the committee should write you on or is that something you would be undertaking anyway?
Mr. Giroux: You’re talking about the defence policy?
Senator Marshall: Yes.
Mr. Giroux: It’s very helpful if I get a request from a committee such as the Committee on National Finance to go to the departments armed with a request from parliamentarians to ask them for information.
Senator Marshall: Okay.
We had a similar problem with the infrastructure program, because the previous Parliamentary Budget Officer had conducted a review of the first phase. So if we wanted a continuity of that, and for you to go back and look for information from those same departments, should we also follow up in writing?
Mr. Giroux: For this one, it would be helpful to follow up in writing, but probably less necessary because we are already engaged quite extensively with Infrastructure Canada, and they have proven to be quite helpful in providing the information that they have.
The issue with infrastructure is not that the government does not want to disclose information. It’s rather a lack of sufficiently detailed or refined information, especially when it comes to results or outcomes. So the information that they have, they generally are happy to disclose and share it with us. But what we find is that the level of information or details that you would expect for a program of that magnitude is not always there. It’s in good part due to the fact that it’s partnerships with other levels of government.
Senator Marshall: That’s the availability issue. Thank you.
The Chair: Thank you for clarification.
Could we please stick to the study of Bill C-62? I have given some latitude, but I will certainly make sure that we stick on Bill C-62. Thank you.
[Translation]
Senator Pratte: In the comparison you made of different types of sick leave, you looked at the federal public service as compared to the private sector. Afterwards, you tried to see what effect age, gender and unionization had on the figures. One of the previous witnesses told us that that method is not valid because it assumes that private unionized enterprises would behave exactly like the public sector. I’d like to hear you on that: To what extent is the comparison on page 6 of your report valid or not?
Mr. Giroux: In my opinion, the comparison is valid, because those businesses tend to behave in a similar manner when they have a similar environment and are of a comparable size. It’s difficult to compare the public sector to another sector, because it is a monopoly by definition. We can compare it with other, provincial public administrations, which is not a bad basis for a comparison, but the private businesses are not a bad basis for comparison either, especially when they are large and have a unionized workforce and facilities everywhere in the country.
The comparison is more difficult and the comparability issues are more egregious because, as some other witnesses have said before, there is no short-term illness or disability insurance within the federal government, whereas this exists in the private sector.
In the federal government, if an employee is sick for several months, and if he has accumulated enough sick leave, he will use it all up. However, in the private sector, where there is a mosaic of benefits, there can be sick leave systems with a few sick leave days, five or 10 per year, which is not that unusual, and a disability regime which comes into effect much more quickly, and this in fact skews the data comparison somewhat.
Senator Pratte: I’d like to go back to the cost of sick leave. In one of your reports, you pointed out that in several departments, people who use sick leave days are not replaced at work. So, this is not a direct cost, but the government counts it as a debt, a commitment. Is it right to consider that as a debt, if employees are not replaced?
Mr. Giroux: That is a very good question. In a previous life, I worked on this file. I am not biased, but I have information, because I was there when some of the decisions were made. The liability is a bit higher than the amount the government struck off and mentioned as savings in Budget 2015, to account for the fact that people do not have to be replaced.
In my opinion, the estimate is nevertheless much higher than the real cost, but this brings back the question. There is a cost, even if people are not replaced; there is a loss of productivity. Some people have to do a bit more, and work additional hours. There are a lot of intangibles; a loss of productivity, and the potential use of sub-contracting and contract employees. It’s very difficult to estimate the cost, but the cost that will be paid is much lower given the liability that is on the books, even if you take those factors into account. It is eminently difficult to estimate.
Senator Pratte: Thank you very much.
[English]
Senator Andreychuk: Just a few clarifications. You’re saying that you could not get the data or that it was inconsistent from area to area. Was that because the definitions of sick leave are different, or is it in the administration of the sick leave recordings in various ministries?
Mr. Jacques: At the time it had to do with the latter, so it had to do with the recording by the administration.
Senator Andreychuk: Therefore, when you’re banking these, we can’t rely on the data from one ministry to the other to see what the sum total is for the government because, again, we are talking about apples and oranges. We’re going to have apples and oranges within our public service.
Mr. Jacques: When we prepared our report, it was in 2014. It was based on earlier data. Subsequent to that, there was a new accounting standard under the Public Sector Accounting Standards Board that required the Government of Canada, for the first time, to actually book liability on its balance sheet. In order to do that and to have a clean audit opinion, you would need solid data that the Auditor General could go through.
As well, as was pointed out and is the focus of the current debate and discussion around Bill C-62, there is a tremendous amount of focus around changing the sick leave regime across the federal public service, which, as Mr. Giroux pointed out, would potentially cost significant amounts of dollars. So one would presume there would be better data at this point to support that decision-making.
A comment to the experience around infrastructure: I would say that once we and parliamentarians start asking questions, the public service has a funny way of all of a sudden focusing their interest on getting the numbers right, trying to reconcile them and generating something they can present to the public.
Senator Andreychuk: Maybe it’s already dated, so you might not want to answer this, but the definition of sick leave itself is subject to constant change. If you talk 30 years ago, sick leave was if you broke your leg or had a heart attack. Now we’re talking about mental health illnesses, addictions. We have added on and on to the definition of sick leave.
That’s hard to track and maintain because it is not as finite as looking down and seeing a broken leg. The complexity of medical conditions today leads me to believe that in this new negotiation, we really don’t know where it’s going to go because we’re not quite sure what both parties are going to bring to the table, what they are going to ask. We don’t really know what the liability will be for taxpayers.
Mr. Giroux: We have an idea of the liability because there is a limit to the sick leave that employees can claim in a year, and we know what the accumulated sick leave is. We have a pretty good idea of what the accumulated sick leave is across the public service, and we know the utilization rates. That’s how we can come up with an estimate of the liability.
Senator Andreychuk: But as I understand, they are going to go fresh to the table under new auspices to negotiate. So we’re not sure what they are going to do. It is a negotiation, so two parties are going to come to the table. We don’t know what those expectations on either side will be.
Mr. Giroux: There is a big element of uncertainty.
Senator Andreychuk: Back to square one, if I understand correctly.
The other thing is this: Is it really sick leave? If you ask your workers to work longer and they are not then causing overtime, you might say, “Take Friday off.” So we have all the discrepancies. We need some sort of management of what sick leave is and how it will be documented to be sure that we’re talking about the right things.
In answer to Mr. Jacques saying that we should be asking the questions, I would ask you to reflect on how do we ask those questions? How do we frame those questions? I think it will be very significant. It’s a very complex field that we’re getting into, with a lot of judgment calls at every level and every ministry. How are we going to get some similarity throughout to judge it?
Mr. Giroux: I would say that sick leave is coded separately from other leave requests. If you take a sick leave, it’s coded as sick leave. If you take time off in lieu of overtime, it’s coded differently. That’s how we can have good data to work on.
The example that you gave unless employees and managers code incorrectly the type of time off that is taken, it would be coded according to sick leave is sick leave. Time off, holidays, it’s a different code.
There are dozens of codes for various reasons for absences. It should be coded correctly, but any system is only as good as the people using the keyboard.
[Translation]
Senator Forest: Thank you for being here. The information you provide is always interesting.
Page 6 of your report concludes that there is a difference of 1.1 additional days in the federal public service as compared to the private sector. When you think about it, the federal system is a peculiar system where, for instance, I could work 20 years for the federal public service and not be sick; after accumulating 244 days of sick leave, I could become ill, and before going on to the long-term disability insurance plan, since there is no short-term disability plan, I have to use up all of my bank of sick leave.
That has an impact, as opposed to what we see in a lot of businesses or other public organizations, where there is short-term disability insurance, and where after having accumulated 15 sick leave days, I would go on short-term disability, and afterwards, onto long-term disability insurance.
There is an impact on the number of sick days that can be used, because some people can use up a bank of 150 or 190 days, as opposed to other places where, after 10 days of sick leave, the person benefits from short-term disability, is then assessed and moves on to the long-term disability plan.
Does that reality impact your statistical conclusion?
Mr. Giroux: There is an impact to the extent that people who are sick for a long time, such as in the example you gave, where 200 or 300 days of accumulated leave had to be used, skew the statistics somewhat, and increase the average significantly. So, it does have a certain impact.
Also, on the issue of the fairness or unfairness to people who have accumulated a lot of sick leave days and must use them, the difference is that when you are on sick leave and use your accumulated days, you receive your full salary, whereas when you are on disability leave, you receive 70 per cent of your salary. Sick employees who accumulated a lot of sick leave do not lose any salary, whereas those who receive disability insurance lose 30 per cent of their pay.
Senator Forest: It is a matter of benefits. I pay the cost of my long-term disability insurance, and when I receive it, I am not penalized. With this reality of the 1.1 additional days, we don’t have the proportion of individuals who are sick seven, eight, nine or 10 days, as compared to public servants who will use 20, 30, 40 and 50 days. In the private sector, that does not exist because we go much more rapidly to short-term disability than in the federal system.
When I see this difference of 1.1 additional days, I tell myself that that isn’t so bad after all. The calculations would need to be weighted to see how many people used 100, 150 or 180 days of sick leave, because that has a direct impact on the statistics.
In Quebec, and this is quite singular, if I accumulate 125 days of sick leave, when I retire, I will be payed 125 days before my retirement. Are there any other provinces that offer such generous conditions?
Mr. Giroux: I am not aware of how things are done in other provinces. I know that federally, obviously, that is not the case.
Senator Moncion: You mentioned in your opening remarks that $1.7 billion was listed as a future liability for accumulated sick leave entitlements. Could you explain what that means? Also, what impact will the repeal of the other two bills and the adoption of Bill C-62 have on the figures?
Mr. Giroux: The amount of $1.7 billion that I mentioned refers to sick leave entitlements. It’s not that people will necessarily use them, but these are sick leave banks that are posted to the liabilities in the 2018 public accounts. They amount to $1.74 billion.
If Bill C-62 is passed, if I remember correctly, the impact would be nil, and Jason can correct me if I am mistaken. I think there would not be any impact, because the government has already reversed the savings that were posted to the books by the previous government when the provisions to eliminate the sick leave banks were tabled.
In Budget 2015, an amount of $900 million in savings was posted for the elimination of those sick leave banks; when the current government came to power, it reversed those savings and posted them as a liability in 2016.
Senator Moncion: And the amount that has been accumulated since then means that this bank is now at $1.7 billion.
Mr. Giroux: Yes. With the passage of time, as healthy people like me do not take sick leave and continue to accumulate it, and with the increase in the size of the public service, the liability increases.
Senator Bellemare: I have a complementary question. In the calculations done in 2015, $900 million was applied to reduce the deficit; is it not true that that measure did not take into account the fact that we would have had to replace the sick-leave-based system, and that the cost of replacing it was not included in those calculations?
Mr. Giroux: The replacement cost was not included, and I would say that that did not take much of anything into account. Aside from the liability that was posted, those estimates were not very refined. They were an approximation, and I am being generous.
Senator Bellemare: Thank you very much.
[English]
Senator C. Deacon: Thank you. My colleagues may be tired of me asking this question constantly, but I struggle with public service salaries and benefits in terms of market comparisons. I come from small business, so what I focus on is productivity. I keep being told that it is almost impossible to measure in the public service. Yet I’ve chatted with others, and just recently with my colleague Senator Pratte tonight, about the fact that we could be measuring very specific activities. This is like a board meeting; you could be looking at this board meeting and seeing some comparators as to what it costs in other situations and what sort of output you’re gathering.
Is that work that you’re looking at? From my standpoint, it’s crucial to making sure there is fair pay and that we are a competitive employer, but there is also value for money being received by Canadians and Canadians can have confidence in the fact that they are getting good value for money.
Mr. Giroux: It’s not something that the office has looked at recently, and it’s not something for now that is in the pipeline for us, but productivity in the public service is indeed hard to measure. Hard doesn’t mean impossible.
There are a couple of examples that come to mind when I hear productivity in the public service, such as the number of support staff. When I started in the public service there were computers, but slightly before that there were not many computers and the number of support staff required to type and to prepare documents was astonishing. With the advent of computers and printers, the support staff have decreased in numbers significantly.
Think about filing tax returns; 95 per cent of tax returns have no human intervention when they are filed electronically. That wasn’t the case two decades ago when people filed their taxes and somebody had to key in the numbers. So there have been improvements in productivity, but they are hard to measure on a year-to-year basis. Again, hard doesn’t mean impossible.
Another example that would certainly benefit from unit cost measurement is a briefing note. In my career I’ve been frustrated more than once by the number of revisions that my bosses made to briefing notes I had written for the minister or the deputy minister. But if there was a log sheet beside and counting the number of hours or minutes that every level spends on a briefing note, you could quickly come to realize that a simple briefing notes costs thousands of dollars when you count all the time that everybody puts into dotting the I’s and crossing the T’s, sometimes purely a cosmetic change.
Senator C. Deacon: I love the way you’re looking at it. I encourage you and I would love to know what I could do to encourage you to look at it further. The way you’re looking at it makes my heart sing.
Senator Duffy: Thank you both for coming. We were talking about the integrity of data. As I understand Phoenix, it was designed to track pay, benefits, sick leave, vacation leave, all of those various things, in one massive solution.
Has the failure of Phoenix affected the integrity of your data related to sick leave?
Mr. Giroux: We haven’t looked at sick leave since the advent of that wonderful system that’s called Phoenix, and that may be for sale for cheap soon; I don’t know. I don’t think it would have a material impact on sick leave data. There might be some side effects, but the HR systems for recording leave, absences and presences are not always the same platform as Phoenix. Some departments use different systems.
That’s one of the problems for the integrity.
Senator Duffy: So they all didn’t migrate to Phoenix at the same time?
Mr. Giroux: I’m not a specialist in these very complex systems, but I think that departments still have the same systems they had for dealing with absences. Some have PeopleSoft. Others still have CAS, but they feed into Phoenix, which is for the admission of cheques and the administration of pay. Absences and presences are still, to my knowledge, dealt with under the same disparate or different systems in different departments.
Senator Duffy: Thank you very much.
The Chair: Thank you, PBO, for answering the questions and sharing the information.
With this, honourable senators, before we declare the meeting adjourned, I want to bring to your attention for clarity that there will be extra sittings of the committee when we return on the week of the 19, which means that there will be three meetings with witnesses to go over the Supplementary Estimates (A) and one meeting on the public accounts.
Then also, honourable senators, I remind you that we are planning on proceeding to clause-by-clause consideration of Bill C-62 at our next meeting, on Tuesday, November 20.
Also, please allow me to say that if you are thinking about proposing any amendments you should contact the law clerk as soon as possible. His office can help you individually with the drafting and the confidentiality. Remember, that if we should want to propose any amendments, please prepare the documents through the law clerk. The amendments should be given to the clerk so that they could be distributed with copies available for all committee members.
If there are no questions on the procedure, I now declare the meeting adjourned.
(The committee adjourned.)