Temps, students trim PS payroll as spending swells

The federal government is scrimping on payroll costs by hiring cheaper student and casual workers as spending this fiscal year hits a six-year high, says a new report by the budget watchdog.

The report, released by Parliamentary Budget Officer Jean-Denis Fréchette, found the Liberal government’s expenditures were 5.7 per cent higher — nearly $3.4 billion — in the first quarter of the 2016-17 fiscal year compared with the same period the previous year.

First-quarter spending reached $62.9 billion. Over the same threemonth period last year, the government paid out about $59.5 billion, the analysis found.

But that spending wasn’t showered on Canada’s public servants. Compensation costs — which account for more than two-thirds of operating costs — actually declined 1.3 per cent or $120 million as other operating costs inched upwards.

The dip is a combination of the impact of the Conservative-era job cuts and operating freezes and a significant shift to cheaper temporary employees.

This decrease is the latest in a three-year decline, taking firstquarter employee costs to $8.55 billion, a level last seen five years ago.

But the PBO argues this decrease has little to do with fewer public servants. The number of public servants has fallen since its peak of 283,000 in 2010, before the Tory cuts, to about 257,000 people over the past two years. Rather, the report points to a shift to hiring fewer full-time permanent employees and a growing reliance on term, casual and student employment.

The number of full-time employees dipped 1.4 per cent between March 2014 and March 2015. At the same time, the hiring of term workers jumped 9.3 per cent. Casuals increased 8.3 per cent and students rose 6.0 per cent. This hiring shift comes at a time when the government has turned up the pressure for baby boomers to retire so a new generation of millennials can be hired.

Hiring temporary workers gives departments more flexibility and saves money on pensions and benefits and the annual increments permanent employees receive every year.

Every job in the public service has a pay range. Newcomers start at the bottom and work their way up that range, each year getting an increment worth between 3.5 per cent to four per cent of salary.

The $45-billion compensation bill is one of the government’s biggest single costs. Wages and salaries account for about $32 billion. A 2012 PBO report on compensation estimated the average federal employee costs taxpayers $114,100 when pensions and benefits are rolled in.

The government and 18 unions have been locked in a contentious round of collective bargaining for two years, stalled by the government’s push to replace the existing sick-leave regime with a shortterm disability plan.

The largest union, the Public Service Alliance of Canada, has tabled a proposal seeking a more than nine-per-cent raise over three years.

The Liberals haven’t made an offer since taking over the reins for collective bargaining, but the 1.5-per-cent increase the Tories offered over three years is still on the table.

A one-per-cent-a-year wage hike would increase the wage bill by $300 million a year.

The unions had high hopes when the Liberals promised to bring back fair collective bargaining that the Tories’ sick leave proposal would be taken off the table or significantly improved.

The Liberals have improved that proposal, but it remains on the table.

The Liberals also plan to continue the Tory policy that departments will have to retroactively fund any wage increase out of existing budgets for 2014-15 and 2015-16, when the last operating freeze was in place.