A sign of bad management?
Conservatives went on hiring binge, then reversed course
OTTAWA — After nearly a decade in power, the Conservatives have come full circle as employers.
They spent their first years creating the largest government workforce in postwar Canada. Then they slimmed it down again, starting in 2010 — a net addition of 66,000 followed by a net reduction of nearly 63,000.
As of last month, nearly 317,000 worked for the federal government, its various agencies and the armed forces — just 1% more than when the Conservatives were sworn in early in 2006.
On the eve of a federal election, Prime Minister Stephen Harper now finds himself in the crosshairs of public-sector unions concentrating on the last half of the Conservative decade.
“This government is cutting public service budgets across the country, without regard for the safety and welfare of millions of Canadians,” read the newspaper ads published this week by the Public Service Alliance of Canada, the largest federal government union.
PSAC may not have long to make its points: its spending on ads will be limited under the rules that kick in once the election campaign begins.
Certainly, the Conservatives have been shelling out less for government operations in real terms (i.e. after discounting inflation). Excluding transfer payments such as old age security and employment insurance, the government has bumped up program budgets by just 0.5% annually since 2010 — less than the rate of inflation. During the Tories’ first four years in power, in sharp contrast, program spending surged 8% per year.
But overall, government workers haven’t done badly, certainly in comparison with workers in other industries. The federal government’s total payroll last year was $45 billion including benefits, up from $29 billion in 2006 when Stephen Harper was sworn in as prime minister.
The rise was not gradual. Pay and benefits across the federal government jumped 9% annually from 2006 to 2010, then weakened considerably to 2% per year during the following four years — reflecting the big drop in the number of employees.
As any personnel expert knows, there’s an important message in these kinds of swings in workforce size: It’s usually a sign of bad management.
Adding on people quickly can result in poor decisions or inflated pay, not to mention the disruption caused by a small army of inexperienced or new employees who must get up to speed. On the cost front, the government incurred significant future liabilities in the form of pension entitlements and other benefits (other factors besides downsizing were also involved). Public Accounts estimated these liabilities approached $225 billion in fiscal 2014 (ended March 31) — up $34.5 billion from five years earlier.
When the Conservatives retrenched, the government made good its obligations to pay severance and pick up costs related to early retirement. Add to this the uncertainty created by workforce adjustment programs — in which tens of thousands of government workers cope with multiple options concerning their future — and it’s little wonder anxiety is so prevalent in many federal departments.
The initial rapid rise in the size of the federal workforce was a response to the onset of the 2008 financial crisis. The thinking was that if the private sector stopped spending, government had to pick up the slack to prevent economic collapse.
When it became apparent a couple of years later that the world hadn’t ended, the Conservatives reasserted a party imperative: The budget must balance. The late finance minister Jim Flaherty began signalling restraint in 2010, then accelerated things with his March 2012 budget. An important catalyst was the introduction of executive bonus programs that rewarded managers who trimmed their budgets.