[Recorded by Electronic Apparatus]
Wednesday, May 8, 1996
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[English]
The Chairman: I call this meeting to order. We have a quorum. Our witnesses today are from the Social Science Employees Association - William E. Krause, president; and Ian R. MacKenzie, research officer.
We're grateful to you for coming before us and we apologize for the delay.
Mr. William E. Krause (President, Social Science Employees Association): That was fine. We don't mind waiting.
On behalf of the membership of the Social Science Employees Association, I would like to thank the committee for allowing us this opportunity. Normally we would have prepared a brief for the committee with an assessment of the budget bill and our recommendations. Unfortunately, the speed with which Bill C-31 was brought to committee has prevented such a brief. We hope the committee will take a long hard look, particularly at those areas where the government as employer is attempting to take authority from Parliament or is seeking to restructure the collective bargaining environment to be needlessly confrontational at the expense of government employees and service to the public.
This bill is plainly a power grab by a government and its senior bureaucrats intent upon rolling back public servants' benefits and wages. These ends will be accomplished through the use of Governor in Council authority and by the abolition of third-party arbitration.
Naturally, we have no illusions about the government's intentions. However, in the past the government was forced to be specific with Parliament when it sought to roll back our benefits and freeze our wages. We of course always had an opportunity to be equally specific before this committee in explaining our concerns.
This bill establishes new precedents, effectively removing Parliament from its role of overseeing the government as the employer. It would further give the government the effective power to dictate wage settlements and employment conditions to its employees by suspending arbitration as a recourse mechanism. This alone would put management and labour on a needlessly confrontational footing, where service to the public will suffer regardless of the outcome of negotiations.
I would like now to refer to specific provisions of this bill that support this view. First, this bill amends section 11 of the Financial Administration Act so that Treasury Board, through an Order in Council, may amend the workforce adjustment directive in relation to alternative service delivery. The intent of this clause is to roll back the workforce adjustment benefits for those unions that will not voluntarily surrender these rights.
Subsections (6) and (7) have been designed so the employer may extort concessions from bargaining agents. We ourselves have been threatened by Treasury Board officials, and indirectly by the Treasury Board president, Mr. Massé, for not surrendering our rights in this manner. We find this conduct not only a contravention of a Staff Relations Act, but morally repugnant. Worse, it is being implemented in such a way as to remove any future parliamentary overview on the specific details of alternative service delivery.
We are recommending that both subsections be stricken and the section be redrafted. If the employer wishes to change the workforce adjustment directive, it Should honour the process it signed and agreed to as part of the Constitution of the National Joint Council. If our employer is compelled to act unilaterally, however, then it must be more specific, and subject to full and complete parliamentary review.
Second, we are concerned over the proposed changes to the Canada Labour Code, specifically article 47.2. This is a new article giving the employer, through Governor in Council, an authority to prevent successor rights where it is the employer's view that it is not in the public interest. Once again, we believe that parliamentary overview on this matter is highly desirable. Furthermore, even if Parliament wished to defer its authority to government officials, there are no criteria or objective tests, nor is there any recourse mechanism for a union or group of employees, or their parliamentary representative for that matter, to challenge the employer's determination.
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We recommend that this proposed new section of the Canada Labour Code be deleted so that the government must deal with Parliament when it wishes to remove successor rights. Alternatively, if Parliament wishes to give its authority to senior government officials, there should be explicit criteria, guidelines, and a redress process.
Third, our most serious concern is Bill C-31's suspension of arbitration as a recourse mechanism. This is the most surprising and disturbing element in this budget. By suspending arbitration the government is gambling in an necessary confrontation with labour, which may lead to work stoppages or a massive strike similar to that which occurred in 1991. More likely, the government is hoping there is little employee will for a strike owing to the government's strike-breaking power, its ability to impose its will through legislation, and the six years of pain endured by government employees.
Removal of arbitration will therefore lead to further concessions and roll-backs, effectively destroying public service morale. Whatever the motivation of the government, it would seem that the Canadian taxpayer will be the loser in this confrontational gamble, as the only certain outcomes will be either work stoppages or severely declining morale and productivity, or both.
The government suggestion that ``We cannot run the risk of allowing independent arbitrators...to award compensation increases that the fiscal framework could not accommodate'' is wholly misleading. In my 27 years in public life I have yet to see an arbitral award where a group of government employees received an increase in salary that even equaled, let alone exceeded, an award to a comparable group in the private sector, or matched the rate of inflation for that matter. For two decades government wages, on average, have lagged behind the private sector counterparts and the cost of living. Arbitration or the fear of arbitration has been the only measure to prevent wide-scale roll-backs in our collective agreements.
It is clear that increases in government employee compensation are no threat to the government's fiscal framework. The government's approach on this matter is so heavy-handed as to betray its true intent. The employer knows full well that arbitrators, while conservative in their awards, are generally unwilling to strip long-standing clauses from contracts. This government's touted to return to collective bargaining, with the removal of arbitration, is really a contract-stripping exercise that can only lead to further employee unrest, declines in productivity, and could promote another service-wide strike.
If the government had a real case and concern on fiscal issues, it should address it directly and make the arbitration subject to those realities. Consequently, we recommend that proposed new section 62 of the Public Service Staff Relations Act be stricken from this bill. However, if there must be some limits on the arbitration process, then certainly guidelines relative to private sector compensation or the cost of living could easily be used.
Fourth, an amendment to the Financial Administration Act, article 7.1, would give the employer the unfettered right to set the terms and conditions relative to any benefit program, including benefits, premiums, contributions and management. Currently, our benefit programs remain intact when the employer and bargaining agents are at an impasse on an issue at the National Joint Council. This amendment will allow the employer to take unilateral action to roll back any and all insurance or benefit programs. It is a parallel measure to the stripping of contracts and will invariably result in a public service morale problem. We recommend that proposed section 7.1, subsection 1, be deleted. We recommend that a joint labour-management approach be used for all benefit plans.
Finally, we note that the bill does not suspend arbitration for parliamentary employees. However, the government is proposing that section 53 of the Parliamentary Employee Staff Relations Act also be amended, so that arbitral awards must be comparable to pay and benefits for comparable units in the public service. In this way the contract-stripping process can be extended even where there is arbitration. Consequently, we recommend that amendments proposed to section 53 of the Parliamentary Employee Staff Relations Act be deleted.
There are some areas where we would have little disagreement with the way the government has proceeded in this legislation. Modifications in the area of pensions, for example, are welcome improvements. These include increased portability, changes to the vesting period, the new transfer value benefit, flexibility for the extension of coverage, and a provision for the fund rate of interest on the return of contributions.
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To conclude, despite some areas of agreement, we have serious concerns on the most pivotal and essential elements of this legislative package. The power of the government as employer should be subject to fuller parliamentary review on specific details of alternative service delivery. The use of Governor in Council authority in these matters sets a bad precedent, transferring power from elected officials to bureaucrats, and allowing the employer to coerce contract concessions through threats of an Order in Council.
Parliament must ensure that government employees are treated fairly, reasonably, and with respect, and that quality service to the public is provided without disruption. This means avoiding unnecessary confrontations and work stoppages. Don't let bureaucrats gamble with service to the public. Give management and labour access to binding arbitration.
Thank you.
The Chairman: Thank you, Mr. Krause.
Mr. Grubel.
Mr. Grubel (Capilano - Howe Sound): Thank you, Mr. Chairman.
Mr. Krause, I have to say that your battles are with the government, and they're sitting on the opposite side. I'm a member of the opposition, but I would like to prepare myself and my party for the possibility of having to deal with your organization in the future.
I find it difficult to accept the concept of arbitration. It's a big gamble. It's a big gamble for the workers, because it might turn out bad, and it's a big gamble for the employer, because it might turn out bad for them.
I also have a great deal of difficulty understanding exactly what kind of people are selected for the process. I play tennis with these guys, who do it in a big way in British Columbia. They have a certain characteristic so it's more or less predictable what they're going to do.
Wouldn't it be more equitable, and if you have any training in economics you will understand what I mean when I say more efficient, if the wages and the value of the packages of different kinds of non-wage benefits were maintained at a level comparable to that in the private sector? Do you see what I mean? That you replace the existing system of arbitration or right to collective bargaining, including strikes, with one in which we agree that for the sake of efficiency and equity there should be a clear relation to what is happening for people with the same professional qualifications in the private sector? What's wrong with that model?
Mr. Krause: Let me answer that. I think you've hit the nail on the head in a few cases. It's rather funny. We're afraid of arbitration sometimes and we know the employer is too, and the fact that arbitration exists and I can take an unreasonable employer to arbitration, and he can take a pig-headed, unreasonable union to arbitration, creates circumstances in which we have to negotiate in good faith and come to an agreement. I can think of situations in the 1980s - we took the employer to arbitration twice. If my memory serves me correctly, while inflation was running at 10%, the employer was suggesting that our members get wage increases of minus 2% and minus 2% in a two-year contract.
That was an absurd position, so we went to arbitration and got modest settlements in the area of 5%, I think. He was being unreasonable and we used arbitration.
The funniest thing happened over the next several years. We came to great settlements at the table because each of us knew we couldn't be unreasonable. So arbitration serves a purpose even when it's not used - it prevents the parties from being unreasonable. That's the first thing.
Second, we have no problem if government employees have parity with their private sector counterparts. Unfortunately, we've had wage freezes for six years, and even before that period.... If you examine the last two decades, group by group, the awards that came out of either negotiations or arbitration, government employees always received settlements that were less than those received for comparable groups in the private sector. I'm sure the data from the department of labour support that position fully.
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Government employees have always lagged behind: we have lost to the rate of inflation; we have lost to our private sector counterparts. So if you wanted to offer us parity with a substantial increase, we certainly would say, of course, we'd accept it.
Mr. Grubel: I'm not familiar with the federal number. This is obviously something that could be found out. I'm asking about the principle.
Mr. Krause: Yes, but I think you have to -
Mr. Grubel: Why don't you put on the table right now for the government...instead of insisting on this arbitration?
I would say the plus 10 and minus 2 was as wide as it was because you knew the arbitrator was going to come down the middle. Is that right? That's what he did. You've just told me that.
Why does your organization not take the position that in order to rationalize wage setting for government employees, you would from now on like to have a contract that maintains parity with the private sector? Why are you -
Mr. Krause: We would love to have contracts that would give us parity with our counterparts in the private sector. We'd love to have a mechanism for getting it. We think the fear of arbitration or taking the employer there, when he's unreasonable, would probably best give us that. We believe the employer wishes not to give us parity. The employer thinks there is a surplus of labour in the system right now, and the employer wishes to roll back our contracts and benefits.
It will become a contest of relative strength, and in a contest of relative strength, I don't think my 5,000 members are capable of shutting down the government and imposing their will. In fact I'm pretty sure the government would impose its will, regardless of consequences and regardless of what it might mean to service to the public.
Having gone through six years of a very terrible period, to be faced with three more, which will really be contract-stripping years, I'm not too optimistic about where public service morale would be.
I think the morale issue should concern you, because I equate good public service morale with an attitude that creates efficiency and leads to good service to the public.
Mr. Grubel: Mr. Chairman, I thank you very much. I'm not entirely happy with the answer. You don't expect me to be.
The point I'm making is that you have a certain amount of bargaining capital. You're putting the bargaining capital into a system that has a great deal of risk. It could go either way, especially if, as you said, part of the framework for negotiations and arbitration put in the fiscal conditions. You might end up with 10% less from some arbitrator.
Okay, so why not use your capital and say, we need a new system? All of you in the sector representing employees of the government have a considerable amount of influence. Why don't you do that?
Anyway, I made my point. I think it's time to pass on the baton.
The Chairman: Mr. Grubel, I suspect you might have unanimous consent from all members if you were suggesting private sector parity for members of Parliament.
Mr. Grubel: Well, Mr. Chairman, to be quite frank, I think Mr. Silye was very much vilified for having suggested that, but I would suggest that would be a very rational approach. It has been suggested by every study of parliamentary compensation by outside panels that I have seen.
Maybe, as MPs, we can possibly join the employees on the other side, all the bargaining representatives we have heard, and we can all unite against the government.
The Chairman: I suspect there's only one drawback: I don't think they'd want us.
Mr. Campbell.
Mr. Campbell (St. Paul's): Thank you, Mr. Chairman. I'm glad Mr. Grubel stopped before he went any further.
Mr. Grubel: What? What arrogance!
Voices: Oh, oh.
Mr. Campbell: The suggestion that we all join together around this table and go into a bargaining unit is a little odd. Also, I think Mr. Grubel will have a great many years to contemplate this testimony today -
An hon. member: In opposition.
Mr. Campbell: In opposition, that's right. But it's always interesting to hear what Mr. Grubel has to say.
Gentlemen, thank you for your testimony. You'll appreciate that for members of the committee, the niceties of the relationship between the public service, the various bargaining units and unions involved, and the government is a complex one, and not easy for us to get our heads around. So if I ask questions that betray a lack of fundamental understanding, I'm sure you'll bear with me as I go through this.
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Mr. Grubel: [Inaudible - Editor]
Mr. Campbell: Well, we've worked together a long time, and I think we give each other a lot of room in the committee.
Unless I misunderstand things, I guess what's been missing in what you've said is that in the return to collective bargaining, at the end of the day - while I'm certainly not recommending this - you now have restored to you the right to strike.
That's not something any of us want to see happen. But in your discussion, your testimony here, and indeed in your discussion with Mr. Grubel, that has not been mentioned.
Arbitration, collective bargaining, the right to strike and all that...I wonder if you would just comment on that. Some units do not have that right, and they're going to have arbitration, as I read this. You will not have arbitration, but you have that ultimate weapon, if you will, at your disposal. I wonder if you might comment.
Mr. Krause: Well, frankly.... By the way, I must admit, this is a very entertaining place this afternoon. I like the level of discussion and bantering.
You have to appreciate our association's 20-year history. Our members have always voted on the avenue they would like to take in the collective bargaining process. For 20 years, despite having the option to take the strike route, they have chosen arbitration.
They've always believed that they could better win an intellectual exercise to demonstrate their relative merit. To demonstrate the value of their work, they could better demonstrate how economists and professionals in the private jurisdiction were being paid and make the case that they should have some form of parity or near parity with them.
They could always make very convincing arguments about their living costs and how they compared to the rate of inflation, etc. After all, they are professionals at doing this kind of thing.
That was felt to be a better avenue of success than taking on the employer in strike action, because you're looking at strike action, you're not looking at rational arguments. You're looking at a heated environment, and you're looking at basically the ability to stop the employer from working. We represent only 5,000 employees. There are perhaps many bargaining agents with very few employees.
There are only two really substantially large bargaining agents - you've already spoken to them - the Professional Institute and, of course, the Public Service Alliance. Basically the rest of us are small, even though we're the third largest with 5,000.
The strike holds nothing for us. We could never shut down the government. We could never impose our will. You have to appreciate that when you remove arbitration, bargaining is unfortunately no longer an intellectual exercise. It is an exercise in the demonstration of power and force.
Mr. Campbell: I respect and am happy you clarified for the committee the position of your association over the years with respect to strikes. But for years, Mr. Krause, the fundamental labour relations theory held that ultimately you counteracted the power of the employer with your right to strike.
That's how it went for decades. Arbitration, and indeed binding arbitration, was something that entered the picture much later.
Mr. Krause: Well, this is the interesting aspect. You see, this employer is kind of unique. With this employer, if you lose a strike, you can drag your butt back into the office and sit down and work. If you're on the threshold of winning the strike, he'll legislate you back to work and impose his conditions.
So you can accept his conditions by failing, and you can accept his conditions by winning. I think that's the lesson that everybody else learned in 1991. When your employer has the power through law to impose on you what he wants to impose, the strike issue is not a viable option.
Mr. Campbell: Well, I wouldn't want you to leave the committee with the suggestion that it's only in the case of public service strikes that back-to-work legislation has been used. It certainly has been used in other situations.
Mr. Krause: I know. You're right about that.
Mr. Campbell: Okay, what -
Mr. Krause: But frankly, in our context, you ask about our members -
Mr. Campbell: Fair enough.
Mr. Krause: - and what we would do. We see no avenue in the area of the strike.
Mr. Campbell: I have one other point. When the right to strike was suspended, given that your union has never used that power, what was your position with respect to that?
Mr. Krause: We wanted other bargaining agents who had used that particular weapon to maintain their rights in the same way those bargaining agents have become before you and asked that the right to arbitration be maintained.
Mr. Campbell: One final question, Mr. Chairman, if you'll allow me.
The Chairman: Absolutely.
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Mr. Campbell: You spoke about the Parliamentary Employment and Staff Relations Act and that binding arbitration is not being suspended because those employees do not have the right to strike.
I wasn't clear on your complaint about this act.
Mr. Krause: Well, my complaint in that area is very basic. What they've done, you see.... In the rest of government they're removing the access to arbitration. So they're going to impose their will, and impose settlements and strip contracts.
For the parliamentary employees, they're saying they may have an arbitral award, but the arbitrator must rule in such a way as to respect the settlements and conditions for comparable groups in the public service.
If you strip the people in the public service of their rights and their collective agreements, and roll back their wages further, the arbitrators who are dealing with the parliamentary employees would have no recourse but to give settlements that follow this same practice.
In this case you keep arbitration for parliamentary employees. You force the arbitrator to make a ruling consistent with what the government will be doing with the rest of its employees. And, believe me, I think it's going to be brutal.
The Chairman: Thank you, Mr. Campbell.
Mr. Solberg.
Mr. Solberg (Medicine Hat): Thank you, Mr. Chairman. I just want to follow up on Dr. Grubel's remarks earlier about accepting private sector settlements.
You've said that you'd be interested, and it would probably be a pay raise for you to do that.
Mr. Krause: Absolutely.
Mr. Solberg: If memory serves, the Canadian Federation of Independent Business suggests that public servants make about 25% more - and if I remember right, that was before benefits - than their counterparts in the private sector. So I wonder how you can say that.
Mr. Krause: Very simple. The case you're quoting this day is a case of very bad statistics, comparing apples and oranges.
If I were to take our professional economists in government and compare them to comparable economists in the private sector, I would have to raise their wages and benefit packages.
I'm suggesting the comparison be done on comparable groups. When the study you quote was done, what they looked at was a rather broad.... They included in the private sector an entirely broad service sector of people doing jobs that you would expect - McDonald's, A&W, and a host of other areas like that where jobs are notoriously low paying.
If you can put into the average tens of thousands of low paid, part-time jobs in the service sector, you decrease the average. But when you take a specific group, let's say scientists in government, and compare them to scientists doing the same work in the private sector, or professionals, economists, statisticians, or sociologists, and make the comparison to private sector people doing the same work, we wind up being underneath their wage levels and benefit packages.
Mr. Solberg: Including the benefit packages?
Mr. Krause: I'd say so, yes.
Mr. Solberg: Okay, I can't really have the debate, because all I remember is the raw figure.
What about giving up the job security you currently have? I realize it's been eroded to some degree, but certainly in the private sector it's really been eroded. Would you be willing to give up your job security provisions?
Mr. Krause: Well, frankly, we've never been willing to give up something we have. It's like saying you have a loaf of bread, and I want half of it back. It's difficult.
On this issue, let's look back and see how we got this package anyway. We all agree there was a strike in 1991, and the government imposed wage restraint and dispensed with collective bargaining.
It then looked at the employees, and said, but don't worry. We've held your wages down, and we're going to do it for just two years. But in return for holding your wages, we're going to give you this package, called the workforce adjustment directive, which will give you job security and allow us to let you people retire in an orderly manner. In other words, we'll give you job security for your career.
And, of course, we know what happened. They extended the controls for more years and gradually eroded the benefits anyway to this point where I think we have very little in the way of job security benefits.
As I read the employer's authority in the current legislation, not just departments but even within those departments that are not severely affected, little individual work areas may be declared most affected and the employees may be terminated under the conditions the government has set down. There is really very little job security in the public service at this time.
Mr. Solberg: I have just one final question: do you feel your union has had much say with respect to where the cuts would come?
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One of the questions we've asked in the House a couple of times is what guarantee there is that the people at the top, the people who are in the upper echelons of management, are making the same sacrifices as people at the service end who are actually providing service to people.
Mr. Krause: My reading of the statistics shows that they are being hit in the upper end as well, but we've had no input whatsoever. Our members have had no input really in determining where the cuts shall be.
Rather than looking at where the cuts shall be, it's a process, of course, that we couldn't stop. We tried to have a role in trying to help save jobs by letting employees switch positions. We tried to get the alternates program working with our own initiatives and, of course, we found that we had some success in some places and roadblocks elsewhere.
Mr. Solberg: People at the bottom end are probably the most likely of anybody to know where the unproductive areas are higher up the management ladder, or, I guess, even other sectors of the overall workforce that really aren't perhaps providing the service that they can. So -
Mr. Krause: That's a difficult issue, because I always think these exercises work out along the lines that they're the ones who are inefficient, with people pointing to somebody else. It's a difficult case to make, and I don't like the type of argument that sets government employee against government employee.
I think the way you approach this is rationally. Government has to decide what services it wishes to give the Canadian public, and the public should have an input in determining that as well. That's perhaps what has been missing.
When we know what the public wants, then we have to organize ourselves in such a way as to deliver it in the most effective and efficient manner possible. That should determine how efficient we're going to be, based upon what functions we have to perform. That's the way it should happen.
It should start with a concept of what the Canadian public expects from their government. From that you determine what you do. Then once you determine what you do, you as parliamentarians can hold senior bureaucrats responsible for delivering the programs in an efficient way.
The Chairman: Thank you, Mr. Solberg.
Mrs. Brushett, please.
Mrs. Brushett (Cumberland - Colchester): Thank you, Mr. Chair.
Mr. Krause, I would like to come back for the moment to wage parity with the private sector. Prior to coming to Parliament I was in the private sector, and a common concern amongst private business was the wage settlements that all governments in general, but the federal government in particular, had made.
A consistent complaint through the years was that we can't compete with the federal government, we can't get people, and so on. Whether it was a secretary at that level, whether it was a field agriculture person or an engineer, it was considerably higher.
I guess I'm interested today to see if there are numbers out there, because I think that is still a constant complaint.
Mr. Krause: That observation is accurate, because you come from eastern Canada, don't you?
Mrs. Brushett: Yes, I do.
Mr. Krause: An issue that arises is that wage rates in the maritime provinces are somewhat depressed.
One of the things we do in establishing contract settlements for the federal government is see that they are uniformly applied and we of course favour uniform applications. We believe if a person does a job that has certain value, that person should be compensated the same as someone else who is doing the job.
Unfortunately, when you have areas of the country where the wage rates are significantly depressed, as in the Maritimes...it turns out that a secretary's salary in the Maritimes will exceed the normal secretary's salary there. Unfortunately, that same salary will be too low out in Vancouver, Victoria, or Toronto, for example. So this is one of the problems you have on regional rates of pay.
I must add again that our position is that rates of pay should be uniform. I know the employer has been making arguments that he'd like to see regional rates of pay, and we don't support that position.
Mrs. Brushett: Well, this is a little off the topic, but in terms of public works, taking rents, paying leases, and so on, are you in favour of the same argument, that we would pay the downtown Toronto rate in rural Nova Scotia?
I mean, this is where the argument gets very cumbersome, because when you have this standard, it's way out of whack, and it almost prohibits the normal flow of the economy in the private sector.
Mr. Krause: Frankly I haven't thought of the issue from that perspective. I should mull over it, give it some thought, but, as I said, I'm not here to make arguments for our members having lesser wage rates in the Atlantic provinces and appreciably higher rates out in Vancouver.
I'm sure that if the employer felt that wage rates were too high for government employees in the Maritimes, he'd be out there saying that they have to be lowered. But I don't think he's going to make the corresponding argument that the rates of pay out in Vancouver should be raised because government salaries aren't sufficient. There's a cost-of-living argument on both sides. I'm not sure he's going to be willing to make the argument on both sides.
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Mrs. Brushett: Just as a final question from me, Mr. Chair, there are line-ups at my office for any job that might ever come out of the public service. That's probably true across this country.
Also, in the private sector we talk about the freezing of public sector wages over the past few years. The private sector has followed suit in most instances. I know municipal councils, provincial governments, and private business will look to try to keep in line. So it's not that they have escalated, as some might lead us to believe.
Mr. Krause: As an economist, one of the most disturbing things I've noted is the fact that the federal government recently pointed at corporations and said, you know, you're not doing your fair share to create employment. And this is after I believe the government itself has not done as well as it should have in employment and job creation.
What I see happening is that both the private sector and the government sector are emulating the same philosophy: how efficient can we become, how close to the bone can we strip our workforce so that we can make the bottom line as sound as possible, as large a number as possible? If we can get rid of employees to do it, let's go ahead and do it.
Everybody seems to be intent on getting rid of employees, but then everybody looks around and says, well, why do we have 9.5% unemployment?
I think large government and large business will have to get together and say, wait a minute, are we doing the right thing when all of us are rationalizing, restructuring ourselves, and trying to become superefficient, all at the same time together, with the provincial governments?
I can't see the employment situation getting any better. That is why you're going to have line-ups when you want to have a job advertised these days, whether it's in the public service or private sector.
In fact, I recall a staffing action we did recently in our union - and we're private sector in that sense. For a research position we must have had in excess of 100 applicants, with many candidates having PhDs. It just told us there is a large number of highly qualified, bright people out there who are looking for work. That's a sad commentary on where this country is.
Ms Whelan (Essex - Windsor): I want to ask a quick question, not being that familiar with whether or not there are any differences between the federal and provincial public services with regard to what benefits you have.
I know that in the provincial public service, once you have achieved a certain number of years of service, there is the opportunity to take a leave of absence for a year. During that time you can do whatever you want, including finding another job.
After that leave of absence is completed, you can then quit your job and keep that other job you've now found. And when you quit your job working for the provincial government in Ontario, you'll receive severance pay. Does that apply in the federal government, as well?
Mr. Krause: As I understand it - I again could refer to the contracts that our members have, but I assume those are the same provisions that exist in other contracts - our members can take a one-year leave of absence for personal needs.
Sometimes it's to look for employment, and other times it could be to take care of an aged relative. There are many different needs for taking personal needs leave, not all of which relate to other employment opportunities.
They have the right to take a year off, and they can go back to their jobs. When they go back to their jobs, like any other government employee, they've been declared surplus just the same.
Ms Whelan: I'm not talking about their being declared surplus; I'm talking about terminating their employment themselves.
Mr. Krause: Anybody can retire anytime they like, but when you retire and get severance, the benefits are much smaller than the benefits you get when you are surplus. There's a substantial dollar difference there. Do you know the differences?
Ms Whelan: No, but my understanding is that provincially if you choose to leave your job, you quit just because you found another job, you will get a week's worth of pay for every year you've spent in provincial service, not counting your pension money that you have elsewhere.
Mr. Krause: My understanding in the government sector is that when they leave government voluntarily, federal government employees may get half a week of salary for each year of completed service, to a maximum of 26 weeks. So on a voluntary resignation, the maximum benefit they accumulate comes to approximately 13 weeks of pay. That's all they get.
That is less than the benefit - you're right - that exists in the provincial sector.
Ms Whelan: I understand that, but I'm not aware of any private institution that would offer me severance pay when I quit my job.
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Mr. Krause: That's interesting, because we have employees in our association who have a contract that gives them severance pay. I know many executives who have left their positions in private industry and severance packages are given all the time.
I think it's normal, depending on the contract arrangements between the employees and the employer. If there is a contract, there are generally severance provisions. I've seen them in all ways, shapes, and forms in the private sector.
Ms Whelan: I'm talking about what I would consider to be the average Canadian involved in a job that's not on a contract basis who chooses to leave for another job. He would not be entitled to severance pay.
Mr. Krause: Could I defer this question to my experienced researcher, Mr. MacKenzie. Maybe he can help me.
Ms Whelan: Sure.
Mr. Krause: Thank you.
Mr. Ian R. MacKenzie (Research Officer, Social Science Employees Association): I think you're right. If there's no collective agreement provision that would govern severance, there's no particular right to receive severance when you leave a job voluntarily. But I think we're comparing apples and oranges. The public service employees should be compared to those other employees who are in a collective bargaining situation.
Ms Whelan: I'm not disagreeing when you're talking about different collective bargaining situations. The real point of my question, what I was trying to get at, is that my generation has been told they will change jobs five to seven times on average. Five to seven times is what they should expect.
How do I explain to somebody I represent who is between 25 and 35 this whole issue of job security? They've been told by all researchers, experts, economists, that they will change jobs five to seven times based on the type of society we now live in. So I'm trying to understand. You said you're not willing to give up something you already have. As we move into changing times and you recognize what's happening, there has to be some negotiation by everyone on all sides. Otherwise we'll never move into the next century.
Mr. Krause: First of all, there hasn't been a negotiation for this matter on all sides. Those rights to a job - what we call our workforce adjustment directive - are being stripped. They've been stripped in the past two budgets. I frankly don't have any illusions and I expect the employer will further strip those benefits as it sees fit to do so.
There really is no job security in the government sector any more. In fact, if I hear the words of the president of the Public Service Commission, Ruth Hubbard, if I think about them, at a recent meeting - actually, it was more than recent, it probably was almost eight months ago - her vision of the public service is where there's only a small core of employees and most services are provided through a pool of experienced individuals, who are basically contracted and basically don't have benefits.
She called it a model where we have job competency and not job indeterminacy. Her view would probably give us a public service with only a core component in the tens of thousands. Many more tens of thousands would be contractors competing against one another, trying to get a contract with one department or another. Anyway, that's the view of the public service that is currently emerging.
Ms Whelan: I think you're missing my point.
Mr. Krause: I'm sorry.
Ms Whelan: My point is that the reality in most jobs is that there's no such thing as job security. For my generation, those are not even two words that will ever exist as being something that will last for 30 or 40 years. So when I hear people talking about it - and I believe we're moving into the next century - I think everyone has to come to the table with some realism. That's my point.
I understand your frustration and I understand the problems you've had to deal with, but we're all going through changing times and I believe we have to look at what's realistic when we go through changing times together.
Thank you.
Mr. Krause: Thank you.
The Chairman: Thank you, Ms Whelan.
Mr. Grubel.
Mr. Grubel: I have just a quick follow-up on the real wage equality.
I can understand the history of the union movement. You would insist your members, in their ideological moments, insist that the wages be the same for everyone. Equality is the great slogan of the union. But rationally, by paying someone in the Atlantic provinces the same as you pay to someone in downtown Vancouver, you are not really creating equality. You admitted it yourself.
The nominal wages adjusted for the cost of living create tremendous inequity. They're not only inequitable to your own members, they're also inefficient and create the kind of dislike and suspicion of the union movement in the public sector that Mrs. Brushett has been talking about.
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In this age, approaching the year 2000, having gone through this unbelievable shake-up of the last few years, isn't it time you took that kind of reasoning to your members and asked them to reconsider the 19th century principle of equality for everyone in nominal terms?
Mr. Krause: As I said, I know the employer would make excellent arguments for reducing wages in those areas where the cost of living is relatively lower. I have no confidence the employer would make the symmetrical argument of increasing wages relative to the cost of living in those areas where it is higher.
Mr. Grubel: Make it a bargaining issue. The first thing you've got to do is put it on the table.
Mr. Krause: I have every confidence the employer may approach us on that basis in the next round of bargaining, but until he does so we have a position I hope you respect. As an economist, I must admit I can appreciate and respect your view as well. Thank you.
Mr. Grubel: Thank you.
The Chairman: Thank you, Mr. Grubel. Mr. Pillitteri.
Mr. Pillitteri (Niagara Falls): Thank you, Mr. Chairman.
In this line of questioning, a minute ago my colleague Ms Whelan asked a question about whether in the private sector they have the same opportunity to get a benefit when they leave an employment and whether, if they're working for industry, they have the same privilege as the public sector. I just wondered how common that is in industry. Would they have the opportunity to leave after 15 or 20 years, to be able to take a year off and be compensated for the years working in there?
Mr. Krause: Generally, I think very large employers maintain comparability to the types of provisions we have in the public service. So with a large employer, a Xerox, a Ford, an IBM, you're always going to find these large employers are capable of maintaining these kinds of programs.
I think they maintain or provide those programs because they have an interest in attracting and retaining bright, qualified, and hard-working people. There's a bit of competition. In times when labour markets get slack, I agree that some of these employers don't provide those kinds of benefits because they hold the view, if there's a large supply of labour out there, why do it.
In other times I have seen comparability in the private sector in providing benefits of that kind. Again, it depends what the policy of the company is, what has been negotiated, and if there have been negotiations. It's going to vary.
Mr. Pillitteri: As a matter of fact, I think you'd better check up on this. I'm quite sure of it because I'm one of those individuals who spent eighteen and a half years in a company. If you don't reach the retirement age, you do not qualify -
Mr. Krause: Any severance?
Mr. Pillitteri: - for anything. You do not get any severance. By the way, at the age of 39, after almost 19 years at General Motors, when I reach the age of 65, I will collect $162 a month. So before you make that statement, I think you had better check up on it.
The Chairman: I think we'd better get General Motors here very quickly before us.
Mr. Krause: I'm sorry to hear that. I think that's regrettable.
Mr. Pillitteri: I don't want to give the understanding that all individuals were allowed that privilege, which they're not.
The Chairman: Mr. Krause, you talked about the alternatives program, which provided for substitution as we lay off these 45,000 public servants over three years. You said it's succeeding in some places and there are roadblocks elsewhere. What did you mean by that?
Mr. Krause: To be specific, I know of some departments - I could think of Environment Canada for one and Health Canada for another - that have done an excellent job in cooperating with the program. They've been able to provide a government employee who wished to continue working the opportunity to do so and at the same time accommodate the wishes of another employee to leave. I would compliment the deputies in both departments for their excellent efforts and their belief in employees.
We've had some problems in other areas where we're just not capable of getting the cooperation on the alternatives program.
The Chairman: Where have you found those?
Mr. Krause: You know we had a problem at Statistics Canada and the problem still exists.
The Chairman: Why is there a problem there?
Mr. Krause: I believe the management believes it cannot achieve its budgetary targets within its fiscal framework if it lets its older employees - we've gone through this argument before - who are near retirement age, between 50 and 55, swap with younger employees in other departments who are facing a lay-off situation. It does not want them and it's put forth this economic argument that it can't afford it. We've made opposite arguments.
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The Chairman: Excuse me, management at Statistics Canada is saying they can't afford to substitute a younger worker for an older one?
Mr. Krause: Yes, because they're counting on these older workers retiring to help them achieve their employment targets. We have countered that suggestion.
The Chairman: That would be within a two- or three-year period, would it not?
Mr. Krause: Within the next several years, yes, while the alternatives program is available and this downsizing is happening.
The Chairman: Would this be an ordinary retirement or one where the employee wants to take advantage of early retirement benefits?
Mr. Krause: Yes, they are denying it to our members who are between the ages of 50 and 55 and who would qualify for an early retirement incentive. We have suggested some creative ways to help them save money.
The Chairman: To whom?
Mr. Krause: We met with the chief statistician, and I suggested the following scenario: that he let swap out of his department only people who are between the ages of 50 and 55, and take in only those employees who are younger. In this way he would forego future severance payments to his workforce because he would have a younger employee instead of the older one who would be retiring in five years anyway. That should save him money.
I suggested the receiving department would save money at the same time because it would pay out an early retirement incentive, which is cheaper than an early departure incentive. The arguments were that both departments could save a bit of money in the exercise, and that Statistics Canada could forego future costs in the area of paying employees severance because they would be getting younger employees to replace their older ones. They said thank you, we don't want to do it. It wasn't question of economics after all, I realized. I think it boils down to the fact that most or some departments perceive those employees who are facing lay-offs as cast-offs.
The stigma that you've probably seen in the private sector is the same in the government sector. Employees who are going to be laid off are somehow perceived in a way that I think doesn't give them credit, and some departments seem reluctant to take on these employees.
The Chairman: I see. So if someone is forced out of Agriculture Canada, they're stigmatized in all other departments.
Mr. Krause: No other department wants to pick them up. Actually, to their credit some departments have shown courage and they're taking these people who would like to continue working and they're trying to find swaps, and if there's retraining, they're doing it. I would commend those departments for their actions. As I said, we've had some cooperation, which is very good.
The Chairman: Mr. Solberg suggests that we increase the size of the Senate.
Some hon. members: Hear, hear!
The Chairman: As you may be aware, it was this committee that recommended last year that substitution or the alternatives program is absolutely the most humane and perhaps efficient way of doing this whole downsizing effort.
Mr. Krause: We agreed with you 100%. I think we see an even greater need now because we're getting into the second and third year of the downsizing scenario.
The difficulty that I think most departments are experiencing, particularly those that are the most affected, is they found as many volunteers in their own establishments as they could in the first year. That was easy.
They also had people who wanted to swap in other departments, and that helped. They were able to find jobs for some people who were affected and wanted to stay and work in government somewhere else. They've run out of volunteers. The pool of people available for swapping is diminishing.
The Chairman: How many are left to go?
Mr. Krause: I don't know, but they have more cuts to make and fewer volunteers to make them with. I expect that -
The Chairman: Out of the 45,000, how many would have taken the early retirements benefits?
Mr. Krause: I did not come prepared for that question today because it didn't relate to Bill C-31. I apologize. I really don't know.
Ian, do you have any idea?
Mr. MacKenzie: I don't know the exact figure, but I know it is available.
The Chairman: It would be through Treasury Board, would it not?
Mr. MacKenzie: They released statistics last month, I believe.
The Chairman: I beg your pardon?
Mr. MacKenzie: They released statistics at the end of March, I believe.
Mr. Krause: I think you're right and that we're going to see the process become less voluntary in this year and the next year. There will be people wanting to work who will not be given that opportunity. We've run out of volunteers.
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The Chairman: If people are not going to voluntarily take the early retirement package, which I understand is very generous, then we don't have a possibility for substitution.
Mr. Krause: That's correct.
The Chairman: Do you have an answer to that?
Mr. Krause: First of all, we would like to see the early retirement package extended a bit further.
The Chairman: Do you mean enriched?
Mr. Krause: No, we want to see the timeframe extended. I'm not going to debate the size of the package as being too generous or too cheap. Let's just say it exists, it is what it is, and we believe it's comparable to what large employers should do, and some do. There have been some large employers who've done a little bit better in fact, but if we could have that program continue on through the balance of fiscal year 1998-99 - I think the early retirement incentive set to expire in March 1998 - and maybe have the early departure incentive program continue as well, that may provide some help in finding more retirees. Those programs are set to expire at the beginning of 1998, which is a year when we're going to see substantial budget cuts. I don't know how departments are going to meet their targets and cuts when the programs put in place for voluntarily getting people to leave and help them reach their targets are going to be wound up.
The Chairman: Are there any other questions?
Is there anything you would like to send to us fairly quickly on how the alternatives program is working? I know you didn't come prepared for it today, but I have the feeling that if this whole thing were working better, the arbitration question would not be quite as poignant. Am I correct?
Mr. Krause: I haven't thought of it that way, but that's an interesting perspective. If the alternatives program were working better.... If I ask myself what would make it work better, I come to the conclusion that we have a mechanism for things because it doesn't happen naturally. The market forces just aren't there. There are things that are impediments.
If deputy ministers were encouraged by their political bosses to make the swaps and make the alternatives program work well, in fact if their performances were evaluated on how well they did their alternatives program, you'd find people being swapped all over. The problem would go away and you might not even need the JAC committees and the other mechanisms that we put in place because the goodwill we need for this system to work and people to swap - it's just not there in every case. If goodwill were demonstrated by deputy ministers, and in a very open manner they allowed these swaps to occur, obviously that would relax some of the tensions that we feel, give us a slightly different perspective on the employer, and perhaps make for a less confrontational view. That's certainly possible.
The Chairman: Thank you on behalf of all members. We appreciate your excellent presentation.
Mr. Krause: Thank you.
The Chairman: The meeting is adjourned.