ARCHIVED - Expenditure Review of Federal Public Sector - Volume One - The Analytical Report and Recommendation

1. The future of the federal public service depends importantly on how employees are compensated.

How people are rewarded at work tells them what the employer values. As knowledge grows in importance as the primary value for employers, and as younger employees seek greater control over their careers compared with the baby boomers now retiring, how we compensate will affect crucially who will join the public service, who will stay, and how effective their contribution will be in meeting the expectations of Canadians.

2. All aspects of compensation are connected for the employees, and so the employer needs to manage the field coherently.

Conscious design should tie together all aspects of compensation, including salaries, pensions, insurance plans, leave entitlements, and even security of employment; the federal employer needs to balance wisely how each of the components of total compensation contribute to attracting and motivating the employees we need.

3. The proper standard for fair compensation is comparability with appropriate comparators in the Canadian private sector.

In the private sector, employers pay excessively at their peril. So the broad private sector provides a benchmark for what we need to pay in the public sector. Although applying this concept can be hugely difficult in practise, we need always to justify our choices against our best understanding of this standard. To be clear, we need to compare the whole compensation package, not just parts of it.

4. Collective bargaining in the federal public service is a healthy way to balance the interests of employees and taxpayers but it cannot be used to justify excessive compensation.

A strong voice for employees in shaping how they are compensated and treated in the workplace is healthy in a free society. However, exceptional bargaining strength derived from the privilege of serving the public should not justify going beyond what is reasonably comparable in equivalent circumstances in the private sector. The time has come to search with determination for better ways to settle disputes fairly, without recourse to the strike weapon.

5. Collective bargaining in the federal public sector should be about productivity as much as compensation.

This is very hard to achieve in view of the highly aggregated character of federal public service collective bargaining. It would make sense to think hard about a range of options to strengthen this link, which is at the heart of compensation negotiations in the private sector. These include, for example, creating additional separate employers, where numbers and focused mandate warrant, or imaginative use of two-tier bargaining.

6. The time has come to rethink the design and balance among non-salary benefits, from pensions to insurance to health and dental plans

The existing suite of benefits has emerged in its current form though decades of unplanned evolution. Changes in the nature of family in Canada, evolving expectations of younger employees, and increasing variety in the private sector make such a review overdue.

7. Transparency is the best way to bring discipline to the compensation field

Few understand the current compensation regime in the federal public service––even fewer track changes or compare them to what happens in the private sector. Regular public reporting of trends in such indicators as total employment, total spending and average salaries will force both federal public sector employers and unions to explain and account for their choices.

This first-ever comprehensive description of the world of federal public sector compensation and its recent history equips ministers, public service management, union officials and other observers to appreciate the issues in context. With this foundation of fact and understanding in place, the opportunity to design and shape public service compensation to attract and retain the workforce we need to serve Canadians well over the coming years has never been greater.