Since then, Clement says he has “picked his spots” and tackled, one at a time, the kinds of perks and benefits workers in the private sector don’t have.
“How do you eat an elephant? One bite at a time,” he says.
It is a tactical approach in keeping with the prime minister’s philosophy of gradual incrementalism, a step-by-step to government reform. The changes are likely to stick, since successor governments would be wary of undoing any of Clement’s reforms and risking public outcry.
Clement’s first move was to eliminate the severance pay that public servants used to collect when they quit or retired. He then changed the pension plan so new hires have to pay a larger share and work longer before they are eligible to collect it. These two measures will save billions in the long run.
He then ordered all employees to have performance agreements with their bosses and that those be strictly enforced to get rid of poor performers and reward the stars. He tied more of executives’ pay to their individual performances.
At the same time, he froze departments’ operating budgets and oversaw the elimination of 20,000 jobs. He launched Shared Services Canada to consolidate information technology and other “back office” services duplicated in departments across government such as financial and human resources.
Now, he has set his sights on absenteeism — public servants have the highest rate in the country — and he’s going to replace accumulated sick leave with a new short-term disability plan during the collective bargaining that is poised to begin. Clement says he “set the table” for these changes, and others he has in mind, with reforms to the Public Service Labour Relations Act that change the rules for bargaining to give a far stronger hand to the government.
Clement says his chief supporters are Canadians who can no longer tolerate their tax dollars going to support wage and benefit levels most of them don’t enjoy. A study by the Parliamentary Budget Office shows the average public servant costs taxpayers $114,000 a year, when pensions and benefits are rolled in, and could reach between $121,000 and $129,800 by 2015.
“My north star for this is what would the average person in the average job outside the public sector say ... and whether this is reasonable. That’s how I judge whether something is out of whack or not,” said Clement.
Some changes will be made with unions at the bargaining table, he said, but the rest are “structural” reforms which the government can largely achieve unilaterally.
He wants to tackle thorny problems that bog down the bureaucracy and which governments have unsuccessfully tried to fix for years, from 50-year-old job classifications and evaluations to staffing rules. Despite the mounting pressure to further reduce pensions, Clement says he’s done, and pensions “aren’t on my agenda.”
But while Clement and the Tories may see these broad “structural” changes as their end goal, they are very aware of the political benefits of exploiting the image of the fat cat bureaucrat in the run-up to the election in 2015.
Ian Lee, a professor at Carleton University’s Sprott School of Business, said Clement is cleverly capitalizing on the larger reform plan for short-term political advantage.
He gets the fiscal win of saving money and shrinking the $44-billion annual wage bill, and scores politically by satisfying the party base and other Canadians who “don’t have positive images of the bureaucracy.” He predicts the Conservatives will use the reforms on the campaign trail to tout their credibility as solid fiscal managers, arguing these changes will promote a more competitive economy.
“It’s a grand slam home run. Reform the public service to make it more efficient, and save monies in so doing while receiving applause from supportive voters across the country in the private sector,” said Lee.
“It seems very clear to me that the Harper government is genuinely driven by all three goals — each of which are mutually reinforcing and consistent — not contradictory.
“And it can be used as a wedge issue against both the Liberals and NDP in the next election. I fully expect the Conservatives to flip the NDP and Liberals and accuse them of a hidden agenda to undo reforms and bring back these benefits.”
But there’s a risk to this politically expedient “short brutal approach,” says Tony Dean, a professor at the University of Toronto’s School of Public Policy and Governance and a former top bureaucrat in Ontario.
The danger is that it will overshadow the broader plan, which will take years to roll out and is central to Privy Council Clerk Wayne Wouters’ “vision” for the future public service outlined in his Blueprint 2020.
“Bashing the public sector is seen as smart politics for this administration and would also be the view of political strategists and the PMO,” said Dean.
“It would make it much more marketable to the public service and the opposition if he put compensation in context of that broader modernization project, but it takes the red meat off the table (for the party base).”
It is hardly surprising that compensation has proven to be a lightning rod in this latest round of acrimony between the government of the day and the public service unions. The comparability of public and private sector compensation has been studied to death over the years. It has been a core principle of federal compensation for a century and researchers have long debated whether the sectors can be reasonably compared, how big the wage gap is between them and what is behind it.
The Canadian Federation of Independent Business reignited the debate a few years ago with studies showing federal bureaucrats make double-digit premiums over the private sector. That’s when it began a campaign to cut public servants’ pay and benefits, which the Conservatives took to heart.
Generally, studies find public servants do make more. The lower-end clerical and administrative jobs — mostly filled by women who benefitted from pay equity raises — are paid more than their private sector counterparts.
That gap narrows as one climbs the ranks in professional and managerial jobs, and then it reverses at the senior executive level, where total compensation for deputy ministers is dwarfed by the enormous packages commanded by CEOs.
Clement indicated he has a report that suggests public servants enjoy a total compensation premium of between 12 per cent and 14 per cent over the private sector, but he did not say whether he hopes to eliminate or merely close that gap.
“I’m not going to give you my wage and benefit target for collective bargaining, but it has to be in the line of sight of what people see in their own lives. There can’t be a complete disconnect between what is being paid to the public sector versus what’s compensated for in the private sector. It’s not acceptable, it’s not sustainable, and the taxpayer won’t stand for it.”
It’s unlikely the government would risk the blowback of trying to match private sector wages because women at the lower end would be hit the hardest. Big raises for executive salaries would hardly fly either.
The changes Clement has already implemented, however, have gone a long way to narrowing the gap. The rest could be made up over the next few years at the bargaining table by striking wage deals with public servants that are below inflation or lower than the raises given to workers in the private sector.
The government could also shift costs to employees, such as making them foot more of the bill for the revamped long-term disability plan, or stop boosting salaries with extras such as a new step in the pay grid.
Many people expected the Conservatives to tackle the wage gap when they came to power in 2006 and were presented with a landmark study, initiated by the Liberals, that confirmed the government paid its employees a modest premium and proposed a complete compensation overhaul.
The report, led by former senior bureaucrat James Lahey, was kept under wraps as a cabinet secret for several years before it was released. Of the few of its 77 recommendations that were implemented, one was the creation of a pay research bureau at the Public Service Labour Relations Board to compare pay and benefits between the sectors. Ironically, the Conservatives shut down that bureau in December, just as it was in the midst of its largest study on the subject.
Lahey updated his report in 2011, and estimated public servants enjoyed an eight to nine per cent premium on salaries. Once pensions and benefits were added, that differential grew to between 15 per cent and 20 per cent.
Lahey’s studies suggest various reasons for the premium public servants receive, but primary factors are loose controls, uneven management and an unintended bias at the bargaining table.
He found the government tended to negotiate costlier settlements than necessary, especially when inflation was low or surpluses were rolling in, to keep labour peace and avoid disruption of services. As a result, the public service has had a roller coaster history of healthy raises in the good times and wage freezes, cuts and layoffs in the bad times. For example, the premium all but disappeared in the 1990s when the Liberals downsized by 50,000 jobs and froze salaries and collective bargaining. That turned around by 2000 when collective bargaining returned, the public service added 80,000 members and the wage bill shot up 60 per cent.
Lahey called comparability with the private sector the “holy grail of the federal compensation system” that’s never been found. Treasury Board and unions have struggled and bickered over finding perfect job matches while weighing factors like age, gender, experience, education, geography, occupation, level of unionization and the lack of a bottom line. Public servants are typically unionized, older, higher educated, have longer job tenures and more experience than private sector workers.
But Richard Mueller, an economist at the University of Lethbridge who has studied the wage gap, said the government also adopted compensation policies over the years to be a “model employer” and set the example for the private sector. Efforts to improve wages for women and lower-skilled workers, as well as employment equity and pay equity policies, collided with the comparability principle and drove up salaries.
Ultimately though, this relentless focus on “affordable and fair” compensation could get in the way of the government taking the steps it needs to implement the structural changes to the bureaucracy that are truly necessary.
Don Drummond, former chief economist at Toronto-Dominion Bank who led a report on reforming the Ontario public service, said governments have to move from the “same short-term solutions” of wage freezes and job cuts and shift to the “big picture” of broad reform. They need to start by figuring out what business they want to be in, measure the results, and loosen the chains on the way public servants work.
And he doesn’t buy the claim that efficiency can’t be measured in the public sector like it can be in the private sector, arguing “the problem isn’t so much the nature of the work but the sloppiness in not attempting to measure outcomes and hence efficiency.
“It all has to start with what a government wants to do. The feds have made some progress in measuring outcomes of programs, but not nearly enough. The problems the programs are to tackle aren’t well defined. The program objectives are loose. There isn’t tight measurement of outcomes or efficiency. Against this backdrop it is hard to measure the effectiveness and efficiency of the workers.”
The big picture is being shaped by a high-powered committee of private sector executives advising the prime minister on the public service. The panel, headed by David Emerson, a former Liberal and Conservative cabinet minister, and businessman and former Privy Council clerk Paul Tellier, is stacked with a lineup of corporate luminaries such as Dominic Barton, the global managing director of McKinsey & Company, and Monique Leroux, president of Desjardins Group.
It has an impressive track record with this government, which has adopted nearly all its recommendations over the past seven years. The eighth report is expected soon.
Emerson said bureaucrats need new tools in a world where public policy and private enterprise collide when trying to tackle issues of a magnitude and complexity never confronted before, whether it is climate change, an aging population, skills shortages or diminishing water supplies.
The old hierarchy has too many layers, particularly for advising government in a digital economy where information moves and changes in a split second, he said. Public servants have to know where information is coming from, assess and test it — while living up to their legislative obligations of privacy and confidentiality.
Emerson said he has never heard the prime minister “denigrate” the public service, and calls his approach to reform “sensible.” But he also says that if Harper and his ministers have any complaint it’s that the bureaucracy is simply too slow.
“He may have some healthy view that given the slow evolution of the public service that you need to balance your advice so you are hearing other points of view that you may not get from the public service. But he has never, in my presence, denigrated the public service.”
In a digital economy, ideas are coming from all directions at warp speed. Emerson said public servants can’t keep funnelling information up through layers of hierarchy before it reaches the minister as advice. It is too slow and ideas are so filtered and vetted that any innovative or creative thinking is watered down along the way.
He said the government doesn’t have to wait for the public service. There are think-tanks, academics, lobbyists, pollsters, political advisers and people on social media flooding them with information and ideas. Ministers’ offices are full of twenty-somethings who have access to more information than ever before. This shift in the balance of information has cost the public service its traditional quasi-monopoly on information and fuelled a testier relationship between politicians and bureaucrats.
Bureaucrats have to learn to use technology to network and bring Canadians inside government. They will have to master social media, learn to manage information and collaborate, rather than control, when it comes to developing policy. Emerson pointed to Wouters’ unprecedented discussion with public servants about reshaping the bureaucracy on Twitter and other social media as an example.
He’s not convinced financial incentives will drive performance. Instead he suggests they get rid of management layers, scrap some rules and reorganize work to give public servants more flexibility and authority to do their jobs. It will demand stronger managers and more training for them.
He said it’s also time to rethink the lifelong public service career and pension mobility. The bureaucracy will still need to recruit “the best and brightest” but they could come in and out of government on contract for special projects and move their pensions with them.
It’s reminiscent of Deloitte’s GovCloud project, the theoretical public service of the future where free agents don’t work for departments but roam from project to project. Under the model, departments would “reach into the cloud “and use experts as needed. Bureaucrats with portfolio knowledge would stay in departments, develop policy and work with government and Parliament, while those who provide internal services such as technology, procurement, human resources, and finance would work in shared services agencies.
Daniel Muzyka, president of the Conference Board of Canada, said governments everywhere are struggling to transform under the pressure of technology which is not only changing the nature of work but the expectations of employees and Canadians who want instant 24/7 service.
He said the transformation of government will take at least five years to unfold and as the last of the boomers leave they will be replaced by the new “emerging generation” of workers — Generation Y, the so-called Internet generation.
Members of the committee advising Harper on the public service say a compensation strategy can’t be separated from structural reforms, but it is a small piece of what needs to be done to turn around the public service.
“We have been dealing with the prime minister and we haven’t really focused on compensation at all in terms of the relative levels between the public and private sectors,” said Emerson.
“We have been looking at the overall way the public service operates and whether it is keeping up with private sector practices and standards of what I would call high performance organizations in a modern, global, competitive digital environment. That’s the focus.”
Meanwhile, the very public mudslinging over compensation appears set to continue for the foreseeable future, in large part because it serves the interests of both the government and the unions.
For the government, there is the boogeyman of lazy public servants and their fat cat union bosses, prepped and ready to be fed to the Conservative base in the run up to the election. And as long as Clement pursues the short-term political gains of characterizing his reforms as bringing public service pay and benefits down to the levels of the private sector, the unions don’t have any skin in the game. They don’t have to collaborate or offer any give and take at the bargaining table. They can simply stonewall, fight, resist, go to court — and keep up their “Stephen Harper Hates Me” campaign to play to their membership base.
Dean says Clement should “balance” his approach and make his compensation reforms more “attractive and marketable” to public servants by situating them as part of the broader plan.
If not, he warns, the stakes are high, and there’s a real chance that all of this could set back or even derail the broader reform plan that is central to Wouters’ yet-to-be completed action plan for Blueprint 2020.
Dean issues a warning: “If Tony Clement is smart he will find ways to connect the two exercises. … There are ways to reform public services in sensible ways and to find efficiencies, but if government thinks it’s necessary to see blood on the floor it’s hard to keep this in a positive frame.”
) engineer. I think she was the lowest paid of the degreed staff (we had some senior NCOs/technicians on the team, too) but she was super-keen to learn and to work (unpaid, unrecorded) overtime to get her job done.
