ARCHIVED - Appendices to the Expenditure Review of Federal Public Sector Compensation Policy and Comparability

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Appendix C

Salient extracts on public service compensation and comparability from the section on "Personnel Management" in the Report of the Royal Commission on Government Organization – Chapters 7 and 8 of the Glassco Commission Report, 1963

7

COMPENSATION IN THE PUBLIC SERVICE -

COMPARISONS WITH OUTSIDE EMPLOYMENT

WAGE AND SALARY LEVEL COMPARISONS POLICY, PRACTICE AND STANDARDS

1  Wage comparisons were made between civil service and outside employment by a detailed analysis of: pay levels and the structure of pay in the public service; outside employment data contained in surveys of the Pay Research Bureau, Department of Labour and published reports of the Dominion Bureau of Statistics; private wage surveys; unpublished records and files; the Royal Commission's surveys and interview material.  Most comparisons were founded on data reflecting the pay situation at September, 1960 and the comparisons now reported are almost entirely with respect to rates for jobs classified under the Civil Service Act.  Some summary observations about the levels of wages and salaries for prevailing rate jobs, Crown corporation positions, and other exempt categories are made later in this chapter.

2  The task of making appropriate comparisons was difficult because of the complex classification system for the civil service, with its 887 classes and 1,827 grades. In some areas, precise statistical data available for compari­sons were scanty, an example being rates of pay for administrative and executive personnel.

Office Occupations (Clerical, Secretarial, and Related)

3  Rates for almost all office occupations at the recruiting level are at least comparable to outside market rates.

4  Comparisons for senior level office jobs are less reliable, mainly due to the greater difficulties encountered in assessing the duties performed.  However, available information indicates that civil service rates lag behind the industrial sector for more senior office positions.

5  A large proportion of the civil servants in office classifications is employed in Ottawa and in fifteen other metropolitan areas.  Because civil service rates compare favourably, in the main, with industry rates in these cities, civil servants in smaller centres are paid rates in excess of those prevailing in such generally lower wage areas.  This premium is partly offset by the higher quality of person the civil service is able to recruit in many smaller areas.

Service and Maintenance Occupations

6 Civil service wage rates for craftsmen, trades, and for service and related jobs are less favourable than those in private industry.  The nation-wide rate scale for these employees in the civil service is below average community rates in large centres, but is equal to or better than those prevailing in small communities. (Note-more than sixty per cent of employees classified in these categories work in centres with populations of less than 100,000 as against only about one-quarter of the office employees.)

7  Although the civil service rates for some service occupations (e.g., cleaning services) are well below private industry rates, they are in line with rates paid by service organizations and public institutions, normally the important employers for these and similar occupations.

Postal, Customs, and Immigration Occupations

8  Many of the postal, customs, and immigration occupations (a single group, constituting better than 20% of all employees under the Civil Service Act) have no direct counterparts in industry.

9  Indirect comparisons by the Pay Research Bureau (e.g., letter carrier vs. delivery truck driver and meter reader; customs excise officer vs. police constable) suggest that civil service rates for junior occupations approximate outside employment pay levels.

10  Although indirect comparisons such as these suggest that for senior positions in this group (e.g. higher grades of customs officers) rates of pay in the civil service are lower than outside rates, several factors favour the civil service jobs.  For example, policemen in some communities work in excess of the forty hours per week which is standard for the civil servant; and customs officers and immigration officers are often recruited and employed in small population centres where average incomes are relatively low.

11  Over forty per cent of all employees in occupations peculiar to the postal, customs and immigration services are located in centres with populations of less than 100,000.  As a consequence, although rates for these occupations cause some difficulty in recruiting and retaining staff in the larger, higher wage areas, most of the wage rates for these occupations are in line with or better than rates for similar occupations in smaller communities.

Technical (Sub-Professional) Occupations

12  Because of the "catch-all" character of the classes and grades in which many of the technical employees in the civil service are classified, information for making wage comparisons is very sketchy.  As an example, the Technical Officer class, originally set up to deal with sub-professional occupations of a technical nature, now encompasses a wide variety of occupations, including some of a professional and some of a clerical nature.  Many of these appear to be improperly classified.  These groups should be appropriately reclassified and the technical classes properly reorganized because a strong future demand for employees in the technical classes is assured.

Professional Occupations

13  There is far less regional variation in professional salaries than in wage and salary levels for office and for non-office service and maintenance jobs.  The market and the salary level tend to be country-wide.

14  For professionals such as engineers and, to a lesser extent, geologists, scientists, economists and statisticians, active competition from industry for personnel tends to set salary levels. The federal government has extensive needs in these areas and has had to ensure that civil service rates are competitive in order to recruit and retain suitable employees.

15  Demand in the outside market for a large group of professionals comes mainly from institutions which traditionally offer somewhat depressed salaries.  Included are occupations such as librarians, social workers and dieticians.  Here the tendency is for the government to be a wage leader, partly to assure itsclf of an adequate supply of such personnel and also to maintain proper relativity between their pay rates and those for other professions employed in the civil service.

16  For a third group of professionals, the outside market is either non-existent or so small as to be dominated by federal government employment.  Certain agricultural science occupations fall into this group.  There is some tendency for civil service rates for these professional occupations to lag relative to other occupations.  This is reflected less in starting rates than in the relative speed of salary advancement on the job.

I7  PROFESSIONS IN STRONG MARKET DEMAND.  For these, civil service rates at recruiting levels are as good as or slightly better than private industry rates.  This ensures an adequate number of recruits but fails to provide, as industry does, the pay flexibility required to obtain recruits of exceptional talent.  The majority of professionals in the civil service advance to the "working level" jobs (usually grade 3) but many may remain there for the balance of their careers. IT  is at this level that government wage rates compare least favourably with the industrial average, being usually below those in the private sector by three to six per cent for most occupations.  Advancement to the supervisory and senior levels in the professional classes is limited to a few, with rates approximating industry averages.  The system lacks elasticity to assure retention of the better-than-average professional.  At the most senior levels, government rates fall below the competitive average, (e.g., engineers and economists), thus making it more difficult for the civil service to retain outstanding professionals.

18  Competition from universities and from private industry tends to limit the number of better employees available to the federal government.  Increasingly, the competition from other levels of government will also be felt.  In a few cases, municipal governments already offer higher pay for some professional posts than does the federal government.  Moreover senior professionals in the public service may seek administrative posts to get better salaries, thus further draining top talent from the professional groups in the civil service.  An additional point of interest is that a smaller proportion of civil service engineers reach the most senior level (Engineer 7) than is the case in outside industry.  Only twenty-one or 1.8% of the total civil service engineers grades 1 to 7 inclusive are in the grade 7 level, compared to 2.4% in industry as indicated by the Pay Research Bureau survey, or 3.7% as reported by the Professional Engineers Association.

19  In summary, while civil servants in these professions are paid at rates equal to or slightly better than the average in industry at the beginning or recruiting levels, they tend to fall behind their counterparts in industry as they advance up the professional work ladder.

20  PROFESSIONS IN WEAK MARKET DEMAND.  In these, civil service rates at recruiting level are sometimes well above the outside market rate for many professional occupations (e.g., social workers).  However, pay rates for professionals at the supervisory or the "working" level are considerably below those paid outside, although required formal academic training and qualifications may be similar.  The government has taken some lead in establishing higher rates for these classes, but there is a limit beyond which it cannot go without upsetting market rates important to some public institutions which must compete with the federal government for staff.  On the other hand, the long-run supply of competent personnel in these occupations will become limited if pay rates are not attractive and career earnings, prospects do not reasonably compare with those for professions in more active demand.

21  PROFESSIONS WITH LITTLE MARKET DEMAND.  Civil service pay ranges for these professions, from the recruiting level through to working levels, are the same as those for civil service jobs in professions which are in strong market demand.

22  Although pay ranges compare favourably, the average civil servant in these occupations does not reach his career earnings, potential as rapidly as those in the professions which are in strong market demand.  For example, maturity curves (showing mean rates by year of bachelor graduation) indicate that forestry officers and research officers (Agriculture) in the civil service earn less money than their counterparts in engineering classes.

23  It is of importance that career earnings in these professions should compare favourably with others in strong market demand in order that the government may have an adequate long-run supply of such personnel, many of whom are vital to the nation's productivity.

Administrative Occupations

24  Wage comparisons for these occupations must be established with some reservation because the present classification system makes difficult the selection of key jobs for comparative purposes and because outside survey data are limited.  Up to the level of $12,500 annually, civil service rates of pay for administrative jobs appear to be roughly in line with industry rates.  The marked compression between salary ranges above $12,500 in the public service leaves no doubt that most senior administrative occupations are paid at rates well below those in industry.

25  Income tax statistics for the 1958 tax year point up the disparities between senior civil servants' salaries as compared to their counterparts in private industry:

	Per cent of Total Employees in Income Group
Income Group	Taxable Federal Employees	Taxable Employees of Business
($000)	%	%
10-14.9	0.7	1.2
15-19.9	0.1	0.4
20-24.9	0.03	0.1
25+	0.02	0.2
Total – Over $10,000	0.85%	1.9%

General Observations

26  Wage and salary rates for the lower grade positions in the civil service are in general equal to, or better than, those for comparable jobs in private industry.  Some disparities appear in salary rates for jobs above these levels, most markedly in senior administrative and professional posts, where the government is at a marked monetary disadvantage in competition with private industry.

• Rates for each civil service occupational class are in general competitive with the private sector at the recruiting level and usually continue to be up to the "working" level.  In a number of areas, however, civil service rates above the "working" level tend to lag behind the industrial sector.
• Over the past decade wage increases for civil servants have paralleled those in the private sector, although adjustments have lagged about two years behind those in industry.
• Between 1939 and 1951, on the other hand, wage increases in the civil service were smaller than those in the private sector.  Two factors had an important bearing on this picture: (a) with the increase during this period in the social and economic status of the non-office wage earner, it was inevitable that the civil service, as a predominately white-collar group, should undergo a decline in relative economic position; (b) civil servants entered the war period in a relatively well-paid position because their wage and salary levels were not reduced during the depression to the same extent as those in the private sector.  It is only in the last decade that increases comparable to those in the private sector have been necessary to retain parity with the outside market.
• Flexibility in their compensation policies and better methods of salary administration place outside employers in a better position than the civil service to attract and retain the better-than-average employee.
• The civil service follows a policy of uniform, country-wide rates for each job but sizeable geographic rate differentials are found in private industry, particularly in clerical and non-office wage jobs.  Because of the use of a standard or national pay policy, a substantial number of civil servants (the proportion varies from one classification to another) are paid in excess of their counterparts in the same community.  The reverse applies for employees in a few classifications in high wage localities.  Lacking flexibility to adjust to local pay levels, the civil service has in many cases pay rates which are above community rates in some centres, below community rates in others.
• As a result, on one hand, of a fairly rigid ceiling at the top (perhaps, influenced by the level of ministers' salaries) and, on the other, upward adjustments in pay levels at the bottom forced by recruiting competition, there has been a serious narrowing of the salary differential between senior civil servants and those in the middle and lower ranks.  Differentials in the private sector have been increasing, thereby accentuating this compression problem.
• Government salaries tend to be more stable than those in private industry, although stability has been growing in the private sector in recent years, thus gradually eliminating an attraction the public service once had.
• Although in Crown corporations senior executive salaries tend to be somewhat higher, there are few serious pay disparities between civil servants and their counterparts in the corporations. Greater flexibility in rate setting and salary administration does provide the exempt agencies with certain advantages in securing and retaining above-average personnel.
• Because "prevailing rate" employees are paid on the basis of going rates in the communities in which they work, while civil servants are paid at uniform, countrywide rates, there are often pay discrepancies between public servants doing comparable work in the same areas.

EMPLOYEE BENEFITS: COMPARISONS WITH OUTSIDE EMPLOYMENT

27  Benefit plans for the public service are, in general, more favourable to government employees than those found in most private industries.  Two facts, however, have to be kept in mind.  First, the private sector of the economy has generally been narrowing the gap during the last two decades.  Second, some large employers now offer a benefit package almost as good as that offered in the public service, and a few provide some benefits that are more attractive.

28  The biggest attraction of the public service plans is the provision for pensions.  In fact, the superannuation plan of the civil service is so generous as to be an obstacle in the way of desirable changes in the total benefits package.  The emphasis upon pensions is so disproportionate as to raise questions about the suitability of the total benefits package to the needs of some employee groups - younger employees with dependents for instance.

29  Public service employee benefits are more attractive than those of private industry in two other important respects. Security of tenure is generally better in government service than elsewhere.  However, particularly for technical, professional and other types of manpower in strong market demand, this advantage has been greatly reduced as in­dustry has come to offer comparable security to such personnel. Leave entitlement of various kinds in the public service is also generally more generous than that usually found in private employment. In other bene­fits and in working conditions, the public service and private industry tend to balance out.

30  Apart from some differences between the civil service and various exempt groups, employee benefits in the public service are generally identical for all levels of personnel.  In the private sector of the economy, it is fairly common to find considerable differentiation between the benefits offered to senior level personnel and all other employees.  The result is that the over-all benefits for non-office wage earners and clerical personnel in the public service tend to be more generous than those for similar groups in industry.  On the other hand, benefits provided for senior level professional and administrative public servants do not match those available to senior personnel in industry.

31  The extent to which important employee benefits programmes for the public service go beyond those in outside employment seems to be due to the lack of any over-all concept of total remuneration (wages plus employees benefits) as a guide to the development of an employee benefit policy for the public service. It owes something too, no doubt, to the absence of proper costing of public service benefits plans and to the neglect of such costing as an element in benefits policy decisions.

32  Employee benefits plans in the public service are so complicated that many public servants, as well as potential recruits, fail to recognize their value.  No adequately effective means exist for informing public service employees of the nature and value of these benefits.

Civil Service and Industry*

33 LEAVE PROVISIONS:

1. Statutory Holidays.  The ten statutory holidays granted to civil servants represent an advantage over industry where the great majority of employees are granted eight or nine statutory holidays.
2. Annual Leave (Vacations). The civil service entitlement of three weeks (fifteen working days) from the start of employment differs from the general industrial practice of granting leave graduated with length of service (one or two weeks after one year of service, rising to three weeks' vacation after from five to fifteen years of service and, in a few cases, to four weeks' vacation after twenty or twenty-five years of service).  The civil servant receives more vacation during the first years of employment but the total leave granted over the entire career is now in line with industrial practice.
   
   The recent provision of an additional week of annual vacation after twenty or twenty-five years of service replaces furlough leave which allowed twenty-five (working) days off in one continuous period after twenty years' service.
3. Sick Leave.  Sick leave in the civil service accumulates at the same rate as annual leave, that is, one and one-quarter days for each month (fifteen working days per year) but leave commences with the first month of employment rather than the seventh month.  Sick leave credits may be carried over from year to year with no limit to the amount which may be accumulated.
   
   In industry, protection against the loss of earnings due to illness is in the form of paid sick leave, sickness indemnity plans or, in the case of some office workers, a combination of sickness indemnity and paid sick leave.  Civil servants are more favoorably treated than most office employees in industry.  Civil servants are much more favourably treated than most non-office employees outside the public service who are covered by sickness indemnity plans.
   
   *Material for this section is based on an employee benefit survey of the Pay Research Bureau and other published and unpublished data. The description of the provisions for the public service incorporates the changes made by the new regulations issued in conjunction with the revised Civil Service Act of 1961.
   
   While a majority of outside office employees are covered by sick leave plans, the civil servant plan has several features which make it distinctly more generous than the normal pattern.  The formal spelling out of rights, the absence of a waiting period, and the unlimited accumulation of unused sick leave make the plan decidedly more liberal.  This advantage is less apparent over brief periods of service, since informal provisions for granting short periods of sick leave are fairly common in industry.  The provision that sick leave is with full pay goes beyond what is available to large numbers of office employees in industry, who are granted part of their sick leave at less than full pay.
   
   Industry plans for non-office employees commonly provide fifty to seventy-five per cent of earnings after a waiting period, with maximum periods for coverage considerably less than the maximum sick leave credits available to civil servants when accumulations are added.  Here again civil servants are much more favourably treated.
4. Retiring Leave.  When civil servants leave the service for any reason other than dismissal, resignation or abandonment of position they may be granted retiring leave provided they have been employed for not less than four years. The period of retiring leave is equal to one week for each year of service, to a maximum of 26 weeks.  Employees who retire on pension may request a gratuity in lieu of retiring leave. The gratuity is equal to the difference between the weekly rate of pay on retirement and the amount of the pension for the number of weeks of retiring leave to which they are entitled.  Employees who resign after four years of service may receive a gratuity equal to one-half week's pay for each year of service, to a maximum of thirteen weeks' pay.  This gratuity could be regarded as a form of severance pay to the extent that it is granted on separation for reasons other than retirement.
   
   These retirement leave provisions give civil servants a benefit which goes well beyond normal practice in the private sector.  Formal severance pay or retirement leave plans providing up to six months' pay are rare in industry, although they are increasing.  Non-office employees in industry, where they receive severance pay, usually receive cash in amounts smaller than the value of civil service retiring leave.  Retiring leave in the civil service, for employees who retire because of age or ill health, has almost no counterpart in industrial severance pay plans.
5. Furlough or Long Service Leave.  For some, who had earned the privilege prior to the coming into force of the new regulations, twenty-five days of furlough leave can still be granted, but this privilege will disappear as older employees take up their options or retire.
   
   Furlough leave, as such, is rarely encountered in industry. Graduated vacations providing for a fourth week of vacation after a specified period of service, usually twenty or twenty-five years, are now becoming more common in industry.  If furlough leave is regarded as a component of the vacation plan, the effect in total is to give some advantage to civil servants over long periods of service.  If furlough leave is regarded as a form of recognition for long service, rather than as a component of the vacation plan, it represents a decided advantage for civil servants.  The small number of employees in industry who are granted comparable long service leave, according to a formal plan, usually become eligible only after twenty-five years' service.
6. Special (i.e. Personal)Leave. As the term implies, this form of leave is for special purposes, such as death or illness in the immediate family, quarantine, marriage, and the like.  Civil servants accumulate a half day special leave credit for each month of continuous employment. Unused special leave credits may be carried over from year to year, up to a maximum accumulation of twenty-five days.  Although an employee may have acquired the maximum credits, special leave as a rule is granted only for short periods.  Court leave (jury duty and witness) is granted with pay but is not a charge to special leave.
   
   It is difficult to assess the relative position of civil servants and office employees in industry in terms of paid leave granted for personal reasons.  The provision of special leave in accordance with a formal plan and the accumulation of special leave credits are not common in industry. Office employees in industry are often granted leave for personal reasons on either a formal or an informal basis, but this practice is much less common for non-office employees in industry.
   
   Leave is commonly granted in the event of death in the family and for jury duty for both office and non-office employees in the private sector. Such leave is granted with pay, on a. formal or informal basis, to a majority of office employees but not commonly for non-office employees.  Paid leave in the event of marriage is granted to a majority of office employees in industry, often on an informal basis, but rarely to non-office employees.
7. Educational Leave. The provisions for educational leave which were a part of the old regulations have not been carried forward into the newly revised regulations.  Under the old arrangements educational leave was granted, provided that satisfactory arrangements could be made for the continuance of an employee's work during his absence.  Frequently, leave for educational purposes was granted on the basis of leave without pay, but, in certain cases, leave with pay was granted to take a short course which would definitely increase the employee's usefulness to his department.  Leave with half pay was granted to assist an employee to do post-graduate work of special interest to his department.  All requests for educational leave had to be recommended by the deputy minister of the department concerned and reviewed by the Civil Service Commission.*
   
   Outside practice on educational leave is usually not formally spelled out but it would appear that the public service is on balance more liberal.
8. Accident or "Duty" Leave. Civil servants injured in the performance of their duties through no fault or negligence of their own may be granted leave of absence with pay without deduction from sick leave credits, provided that satisfactory medical evidence is furnished.  Injury or duty leave has the effect of ensuring that classified civil servants receive full salary rather than the percentage of earnings up to specified limits provided by Provincial Workmen's Compensation Acts.  These provisions are more generous than normal industrial practice.
   
   The compensation for medical treatment received by an employee and the pension or other payment provided to his dependant in the event of his death is determined by the provision of the Workmen's Compensation Act of the province in which he is usually employed.
   
   (*The new regulations provide only for educational leave without pay, granted at the discretion of the deputy minister.)
9. Maternity Leave. Maternity leave rules in industry and the employee's eligibility for re-employment are comparable to existing civil service practice.  Maternity leave without pay is granted by about one-half of industrial employers, often on an informal basis.

34  INSURANCE PROVISIONS:

1. Supplementary Death Benefit (Group Life Insurance). The Public Service Superannuation Act provides a supplementary death benefit which can best be compared with the group life insurance plans which are common in industry.  The Act provides for death benefits based on salary up to a maximum of $5,000.  Employees pay 10 cents a month for every $250 of coverage.  After employees reach the age of sixty, benefits decline by ten per cent each year and at age seventy (unless still employed in the public service) employees are no longer insured under the plan (except for a basic benefit of $500 under certain circumstances).
   
   This equivalent of group life insurance for civil servants is in keeping with industrial practice, but the amount of the employer contribution in industry is normally at least fifty per cent whereas the government's share of the cost is considerably smaller.  Formulae for establishing maximum individual coverage vary widely in industry but many office employees participate in plans providing coverage at least equal to their annual earnings.  Post-retirement coverage and total and permanent disability are provided for in many industrial group life insurance plans.  On balance, the supplementary death benefit for civil servants is less favourable than equivalent group life insurance plans commonly available in industry.
   
   The supplementary death benefits in the public service should, however, be viewed together with the survivorship provision in the Public Service Superannuation Act.  If an employee covered by this Act dies, either before or after retirement, his widow receives fifty per cent of the employee's pension entitlement at the time of death.  The survivorship benefit is further increased for each dependent child to a maximum of ninety per cent of the employee's pension entitlement at the time of death.  Survivorship benefits are also paid to orphaned children. These provisions go far beyond anything normally available to employees outside the public service.
2. Hospital Insurance. Civil servants are in the same position as a great majority of employees in industry who are required to pay premiums for provincial basic hospital insurance plans.  The position of civil servants is less favourable than about one-half of employees in industry who are covered by supplementary hospital insurance plans under which the employer contributes at least one-half of the cost of premiums.
3. Group Surgical-Medical lnsurance. The position of civil servants is comparable to a great majority of employees in industry who are eligible to participate in group surgical-medical insurance plans covering themselves and their dependants.  Under these plans the employer contributes at least one-half of the cost of premiums.  The major medical expense provision in the public service plan is comparable to those commonly found in industry.

35  PENSION PLAN. The pension plan for the public service represents a substantial advantage in relation to the plans available to employees in industry. While most employees in medium and large firms are covered by pension plans, the Public Service Superannuation Act provides a number of advantages:

• Participation-is automatic, whereas eligibility provisions in many industrial plans specify age or length of service.
• After an employee has made contributions for thirty-five years he ceases to make payments into the plan, whereas almost all industrial plans require contributions up to the date of retirement.
• The pension formula provides two per cent of earnings for each year of service whereas a majority of industrial unit benefit plans have a less generous benefit formula.  The earnings' base under the public service plan is the employee's earnings averaged over the best six years of service, thus yielding much higher pensions than would the same percentage of average career earnings.  Few employees in industry have pensions calculated against the best years of average earnings.  The earnings' base period under the Superannuation Act was changed recently from the "best 10 years" to the "best 6 years," a distinct sweetening of the pension plan, with an accompanying increase in its cost to the government.
• Survivors' benefits under the public service plan are significantly more generous than the great majority of industrial plans.  On the death of the husband, the wife receives 50% of the husband's pension plus 10% for each child up to a maximum of 90% of the pension.  The pension ceases if she remarries, but is restored should she again become a widow.
• The provision under the public service plan for immediate annuities, without discount for age, in the event of disability, is significantly more generous than those found in most industrial plans.
• There is full vesting of pension rights after five years' service, accrued rights being granted in the form of deferred annuities.

36  The rate of employee contribution (6 1/2% of earnings for men and 5% for women) under the public service plan is significantly higher than the most common rate, 5% of earnings, found in industrial plans.  This is offset, however, by the provision for cessation of contributions after thirty-five years of contributory service.  From the standpoint of the employer, the government, this is an extremely costly pension plan.  Its costs and actuarial aspects are reviewed in another report of your Commissioners.

37  WORKING CONDITIONS AND OTHER BENEFITS:

1. Hours of Work. The standard work week in the civil service for administrative, professional, technical and clerical employees is a five-day, 37 1/2 hour week.  Clerical staff in departments employing service and maintenance personnel also work a five-day, 37 1/2 hour week. Service and maintenance employees, hospital staff and operating employees in the postal, customs and immigration services, work a five-day, 40-hour week.  A limited number of employees - fire fighters and lightkeepers - work more than 40 hours per week.  Some employees in customs, immigration and other services may be required to work hours which do not conform to the five-day, 40-hour week.
   
   Civil service hours of work are in line with majority practice in commerce and industry. For example, in Canadian manufacturing, 70% of office employees are on a 37 1/2 hour week while 70% of plant workers are on a 40-hour week.
2. Overtime Compensation.The civil service practice of compensating office employees for overtime work by time off (on a straight-time basis) does not parallel industry practice for the majority of office employees, for whom overtime compensation is in cash at rates equal to one or one and one-half times the normal rate.  On the other hand, overtime compensation for operating employees in the civil service is in line with industrial practice.
   
   Meal allowances are not paid in the public service.  No time or other travel allowances are paid to public servants required to work overtime.  Such allowances are frequently provided for in the private sector.
3. Paid Rest Periods ("Coffee Breaks"). The civil service position on this matter is difficult to assess since there is no formal policy and practices consequently vary between departments and units within departments.  Nevertheless, the informal method of granting paid rest periods (coffee breaks) to civil servants appears to be roughly comparable to the practices affecting about one-half of office employees in industry.  Non-office employees in industry are granted paid rest periods on a more formal basis.
   
   The practice in some parts of the civil service is for employees to go to cafeterias for coffee breaks.  Such arrangements are as open to abuse and as difficult to control in industry as in the public service.  With many large outside employers an increasingly common practice is to bring coffee to the desks of employees by means of carts.  If introduced in government offices, the practice should bring substantial reduction in time lost.
4. Unemployment Insurance. Classified civil servants who earn more than $5,460 per annum do not contribute to the Unemployment Insurance Fund.  After two years of service, contributions cease for any employee if the department certifies that he is expected to be employed for an indefinite period.
5. Workmen's Compensation. Provincial laws governing payment of compensation to persons who are killed or injured or who contract an industrial disease in the course of their duties do not apply to employees of the Government of Canada.  However, the Government Employees' Compensation Act provides similar compensation, and on the scale provided for by the Workmen's Compensation Act of the province in which the employee is usually employed.
6. Pay Supplements: Shift Differentials. As a general rule, shift differentials are not paid in the civil service.  There are, however, two exceptions to this rule.  Employees of the Post Office Department who are required to work on either the evening or night shifts are paid a shift differential at the rate of 15 cents per hour for each night hour worked.  A number of employees of the Department of Public Printing and Stationery, who work in conjunction with prevailing rate staff in the printing trades, also receive a shift differential if they work on the regular night shift.  The shift differential is 32 cents per hour, equal to the shift differential established for the prevailing rate printers.
   
   Incentive Pay. The class of Senior Transcriber in the civil service represents a form of incentive pay in the stenographic-typing field.  Stenographers, typists and machine transcribers (mainly in pools) are paid a single premium rate on reaching and maintaining, for a designated period, productivity standards established for the three grades of senior transcriber.  These standards are based on a line-count system.
7. Allowances. In a number of circumstances, allowances related to the duties of their positions are paid to classified civil servants as compensation for work done beyond their normal duties. As such, they are part of the pay structure and not properly considered as employee benefits.
   
   Isolated post allowances of different kinds are paid to employees to compensate for the undesirable social and economic aspects of living in isolated centres.  Foreign service officers on overseas assignment are eligible for a variety of special allowances, of which the most important are the basic foreign service allowances and the representation allowance.  These vary with rank, marital status, and the post.  Administration officers posted abroad have not received representation allowances and there has been some dissatisfaction about the disparity between the two groups.
8. Miscellaneous Benefits and Working Conditions. There are a number of miscellaneous benefits and working conditions in the civil service which have less general application than most of those outlined above: 
   • Flying accidents compensation.
   • Leave for external training (seminars, workshops, etc.), reserve forces training, civil defence training, and attendance at scientific or professional conventions.
   • Allowances in special circumstances to cover excessive transportation costs involved in getting to work.
   • Comprehensive Civil Service Health Service provided to civil servants in Ottawa.  A number of private companies provide more comprehensive periodic medical examinations than are available through this Health Service.
   • Provision of uniforms to employees if identification by this means is necessary or desirable from the point of view of work to be performed, (e.g. Post Office, Customs and Immigration Departments).
   • Memberships in associations where necessary to carry out the employee's duties or if to the department's advantage to be represented in an association.
   • Some subsidization of food services in cafeterias in government buildings and in other eating facilities-although not to the same extent as in some large financial and commercial institutions.
   • Travel expenses.  These are more restricted and much more detailed and costly in terms of "red tape" than in the private sector.
9. Comparative Disadvantage for Certain Senior Officials Regarding Special Benefits. No differentiation is made between the benefits offered senior-level professional and administrative officials and those for all other civil servants.  By contrast, many private companies do provide additional and more generous benefits for their senior officials.  Consequently, benefit programmes for senior level civil servants compare unfavourably in several important respects with those available to top management in many companies.
   
   In the private sector, senior personnel are frequently entitled to life insurance coverage equivalent to two or three times their salaries; expense allowances and expense reimbursements are less restricted.  There are also certain benefits widely available to industrial executives which are completely unavailable to government officials.  These include:
   • Periodic health examinations.
   • Bonuses, stock ownership and savings plans.
   • After-tax compensation-e.g. deferred profit-sharing or retirement plans.
   • Wide variety of special insurance benefits which have been developed as supplements to executive compensation.
   • Perquisites not considered income in the tax sense.
   • Opportunities for deriving income from other activities.

CIVIL SERVICE AND EXEMPT AGENCIES - BENEFITS COMPARISONS

38  A number of civil service benefit plans, but not all, apply also to most Crown corporations and other exempt agencies.  The Public Service Superannuation Act (including the death benefit plan), the surgical-medical insurance plan, and the Government Employees' Compensation Act are formal benefit plans applying to a number of public agencies, boards and corporations as well as to the civil service.  The usual practice is to exclude from coverage under these plans employees of the publicly-owned industrial corporations such as Polymer Corporation Limited, Canadian National Railways, and Trans-Canada Air Lines.  Some of the more important exclusions from coverage in the plans mentioned above are the following:

Major Exclusions from Public Superannuation Act

Major Exclusions from Death Benefit Plan

Major Exclusions from Group Surgical-Medical Insurance Plan

Major Exclusions from Government Employees' Compensation Act

(None: Polymer is covered by this Act)

39  A number of the groups mentioned above as excluded from the plans in question do, however, follow voluntarily the main provisions of these benefit plans.  In other benefit areas, many of the public agencies, boards and corporations closely follow civil service practice.  As in the wage area, the main advantage which the exempt agencies have is a freedom to adjust benefits and conditions to meet market pressures or other special conditions and needs.

Benefits for Prevailing Rate Employees

40  Employee benefits for prevailing rate employees are somewhat less generous than those for civil servants.  However, they are as good as or better than those provided for non-office employees in private industry.

41  The main differences between benefits for civil servants and those for prevailing rate employees are listed bélow:

Leave Provisions. Prevailing rate employees are granted annual leave on a graduated scale that provides five days per year up to two years' service, ten days per year for two to fourteen years' service, and fifteen days per year for fifteen years' service and over.  Civil servants receive three weeks (15 working days) leave from the first full year of employment.

Nine public holidays with pay are authorized for prevailing rate employees as compared to ten for civil servants.

The rate of accumulation of sick leave credits is 7 1/2 days per year for prevailing rate employees as against 15 days per year for civil servants.  Prevailing Rate Employees General Regulations also prohibit pay for the first day of absence due to illness, whereas there is no waiting period under the civil service plan.

While special leave with pay may be granted at the discretion of the deputy minister for a number of designated personal reasons, prevailing rate employees do not accumulate special leave credits as do civil servants.

Furlough leave, retiring leave, and gratuities in lieu of retiring leave are not provided for prevailing rate employees.  Nor is there general provision for granting leave with pay to prevailing rate employees injured on duty.  Compensation for loss of earnings is limited to the provisions of the applicable Workmen's Compensation Act.  The government does not make up any part of the difference between the Workmen's Compensation Act and the employee's normal wages.  Sick leave may not be granted to a prevailing rate employee eligible for indemnity under Workmen's Compensation.

Insurance Provisions. Prevailing rate employees are required to participate in the supplementary death benefit plan if, after two years of service, they have been designated as contributors to the Superannuation Plan.

When a prevailing rate employee who is not a contributor to the supplementary death benefit plan dies, after two or more years' service, his widow may be paid a gratuity equal to two months' wages.

The group surgical-medical insurance plan for the public service is available to prevailing rate employees and their dependants on terms identical to those for civil servants.

Pension Plan. Prevailing rate employees become eligible for pension coverage and other benefits under the Public Service Superannuation Act once they have been designated as contributors. Whereas civil servants become contributors and are covered automatically on appointment or after not more than a year of service, prevailing rate employees have no guarantee of being designated, regardless of service.  They may be designated as contributors after two years of service (or a total period of 24 months in successive calendar years) if the employing department recommends it to the Governor in Council following review of attendance records, performance, and other factors. An estimated fifty-five percent of prevailing rate employees have been designated as contributors.

Working Conditions and Other Benefits. The hours of work for the majority of full-time prevailing rate employees are 40 hours for a 5-day week, with Saturdays and Sundays as the usual days of rest (without pay).

Prevailing rate employees may be compensated for overtime by compensatory leave or cash payment.  The usual practice is to pay for overtime work.  For each completed 15 minute period of time worked in excess of normal daily working hours, payment is made at one and one-half times the normal rate.  If compensatory leave is granted, it is also at the rate of one and one-half times the amount of overtime worked.  There are also special provisions for work done on statutory holidays and on an employee's normal day of rest.

There is no formal policy governing the granting of paid rest periods or "coffee breaks." The practice varies from one department to another and with the nature of the work.  Prevailing rate employees tend to be granted rest periods to a lesser extent than are civil servants, partly because many prevailing rate employees work outside shops or offices.

Prevailing rate employees are required to contribute to the Unemployment Insurance Fund, unless they have two years' service and the employing department certifies that they are expected to be employed for an indefinite period.  Prevailing rate employees earning more than $5,460 per annum are required to contribute if they do not meet the above requirements.  In general, proportionately more prevailing rate employees are required to contribute than are civil servants.

The Government Employees' Compensation Act applies to prevailing rate employees as well as to civil servants.  However, the regulations contain no general provision for the granting of leave for injury on duty to prevailing rate employees.  The wages paid are, therefore, limited to the percentages of normal wages and the ceilings provided by the applicable Workmen's Compensation Act.  Sick leave with pay may be granted to employees only for periods for which no indemnity for loss of wages is paid under the Government Employees' Compensation Act.  No wages may be paid to supplement Workmen's Compensation payments where the rate of compensation is less than the employee's normal wages or where a waiting period is required by the relevant provincial Workmen's Compensation Act.  Where there is no entitlement to indemnity benefits, sick leave with pay may be granted to prevailing rate employees.

Shift differentials, stand-by duty pay, and supervisory differentials are available to prevailing rate employees but not to civil servants.  Prevailing rate employees are not generally engaged on shift work, however.  A few employees in dry docks and in the printing trades receive extra pay for shift work.  Shift workers in the printing trades receive a fifteen per cent differential over their normal rate, to a maximum of 32 cents per hour.

Employees in certain classifications, who are required to be on stand-by duty, may be compensated at the rate of 21 cents per hour of duty on any day that is a holiday with pay, at the rate of 15 cents per hour on any other day.  For an emergency call-out during a period of stand-by duty, an employee is granted a minimum of three hours' pay at normal hourly rates, regardless of the numbers of hours worked.

Prevailing rate employees who perform supervisory duties may be paid a supervisory differential in multiples of 5 cents, up to 30 cents per hour, in addition to the authorized hourly rate for their trade.  All proposals to pay supervisory differentials in excess of 15 cents per hour must be reviewed by the Civil Service Commission and approved by the Treasury Board.

GENERAL OBSERVATIONS

42  Benefits plans for the public service, taken as a whole, are so complex, there is such widespread lack of understanding of them, and they depart so far in many important ways from practice outside the public service that the whole situation would clearly benefit from:

• a temporary moratorium on the introduction of new benefits or significant modifications in existing plans to permit a proper over-all assessment of the existing public service benefits package;
• a detailed study of employee benefits both in and out of the public service, with particular attention to types and scales of benefits provided, their coverage, their costs, and the ways in which costs are shared between employees and employers.  The purpose would be to develop an over-all benefit package for the public service appropriate both to employee needs and the patterns in the outside market;
• decision that, as a long-run goal of public service compensation policy, salaries and employee benefits should conform more closely to those prevailing in the appropri­ate labour markets of the country.

43  Employee benefit policy for the public service might be advantageously based upon the following principles:

1. Acceptance of the concept of benefits as an integral part of total remuneration from the standpoint of the government's employment costs and of their attractiveness to both employees and those to be attracted to the service.
2. Central policy control and co-ordination for all employee benefits.  Different authorities are now responsible for different benefit plans: the Department of Finance for superannuation and death benefits, the Civil Service Commission for leave entitlements, the Treasury Board and the Commission for overtime regulations, and so on.  For some conditions of employment (e.g., rest periods) there is no central authority and practice often varies from department to department.
   
   Central policy control and co-ordination would make it clear that employee benefits and working conditions are instruments of personnel policy having the same broad objective as selection, training, classification, and direct compensation practices.  It would permit central thinking by the government as employer about total remuneration and would permit some balanced thinking about the various parts of the programme, perhaps even providing some scope for informal trading and bargaining.
3. Reasonable balance between benefits provided and the government's contribution to their costs.  Excessive expenditure on any one benefit creates difficulties in adjusting other benefits which may be more advantageous to both the employer and the employees.  The public service superannuation plan is an excellent example of a benefit programme which costs the employer so much as to create difficulties in taking on added benefit costs in other areas, even though they may be desirable.  For example, death benefits provided by the Superannuation Act might be achieved at less cost and more usefully (particularly for shorter service employees with important responsibilities to dependants) through greater group life insurance coverage.
4. Maintenance of a pre-determined relationship with the level of employee benefits in private industry. Where public service benefits now greatly exceed normal levels outside there are formidable obstacles to reducing them, to correct the disparities.  As a practical matter, it may be wiser to wait for benefits in industry to reach present public service levels, taking good care in the interval not to perpetuate the present relationships.
5. Development of a benefit programme having the greatest appeal to the largest number of employees.  This requires conscious avoidance by policy-making officials-generally long-service employees - of any tendency to assess the desirability of benefits programmes in terms of the interests of their own age and earnings group.
6. Recognition that different benefit programmes may be appropriate to different occupational groups.  Just as industrial practice suggests different wage patterns for different occupational groups, so it also suggests differences in the pattern of benefits.  If it should be decided to provide uniform benefits for all classes in the public service, presumably some offsetting modification in rates relative to outside rates becomes desirable for particular occupational groups.
7. Recognition of the value of simplicity in employee benefit plans.  Unless the benefit programme in total and the characteristics of each benefit it provides can be understood by the employee, it may be of less employee-relations value than a simpler programme costing less. It is therefore noted that it is traditional in the public service to use complicated regulations and directives.  Attempts to meet every possible contingency have led to such complexity that many employees do not understand what benefits they have.  Some measure of administrative discretion would meet needs more simply and just as equitably.
8. Recognition of the value of an effective programme to inform employees about benefits and their value.  Employee benefit programmes are designed to meet competition in the market and to contribute to morale and productivity.  Many private employers have found that informing employees of the nature and value of the benefit programmes they have is an insignificant cost item and that it contributes to satisfactory employee relations.

8

COMPENSATION: POLICY AND
AMINISTRATION

1  It is by no means easy to develop an adequate wage and salary policy for any institution, private or public.  Pay determination is not amenable to any scientific or mechanistic approach. The factors involved are complex and their significance is continually changing with circumstances and market pressures.  While market prices set the limits of wage policy, changing political, administrative and social influences affect the determination of a particular wage rate.

HISTORY OF PUBLIC SERVICE PAY POLICY

2  The history of modern compensation policy in the Canadian civil service dates from the report of Arthur Young and Company in 1919.  Although the emphasis in this report was on classification and salary structure, the Report of Transmission declared the following principles on general pay policy:

• Rates of compensation should be uniform for the same rank.
• Rates of compensation should be relatively right for different classes. Within the same vocation, trade or profession, this relativity was to be measured by differences in duties, responsibilities, experience, knowledge and skill. in the case of classes of positions in "different fields," this means that they should bear the same relation to classes of positions in other fields that have been established in the "business world" as between the respective vocations, trades, professions and lines of work.
• The pay for each class should be equitable, that is, fair to the employee and fair to the taxpaying public.
  1. Fairness to the employee was defined to require that the compensation should permit him to maintain a standard of living that will make for the good of society and posterity.  In the case of the lowest ranks, the compensation should be adequate to attract into the service young men and women without family responsibilities, but of a training and capacity that will enable them to become of future value to the service and to themselves.
  2. Fairness to the taxpaying public was defined to require:
     1. Compensation should not materially exceed that paid for similar services by enlightened employers in the general industrial and commercial world. Any excess over such a prevailing average is in the nature of a special subsidy with which no group should be favoured.
     2. Furthermore, in comparing the compensation paid in government and in business for similar services, the relative advantages and disadvantages of employment in the two sectors should be taken into account:
        • permanence and continuity of tenure
        • hours of work
        • holiday and sick leave

3  The next statement of salary policy dealt with the technical and professional classes.  The Royal Commission on Technical and Scientific Personnel (1930) found that, although junior salaries compared favourably with the outside market, salaries for most scientific classes in the public service were substantially depressed.

4  During the depression, a number of restrictive pay policies were introduced in the civil service as well as in the private sector of the economy.  In the civil service, salaries were reduced by ten per cent (Salary Deduc­tion Act, 1932), promotions were limited, statutory increases discontinued, and permanent positions which became vacant were abolished (P.C. 44/1367-June 14, 1932).  With wage cuts of substantially greater magnitude in the private economy and with a restoration in the mid nineteen-thirties of one-half of the ten per cent civil service pay reduction (and the restoration of all before the decade ended), salaries in the service at the outbreak of war were in a highly favourable position relative to those in the private sector.

5  Broadly speaking, compensation policy during World War II was one of over-all restriction on increases, tempered by a variety of expedients designed to prevent gross injustice and to place the government in a reasonably competitive position for hiring the enlarged staff it required during the emergency.  A cost-of-living bonus, promotions in war units, war duties supplements, and the watering-down of the classification structure, all provided some flexibility for civil service wages and salaries during the war.

6  In the immediate post-war years, the first question of pay policy involved the scale of remuneration for the higher levels of the civil service.  Acting on the recommendation of the Royal Commission on Administrative Classifications in the Public Service (1946), selective increases were made in the salaries of various deputy ministers and other senior officials.  During this period, too, the cost-of-living bonus, introduced during the war, was incorporated into the salary structure of the service.

7  The then Prime Minister, the Right Honourable Louis St. Laurent, in introducing certain salary revisions in 1948, re-stated the principles upon which the compensation policy of the government was based.  This was the first comprehensive statement of pay principles since 1919 but did not differ greatly from those of 1919. In summary, the three most important were:

• Equal pay for equal work-defined to include regional and locality pay differentials.
• Fair relationship between classes.
• Fair relationship with private employment - defined to require consideration of the average paid by "enlightened employers" or the so-called "good employers."

8  At the founding convention of the Civil Service Association of Canada in 1958, the Prime Minister, The Right Honourable John Diefenbaker, made the following statement on wage policy in the public service:

For many years it has been generally accepted that two main principles should guide the determination of salaries in the service.  First, the salaries must be enough to do the job, that is, to attract enough of the right kind of men and women into the service and keep them in it; second, they must be fair as between civil servants and people outside the service, the taxpayers if you will, which means that the salaries we pay for any class of work should be comparable with those paid by private employers for similar classes of work, taking into account the other terms of employment that are necessary to make a fair comparison. I think these principles should continue to guide us.

9  The most recent expression of pay principles is to be found in Section 10 of the new Civil Service Act, which is worded as follows:

The Commission in making recommendations on remuneration shall consider the requirements of the civil service, and shall also take into account the rates of pay and other terms and conditions of employment prevailing in Canada for similar work outside the civil service, the relationship of the duties of the various classes within the civil service and any other considerations that the Commission considers to be in the public interest.

10  These most recently enunciated principles of compensation, although somewhat similar to those of 1919 and 1948, are much less specific and are consequently open to varied interpretations.

11  There is still no comprehensive statement of compensation principles for the public service. Past statements have been so generalized as to be of little practical value as policy guideposts. Government enunciation of concrete remuneration principles for the public service would meet a number of urgent needs.  It would:

• provide a meaningful framework within which more specific pay policies may be developed.
• serve as guideposts to the Pay Research Bureau for making appropriate market comparisons.
• assist departmental managements in administering pay.
• facilitate a better understanding by employees and staff associations of government pay policy and practices.
• provide Parliament and the broader public with the necessary background and rationale for appraisal of government compensation policy.

12  A second major observation is that only in recent years has there been much attention to market forces in government pay determination.  Although market factors were mentioned as one of the criteria for wage determination in the Young Report of 1919, the main emphasis during the nineteen-twenties and nineteen-thirties was on maintaining internal relativities and on vague standards of equity.  Pay practice reflected an assumption that rates were adequate as long as they enabled the service to secure and retain the staff required.  During World War II and the immediate post-war years, the basic criterion for most salary and wage adjustments was changes in the cost of living.  It was not until the late nineteen-forties that any real attention was given to outside market pressures and rates.  Mr. St. Laurent's restatement of compensation principles in 1948 placed greater emphasis upon the market than had been the case in the past.  Increasingly since then there has been more concern about market rates, although it was not until the formation of the Pay Research Bureau in 1957 that this was translated into reasonably specific policy and practice related to outside occupational market comparisons.

13  This greater emphasis on market rates as a guide to pay determination in recent years reflects two factors: (1) relatively full employment since World War II inevitably has made the market a more dominant factor in pay determination; and (2) the growing need of the government for scarce technical, professional and higher-level manpower has forced it into more active competition with outside employers.

EXTERNAL CRITERIA FOR PUBLIC SERVICE WAGE POLICY

14  Clearly, the general aim of wage policy in the public service should be to create and maintain an efficient and properly remunerated service.  Specifically, pay policy should, first, facilitate the staffing of the service with competent personnel by attracting suitable recruits and retaining effective employees; second, compensate employees in the public service fairly; and, third, achieve these two aims at a cost which is as reasonable as possible to the taxpayer.

15  The government competes with employers in the labour market.  If the general level of wages in public employment is substantially lower than that for similar work and conditions in private industry, the government will find it increasingly difficult to recruit qualified persons.  On the other hand, if the public scale is substantially higher, the public service will drain a disproportionate share of the more efficient workers from industry, thus affecting productivity in the national economy.

16  It is evident also that without consideration of "going" rates the government has little guide to the major economic aspects of wage determination.  In the public service there is, as a rule, no direct relationship between wages and demands for the product because most governmental services are not supplied in a free, let alone a competitive, market.  The government's only economic guide is, therefore, supplied by prevailing conditions in the labour market.

17  To establish outside market rates as the primary guide to public service wage and salary levels is, however, only to pick a starting point.  Many practical difficulties are involved.  The first is that there are usually a whole range of market rates with which the rate for any one public service position might be compared.  Then there is the fact that many public servants lack counterparts in private industry.  For their positions it is difficult, perhaps impossible, to find a useful market rate for comparison.

18  The first difficulty mentioned stems from the fact that the term "market" or "going" rate refers to an abstraction.  There is no such thing as a single market rate.  There are many going rates, and the problem of wage determination is not solved by identifying the rates paid for various types of work in private circles.  It is still necessary to choose an appropriate sample of firms and rates to use as a guide in wage determination.

19  As a general rule, for most clerical and non-office wage earner jobs-after due account is taken of the geographical distribution of civil servants in the classification concerned-averages of rates paid in all establishments (except the very small) may properly be used for purposes of comparison.  For technical, professional and higher-level jobs, however, the government must compete with a select group of employers.  Here, the government, as a large employer, competes directly with the large private employers, and must keep in step with their practices if it is to recruit and maintain an efficient work force.

20  The Pay Research Bureau bases its wage comparisons on a "select group of employers." The phrase is not intended to mean the best employers, but rather a representative sample of those employers with whom the public service is in competition for recruits.  The sample of firms used by the Pay Research Bureau in its surveys, although still evolving, seems to be a reasonably appropriate one for professional and technical manpower, but it might consider a somewhat less select sample for a number of the lower level occupations.

21  As a result of dramatic shifts in the labour market, many types of highly specialized manpower which previously found their outlet almost exclusively in the federal public service are now in strong demand by private industry, provincial and local governments, and educational institutions.  Candidates who formerly would have considered the civil service their first choice now have a wide range of interesting and remunerative alternatives from which to choose. Increasingly, for this and other reasons, the public service has to be competitive in its wage and salary rates.  As a corollary, it must maintain high standards of selection and work performance. It must give more attention to maintaining efficiency, standards of performance, and levels of productivity appropriate to such compensation levels.  Compensation costs only begin with wage and salary levels.  The final measure is the output the salaries buy.

22  Reference has already been made to the number of occupations in the public service for which it is difficult to find comparisons in the private sector of the economy.  How, for example, can competitive market rates be used to fix the remuneration of astronomers, meteorologists, air traffic controllers, and others for whom the government is the chief employer?  Here, bench-mark jobs with counterparts in the private sector may be used in association with job evaluation and other similar techniques to slot the jobs in question into the public service wage structure.

23  The government has some responsibility to ensure that the incumbents of such non market jobs receive equitable treatment compared to those whose rates are market-determined.  It has already been observed that career earnings of those in jobs without counterpart in the private sector of the economy have tended to lag somewhat behind those for comparable jobs where the government is in competition for personnel.  The government also has another objective.  It must ensure an adequate long-term supply of personnel required to man jobs which are peculiar to the public service.  This need reinforces the case for comparable and equitable pay treatment.

24  Should the government's general wage policy for the public service be modified to allow for the relative attractions of employee benefits and "other conditions of employment" in the public service?  The government's present substantial advantage over private industry on fringe benefits for clerical and non-office wage occupations provides some leeway for shading recruiting rates slightly below the market for these classes.  However, because of the competitive labour market such modification is inappropriate when recruiting managerial, professional and technical personnel.  New graduates in these groups are more likely to be influenced by direct remuneration and opportunity than by the long-run value of fringe benefits.  In the tight labour market for high-level manpower they can easily find both the wages they desire and employee benefits relatively similar to those offered by the public service.  In the long run, government compensation policy should be designed to meet market conditions both in pay rates and individual fringe benefits.

INTERNAL CRITERIA FOR PUBLIC SERVICE WAGE POLICY

The Classification System

25  External comparisons provide proper bench-marks for establishing general levels of remuneration for particular types of work within the public service.  They suggest the range within which wages and salaries for particular categories of personnel should fall but they do not provide all of the ingredients for administration of a well-conceived remuneration system.  Such a system must make it possible for the wage or salary of the individual to be fitted into the salary structure suggested by external comparisons and to be fitted into it in such a way as to provide rewards and incentives for proper performance.  Classification of positions, especially for an organization as large and complex as the public service, is essential for achieving these objectives.

26  Classification is not only important in administering a compensation system; it also serves other purposes.  Classification depends on defining the function which the incumbent of a position is to perform.  Such definition is clearly essential to proper placement, promotion and transfer, to training decisions, and to evaluation of performance.  Classification and the job descriptions upon which it is based facilitate recruiting to meet present and future manpower requirements and to provide the foundation for decisions about qualifications required by the incumbent of any position.

27  The civil service classification system had its origin in the study by Arthur Young and Company, reported to Parliament in 1919.  It was a time when there was a strong public sentiment in favour of bridling patronage. The "merit system," which was intended to relate appointments and promotions to qualifications for the work to be performed rather than to political favour, required a system of classification which would accurately define each position.

28  The present classification system was legally founded on the Civil Service Act of 1918, as amended in 1919.  In the newly revised Civil Service Act, 1961, the legal basis for classification has been continued.  Section 9 reads as follows:

29  In its Report of Transmission, Arthur Young and Company in 1919 dealt with the needs and purpose of classification.  It pointed out that the classification of the service was a prerequisite to the examination of applicants.  The Act of 1918 required the testing of candidates, and appointments were to be made after competitive examination "which shall be of such a nature as will determine the qualifications of candidates for the particular positions to which they are to be appointed."  "Obviously," wrote Arthur Young and Company, "the Commission cannot pass on the qualifications of candidates to fulfill the duties of particular positions unless they know what the duties of those positions are ... Only by a system of classification by which positions having substantially the same duties and calling for the same qualifications are grouped together can examinations be held in advance and lists of qualified persons be secured and maintained."

30  In addition, the Act required the Civil Service Commission "after consultation with department heads, to prepare plans for the organization of each department of the civil service." To fulfill its obligation to "indicate what classes of positions and what numbers of each class are required for the work of any department," a scheme of classification was essential.  Finally, Arthur Young and Company emphasized that such a programme was necessary "if uniformity in compensation for the same work was to be brought about."

31  Since its inception in 1919, the system of classifications has been administered by the Civil Service Commission.  For the guidance of those who were engaged in the classification programme, the Civil Service Commission approved the following statement of principles:

32  The problem of administering a classification scheme may be readily appreciated merely by noting that when the system was inaugurated there were only 25,000 employees in the classified civil service, whereas today there are 130,000.  A system which was intended to incorporate "the simplest practical grouping of positions" may have permitted a reasonable degree of flexibility when it covered 25,000 or even 50,000 employees.  It has become more complex, more difficult to administer, and more inadequate as the size of the service has increased.

33  The Royal Commission on Administrative Classifications reported that in 1946 there weresome 3,700 different classifications (1,500 of which were for temporary war-time posi­tions), which it considered an excessive refinement and by no means "the simplest practical grouping." The Royal Commission recommended a simpler and more workable system of classification.  In the intervening years an effort has obviously been made to meet this criterion: at the time the present study was undertaken the number of classes had been reduced to 887, of which 106 had been defined in such terms that they were considered adequate for present working conditions. There were no official standards for the remaining 781 classes, however, and it is estimated that a complete set of standards will not be "achieved for some years."

34  Until the early fifties the administration of the classification system had the merit of relative flexibility. Classification officers were employees of the Civil Service Commission but spent considerable time in the departments in the performance of their duties and were under instructions to become familiar with every first name.  They came to have a considerable knowledge of the departments for which they were responsible and of the individuals in them. Classification decisions were made close to the work place.  This was very much the picture after World War II, when the men doing this work were comparatively senior and experienced, not only in classification but also in dealing with widely varying types of personnel under many different circumstances.  It was a period when the Civil Service Commission had one clearly recognized head, communication lines from the classifier to the Chairman of the Commission were short, and those responsible for classification could get relatively quick decisions and be certain of firm support.

35  Within the last decade, this flexibility has been lost.  To the individual and his supervisor alike classification problems appear more difficult.  There is less room for intelligent persuasion and the whole process is much slower.  Among the several apparent reasons is the change in the organization of the Commission itself.  The three Commissioners now allocate their responsibilities among themselves.  As a result, staff work on classification and pay falls to one Commissioner while the operations group responsible for implementation reports to a different Commissioner.

36  In a move of debatable wisdom, too, classification, recruitment and placement have been combined under officers attached to the Operations Branch of the Commission.  Experience in industry suggests that these are distinct functions best kept separate and that, if they are not, one or other of them is likely to suffer, depending upon the pressures of the moment.  Few personnel administrators are equally effective in handling such divergent functions.

37  The exigencies of financial control have, however, been the source of most of the relative deterioration in the administration of the classification system.  Although the Treasury Board has no authority to classify a position, it has become the real power behind the classification system by ruling on the number of positions of any given classification to be permitted in a department and on the salary appropriate to each classification.  Inevitablyt its enlarged role has involved duplication of personnel staff.  The Treasury Board soon found, for instance, that to rule on the salary range appropriate to a classification it required personnel specialists to assess the recommendations of the Civil Service Commission.  In addition, the establishment review procedure, the defects of which have been enlarged on earlier, has tended to make the classification plan sluggish and unmanoeuverable.

38  Classification administration does not usually pose the problem for industry it does for the civil service.  An important reason is that industry is less prone to apply common classifications to all divisions of its operations.  Whereas in the federal civil service the common denominator is the classification, in industry it is usually the salary range.  This is an important distinction.  Industry has found that a system which ranks classifications largely by linking them to a simplified set of salary ranges is much more flexible than a system of classifications applying across the organization.

39  Many European countries, notably Britain, France, Germany, Italy, Austria, and Belgium, have adopted general classes which are common to their whole civil service; this is also the pattern favoured by the Canadian classification system.  In the United States, the enormous size of the federal public service has made the concept of service-wide classes impractical.  The salary range has, accordingly, been made the common denominator and, under the United States Federal Position Classification Plan, all positions are encompassed within 18 salary grades.  Each salary grade takes in many classifications, and position names are of relatively little significance.  The important fact is the decision that the position is comparable in terms of difficulty and responsibility with all other positions classified within the same salary grade.

40  In essence, this is the system now used widely throughout North American industry.  The description of the duties of the class determines its ranking within a comparatively small number of salary grades.  Since these rankings are subjective, they cannot be really precise and there is, therefore, a tendency to use broad overlapping ranges. In effect, through the present classification system, Canada's Treasury Board and the Civil Service Commission are struggling to make distinctions finer than either the United States Civil Service Commission or major company industrial relations executives consider themselves competent to achieve.  In the result, the classification files of Ottawa's Civil Service Commission are replete with tedious evidence of long-drawn-out wrangles over alleged inequities and inconsistencies which the present classification maze makes largely unavoidable.

41  The groping for unattainable perfection is also evident in the attempt to write standards.  Up to May 1961, only some 106 of 887 classes had been brought within the control of generally accepted standards.  Some months earlier, one officer of the Civil Service Commission had predicted that it would take fourteen years to complete the programme.  This prediction was probably appropriate to the approach being used, with standards being written in the most meticulous detail.  Their very length and complexity would overwhelm the memory of the average executive, so that he could never expect to get any substantial number of standards clearly in his head.  Preoccupation with meticulously detailed classification is unrealistic. Minutely descriptive detail, of little significance for determining the market value of the position or its relative organizational position, serves chiefly to confuse the issue and limit flexibility in personnel management.  Such descriptions can be accurate only at a point in time, because jobs, like living organisms, change constantly.

42  Succinct descriptions, containing all the essential detail needed for organizational clarity and the determination of job value, are greatly preferable.  Fortunately, this style has recently gained favour with the Civil Service Commission and, not surprisingly, the work of preparing standards has been speeded up accordingly.  There is now some reasonable hope that a complete set of standards will be provided in not more than four years.  This may prove an optimistic forecast, depending upon the rate of change within the classification system during this period. The pace of change within the civil service will force the administrators of the classification system to run faster and faster, if they would avoid giving the embarrassing illusion of standing still.

43  This, however, is only tinkering with part of a system which needs wholesale review and revision.  The present classification officers are like skilled mechanics repairing the engines of a paddle-wheeler, forging a replacement part from a carriage bolt here and making do with a bicycle chain there.  They are too preoccupied to consider the relevant question of whether the engine they tend so knowingly and with such ingenuity has not long since become obsolete.

44  A major element of rigidity has been injected into the civil service classification system by the practice of tying very specific educational and experience qualifications to the descriptions of the positions.  These qualifications often appear to be somewhat arbitrary and have the inevitable result that career sequences indicated by the classification system are often bestrewn with road blocks insurmountable by many, regardless of the level to which their energies and abilities might otherwise take them.

45  The practice of specifying educational and experience standards for positions was forecast in the early Civil Service Commission statement of principles on classification which has been quoted above.  The administrative convenience of such standards is that they make it easier to screen candidates.  Specific objective standards, no matter how arbitrary, have practical advantages over the best conceived job descriptions, in limiting the number of appeals which can be launched against promotion decisions and in relieving some of the continuing pressure for making seniority the chief element in promotions.

46  Experience in the exempt agencies does not support the contention that arbitrary and tightly drawn educational standards are necessarily required.  In the Bank of Canada, for example, there is no fixed educational requirement for an economist.  There are examples of this classification being attained by men who have never been to university, but who have developed the ability to perform the work of an economist in the Bank.

47  Over the years, the administrators of the classification system have endeavoured to slay the dragon of rigidity in the classification system by the development of loose general classes.  Those who can meet the educational prerequisites can be classified, for example, as "Chemists;" others who have the knowledge of junior chemists but lack the formal education are classified as "Technical Officers."  The academically qualified man may be an "Economist," his self-educated colleague a "Technical Officer."  Thus, to give the system something of the flexibility which the standards themselves deny, a number of exceedingly loose general classifications have been added, of which the most striking examples are the Technical Officer and the Administrative Officer series.  An employee classified as a Clerk, an Economist, a Calculating Equipment Operator, or a Cargo Inspector, can be readily identified; but one cannot guess what a Technical Officer does simply from his classification.  Although the classification suggests a laboratory occupation, the individual often turns out to be a personnel officer or information officer.

48  A basic principle of the classification system enunciated in 1919 was "that neither the degree of efficiency with which the duties of a position are being carried out by the person who may be filling it, nor the qualifications such person may possess or lack, or the pay he may receive, nor any other fact dependent solely on his individuality, shall be considered as having any bearing on the classification of the position in question." Classification, in other words, is concerned with duties and positions, not persons.

49  However, concern for the individual rather than the position in the civil service classification has become very evident, particularly in the scientific classifications.  A chemist, for example, may go all the way from a Chemist 1 at $4,380 to a Chemist 5 at $11,200 per year without ever changing his job, and might do so while working at the same problem from start to finish.  Here the change in the classification is the change the man makes in the job; literally he changes the whole level of the job "solely on his individuality."  It has long been recognized that the job tends to form itself around the man at all levels of management.  There is not one best way of performing a management function; the best way for one may be almost impossible for another, and yet each may discharge his responsibility competently.

50  Even at clerical levels, the qualifications of the individual, and other factors dependent solely on his individuality, may change the job and force reclassification.  The result is referred to in the civil service as "classification creeping," and some of it is undoubtedly justified.

51  The present administration of the classification system, and indeed the classification system itself, is only part of the excessive paternalism which surrounds the civil servant.  He is protected by Parliament, both indirectly by individual members and directly through the Civil Service Commission, and except by various evasions of the system, denied his individuality by the tight control system of personnel management.  Control of classification, for example, is removed from departmental management and placed in the hands of a more remote control agency, presumably to ensure objective review, free of bias.  The result is that the system is made more impersonal and at the same time is much less sensitive to the realities of constantly chang­ing duties and responsibilities for the individual.

The Remuneration System

52  Most modern remuneration systems are imperfect attempts to see that each employee is paid fairly in relation to four basic considerations:

• The requirements of the job.
• The employee's performance in relation to such requirements.
• The internal (and usually historical) concept of the difficulty and responsibility of any given job as compared with the relative difficulty and responsibility of all other jobs within the organization.
• The external concepts of relativity with reference to the same job.

53  Since the perfect remuneration system does not exist anywhere, a variety of methods are used to determine the relativities within a remuneration system and to administer the system. There is to be seen, on the North American continent, a considerable area of agreement in the economy at large and in some governments, notably that of the United States of America, on the desirable principles of a good remuneration system.  The system currently in use in the civil service and in most, but not all, of the Crown agencies, does not meet these standards.

54  Like the classification system, the remuneration system in the civil service of Canada evolved from principles enunciated in the Arthur Young and Company study of 1919.  Briefly, these were:

• Rates of compensation should be uniform for the same work.
• Rates of compensation should be relatively right for different classes.  Within the same vocation, trade or profession, this relativity was to be measured by differences in duties, responsibilities, experience, knowledge and skill.  In "different fields," rates of compensation were to be related, one field with another, in the same way that the "business world" related rates for different vocations, trades, professions and lines of work.
• The pay for each class should be equitable. This was to mean "fair to the employee: and fair to the taxpaying public."  This fairness was spelled out in its social implications and was also taken to mean that compensation should not materially exceed that generally paid for similar service by employers in the industrial and commercial world.  In making comparisons with the industrial world, consideration was to be given to permanence and continuity of tenure, hours of work, and holiday and sick leave.
• The schedule should provide an absolute minimum, absolute maximum and intermediate rates between the two.

55  Before describing the administration of the present system, it is useful to consider some of the assumptions inherent in this approach.  These may be stated as follows:

• The principles can best be implemented through a central administrative agency.
• The principle of equal pay for equal work can be implemented with a close approach to precision.
• The implementation of the second principle, that rates of compensation should be relatively right for different classes, assumes a system of job evaluation.
• The fourth of the principles originally set out by Arthur Young and Company, "that the schedules should provide an absolute minimum, absolute maximum and intermediate rates within this range," now relies for its interpretation on a number of assumptions which appear to have evolved over the years and which do not derive their inspiration from the report submitted by Arthur Young and Company. These are:
  1. that the value of an employee in a given classification can be defined within narrow limits;
  2. that the limits within which this definition may be achieved become increasingly narrow as the value of the employee's service increases;
  3. that within this narrow range, the increasing effectiveness of the employee can be directly related to time and his increasing merit compensated on a pre-set time schedule;
  4. that the vast majority of employees in any given classification will merit the pay increases based on time and that denial of such increases should therefore be made difficult.
• Unstated, but important, is the assumption that no salary of a member of the classified civil service may exceed the remuneration of a cabinet minister.  This assumption also appears to exert a powerful influence in the Crown agencies and there is reason to believe it may have important influence even where the chief executive is paid more than a cabinet minister.

56  The administration of the remuneration system has been plagued by the absence of a complete set of classification standards as a prime requisite.  Moreover, the system has presupposed job evaluation, but no formal system of job evaluation has ever been adopted.  It is true that some of the elements of a factor comparison system have been applied to job evaluation, but it is essentially a loosely administered ranking system.  If equitable salaries have from time to time been achieved, this has been in spite of the system.  Because the Civil Service Commission advises and Treasury Board decides, there is dual responsibility and duplication of staff.  Relativity with salaries in the economy at large has undoubtedly been improved since the establishment of the Pay Research Bureau, but the Bureau, in turn, is handicapped by the inadequacy of standards for making the comparisons.

57  One of the principles of remuneration applied since the inception of the system is that the schedules should provide an absolute minimum, an absolute maximum, and automatically attained intermediate rates within each range.  This principle is sharply at variance with the general practice in the economy, particularly with reference to supervisory and management positions.  Some companies have adopted systems of automatic progression at the lower levels of office employment because they have found that automatic progression at the lowest level, and sometimes to the mid-point of the range in clerical levels, tends to reduce arguments, simplify administration, and conserve the time of departmental management and of the personnel or industrial relations organization.

58  This might be taken as evidence of the wisdom of the present civil service system.  Most of those who administer such systems will admit, however, that they favour mediocrity and constitute a rationalization in favour of peace.  The victims of the system are those superior performers whose merit is not recognized lest such recognition bring grievances from less meritorious but more numerous colleagues.

59  The validity of this conclusion may be tested by noting that companies, which pay typists on an automatic progression of salary, pay supervisors by merit within broad ranges, on the assumption that incentive is more important to supervisors.  There is, indeed, some possibility that this is true for it is not unreasonable to suppose that the very employees who have the qualities necessary for progressing to supervisory positions, are likely to be the most alert and responsive to financial incentive.  Even so, there is certainly no proof that the elimination of financial incentives for meritorious performance at the lower levels of office employment is an advantage.  Treating all such employees in a uniform manner may have the advantage of convenience, but this is scarcely the same as saying that the elimination of financial incentive at the lower levels of an office organization will improve efficiency.  Even those companies which have done it suffer from no such delusion.

60  The administration of ranges within the civil service bears no resemblance whatsoever to the recommendation of Arthur Young and Company in the Report of Transmission, Part III (g) which reads:

Even as far back as 1919, it was possible for the Report of Transmission to note "that only in very rare cases indeed is the annual increase withheld" -a statement as valid today as it was then.  The tendency is so strong toward automatic progression through the ranges that the key comparison used by the Pay Research Bureau, the Civil Service Commission and the Treasury Board in establishing salaries is the comparison of the top of the range with that in selected companies.

61  The system of ranges as conceived in the 1919 study recognized the impact of the employee's own efforts upon the value of his job.  The ranges were comparatively narrow and therefore the provision for the recognition of such effort and such variation between employees was modest; but it was there, and it is unfortunate that this potentially effective incentive has been largely destroyed by administrative practice within the service.

62  In the intervening years, enlightened companies on the North American continent have tended toward a widening of ranges, particularly at the more senior levels.  The endeavour is to fix the employee's salary within the appropriate range strictly on the relative merit of his performance.  This is not to deny that in any organization length of service tends to influence salary in an upward direction, but there has been a conscious and increasing effort to control this tendency and to make its influence secondary to quality of performance.

63  These broader ranges favoured by industry are effective only when administered in accordance with the principle of merit.  It would be extremely costly to use wide ranges, designed to recognize the variations in performance which are inevitable in any group of men and women, in such a way that movement through the ranges would, in practice, be related strictly to the passage of time.  As the present system of ranges in the service is geared to the passage of time and not to merit, managers in the departments find it necessary to use other expedients for the recognition of merit.  The most common is what has been referred to previously as "classification creeping," a practice which is facilitated by the loose general classification and by the lack of standards for the majority of classifications.  Thus, it is possible to support a change in classification, ostensibly because the duties have changed, but actually because the worth of an employee in a position has changed.  His duties remain the same, but in the opinion of his superior he deserves recognition for his accomplishment.

64  This procedure has largely destroyed the effectiveness of the classification system and made a mockery of the ranges, to the point that only a far-reaching job evaluation study within the civil service would disclose the real ranges for positions of comparable difficulty and responsibility.  It is safe to say that the actual ranges would be found to be considerably broader than they appear to be from the official classification listings.  Experience elsewhere suggests that they may well be broader than those currently favoured by industry but, if this is true, they are not administered fairly, because not every able employee giving superior performance in his position is recognized by the device of classification creeping.  Moreover, real changes in responsibility may not be, and frequently are not, recognized promptly.  An employee may be misclassified and mispaid for long periods while his case is passed through the control agencies, which have no real responsibility for him, no interest in him and no concern for the achievement of his department's objectives.

65  Your Commissioners are bound to conclude that the present remuneration system is essentially negative.  It does not provide for positive recognition of superior performance.  The administrators tend to regard it as a system of cost control and, for the reasons set out, it lends itself to the self-deception of those who cherish it as an effective instrument of cost control.  It is too easily defeated and, worse still, those who exercise the control cannot know the extent to which it is being defeated.  So it is a control system which is not what it appears to be - a system pushed and pulled by pressures from many sources and revised in its parts to meet such shifting pressures.  It has long since lost any unity of concept which it may once have had.

66 These serious defects in the classification and remuneration systems become more evident as the public service employs more high-level professional and managerial manpower. Whether for the purpose of its competitive position in recruiting such personnel or of obtaining most effective results from their services, the public service, like private employers, should increasingly be guided by the following principles:

1. More emphasis should be placed on developing appropriate monetary and non-monetary rewards for senior professional people, as an offset to check the present incentive to abandon professional jobs and seek advancement through the administrative hierarchy.  Salary plans should provide for parallel lines of advancement for professional and administrative personnel, with roughly comparable salary scales.  The present system in many areas places too much emphasis for purposes of remuneration on the organizational level and numbers of people supervised and not enough emphasis on the technical competence and contribution of the individual.
2. There must be greater recognition of differences in individual performance, particularly for high-level manpower.  It is becoming important to base compensation on the capabilities and performance of individuals rather than solely upon rigid job descriptions.  The present system, which is said to be based on equal pay for equal work, too often results in equal pay for unequal effort and un-equal interest.  This is unfair and has an insidious effect on morale and efficiency. The present classification system emphasizes the job first and the man second.  A proper classification and remuneration system recognizes that in the professional and managerial areas the individual determines the level of responsibility carried in the job.  Job families can be classified by level of responsibility carried as well as by the nature of the work performed. Thus, to the extent appropriate, the individual can be rewarded either by advancement within the range or by promotion to a higher range in the series, for the same work carried out at more responsible level.

MACHINERY FOR WAGE DETERMINATION AND SALARY ADMINISTRATION

67  By the terms of the Civil Service Act, responsibility for wage determination and salary administration rests with the Civil Service Commission and the Governor in Council.  The Commission is required to keep the rates of pay under review and, whenever the need arises, to make recommendations concerning them to the Governor in Council.  To become effective, the recommendations of the Commission must be approved by the Governor in Council, whose powers in this respect are normally exercised by the Treasury Board.

68  Two branches of the Civil Service Commission are involved in the process of wage determination.  The Pay Research Bureau is responsible for fact-finding.  Its function is to carry out comparative studies of the rates of pay, conditions of employment and related practices prevailing inside and outside the civil service, and to report its findings in an objective manner to the Commission, the Treasury Board, and, in practice, to representatives of the major staff associations.  The Pay and Standards Branch is responsible for assisting the Commission to develop pay recommendations.  Reports of the Pay Research Bureau are considered in conjunction with other relevant factors, such as the need for appropriate internal relativities or recent experience in recruiting and retaining qualified employees for the public service.

69  The Commission receives advice on pay research from the Advisory Committee on Pay Research.  This body meets regularly to review progress reports of the Bureau and to consider a variety of problems associated with survey concepts and techniques, the timing of studies and the distribution of reports.  The Committee is chaired by a Civil Service Commissioner and has six other members, three representing the staff side and three representing the official side.  Of the three staff side members, one represents the Professional Institute of the Public Service of Canada.  Of the three offcial side members, one is e­xpected to represent the views of management of departments employing professional personnel.

70  The staff associations maintain a very active interest in the whole process of pay determination.  Their role in the process, which has developed gradually over the years, has recently achieved formal recognition in the sections of the new Civil Service Act that provide for consultation with "representatives of appropriate organizations and associations of employees" on pay matters.

71 The role of the departments is more difficult to identify.  Legally, they have no responsibility in this field.  In practice, however, there is continuous communication between the Commission and departmental management on the adequacy of existing rates of pay and the probable effects of proposed revisions.

72  The final step in the pay determination process is the review of the Commission's recommendations by the Treasury Board.  This frequently requires intensive discussion between senior staff of the two agencies.  Under the former provisions of the Civil Service Act, the Governor in Council could accept or reject the Commission's recommendations, but could not establish rates of pay different from those recommended.  Under the provisions of the new Act, the Governor in Council, while bound to consider the views of the Commission, will be free to set whatever rates it considers appropriate.

73  Civil Service Commission responsibility for pay recommendations extends only to those affecting civil servants.  Determination and application of rates of pay for prevailing rate employees, ships' officers and crews, and other similar groups exempt from the Civil Service Act is shared among the Treasury Board, the employing department and the Department of Labour.  It is not surprising that the whole area of pay determination is marked by duplication of machinery and effort and a failure to achieve reasonable co-ordination and common guiding principles.  These defects can be remedied if the proposed Personnel Division of the Treasury Board is held responsible for appraisal of the wage and salary situation and for making recommendations to the Board for all pay adjustments in the public service.  Similarly, the Pay Research Bureau should be held responsible for collecting and organizing all the necessary outside comparative data.  It is much better fitted to provide this necessary specialized information than are either the Department of Labour or the Dominion Bureau of Statistics, whose roles are more suited to the collection and compilation of aggregate data for public consumption and use.

74 Responsibility for determining and adjusting employee benefit plans is even more widely dispersed than is that for wage and salary determination.  As a result, each benefit plan has tended to be looked at in a vacuum rather than in the perspective of the total benefits package or, more properly still, in the perspective of the total compensation (pay and benefits) package.  To fill its contemplated role properly, the Personnel Division of the Treasury Board must be as concerned with the benefits part of the total compensation pattern as it will be with wage and salary determination.

75  Some special comment is desirable on the task of making suitable outside comparisons with public service wage and salary rates, benefit plans, and other working conditions.  This, while simple in concept, is remarkably diffcult in practice.  It is essentially a fact-finding job, but one which requires the exercise of a great deal of skilled and professional judgment as to what are relevant facts.  Wage and salary comparisons can be made properly only on the basis of a sound evaluation of job duties and requirements.  Comparison of working conditions and benefit plans involves weighing complex questions of relative value and costs to employer and employee.

76  The Pay Research Bureau was established in 1957 for this difficult fact-finding job.  It has made substantial progress in assessing the comparability of public service and private sector jobs and in building pay comparisons on these.  It produces valuable information about the labour markets in which the federal public service must compete.  Recently, it has begun the very necessary task of matching pay comparisons with data on benefits and other working conditions. The Bureau operates, and must if it is to do its job properly, as an independent, objective body, producing data which the central management of government can use as a basis for making its compensation decisions.  Currently the information it gathers is made available to the Civil Service Commission (of which it is a part), the Treasury Board, and certain senior oflïcials of major staff associations.

77  As has already been demonstrated by United Kingdom experience (where pay research is conducted by a body directed and financed jointly by the government and the staff associations) a major hazard is the temptation, or alternatively the pressure, to make too many outside comparisons and to make them too frequently.  To keep the job within manageable proportions for an organization as large and as varied as the public service, there must be a determination to limit comparisons to appropriate bench-mark jobs and, generally, to limit frequency of comparison by some cyclical review plan.  Recently, the federal government has moved in this direction with its biennial review schedule, which divides wage and salary rates of civil servants and the R.C.M.P. into five groups, with the following initial set of review dates.

• Professional and related classes: reviewed July 1, 1961.
• Administrative classes, clerical and office service classes, professional support classes and commissioned R.C.M.P. officers: reviewed October 1, 1961.
• Hospital classes: reviewed January 1, 1962.
• Penitentiary staffs and non-commissioned R.C.M.P.: reviewed April 1, 1962.
• Customs and Immigration classes, postal classes, crafts, building, custodial and maintenance classes and other classes: to be reviewed October 1, 1962.

78  Complementing the internal administrative need for limiting the number and frequency of comparisons is the desirability of considering the position of the co-operating employers. Without the willing co-operation of outside employers, the usefulness of pay comparisons is likely to be vitiated and the task of getting even poor comparisons made very difficult.  On the other hand, most employers with whom the federal government wishes to make comparisons share the same need and are themselves accustomed to the procedure.  They realize that for them the values of pay comparisons must be balanced against costs in manpower and dollars.  They make comparisons with other firms, but realize that to obtain co-operation they must keep their requests reasonable and ensure that the information they receive and exchange makes the process worthwhile to both parties.  It would be most unfortunate if there were any attempt to compel outside employers to "co-operate" or to impose on them an unreasonably detailed and costly burden without adequate reciprocal advantages.

 

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