Paid leave for public service during pandemic cost $623M, well above estimates: budget watchdog

OTTAWA — The federal government spent well over $600 million on paid leave for public servants in the first few months of the pandemic, and is set to spend more as bureaucrats remain home from work, according to the federal budget watchdog.

In a report on Friday, the Parliamentary Budget Officer (PBO) estimates that Ottawa spent $623 million on paid leave for public servants between March 15 and May 31, when governments first shifted the economy into lockdown mode. Ottawa likely spent another $80 million to $140 million in June, according to the PBO.

The new estimates are well higher than projections provided by the Treasury Board earlier this week, which pegged the cost at $439 million over the same period. In response to a CBC story on Wednesday, Treasury officials estimated that 76,804 public servants had taken advantage of a “leave with pay” provision known as pay code 699.

The 699 provision is typically reserved for exceptional circumstances like natural disasters, long-term illness or work limitations, and was extended to public servants in the wake of the COVID-19 pandemic.

Higher projections for paid leave is largely a result of incomplete Treasury Board estimates, which accounted for just 62 out of the 88 federal public service organizations. The PBO estimated the cost by extrapolating data from those 62 offices.

Perhaps surprisingly, officials at the Canada Revenue Agency accounted for 70 per cent of total public servants who have used the paid leave provision, even as the agency administers major federal programs like the Canada Emergency Response Benefit (CERB) and Canada Emergency Wage Subsidy (CEWS).



REPORT: “Public service use of paid leave for reasons related to COVID-19” https://t.co/8UIJoaoe2f #cdnecon #cdnpoli pic.twitter.com/5wFMR1lof0

— Parliamentary Budget Officer (@PBO_DPB) July 24, 2020

Taxpayers spent $311 million covering paid leave for CRA officials alone, over 40,000 of whom accepted paid leave. The next largest cost was for employees at Correctional Service Canada ($33 million), the Canada Border Services Agency ($15 million) and Employment and Social Development Canada ($14 million).

Researchers at the PBO suggested the high proportion of CRA officials is possibly a result of tighter reporting requirements at the agency, which would in turn suggest that current data “is likely an underestimate of the number of hours of work lost during that period,” suggesting that true costs could be higher still.

Aaron Wudrick, director of the Canadian Taxpayers Federation, said costs for paid leave could reach the $1 billion marker by the time the pandemic has run its course, which he says underscores the overly generous nature of public extended leave.

“The 699 was not designed to cover indefinitely for massive numbers of people,” Wudrick said. “And so going forward, when they’re negotiating with the unions, the government needs to put some parameters around this.”

Both Wudrick and the PBO suggested that similar leave provisions did not exist in the private sector. As of July 12, more than eight million Canadians had applied for the $2,000-per-month CERB program, after private businesses went through successive rounds of widespread layoffs.

“The PBO was not able to find a leave policy of a similar scope in the private sector,” the report said.

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Some provincial public servants have received similar pay provisions. Employees with the Ontario Professional Employees’ Union (AMAPCEO) who do not provide “critical services,” for example, will remain on paid leave until at least September 2020, the PBO report said.

Public servants in Quebec have been given time to take care of children while accepting full salaries.

Early data provided by the Parliamentary Budget Office also runs counter to recent claims made by public sector unions, who suggested that most federal servants were taking time off primarily for childcare duties.

In an interview with CBC, Chris Aylward, president of the Public Service Alliance of Canada, said the uptake for pay code 699 was largely from “employees who are parents.” The widespread shutdown of schools and daycares “left thousands of parents with full-time caretaking duties that made their work … impossible to perform,” he said.

The PBO report instead found that “the most common reason for taking leave was due to work limitations,” similar to those cited by the CRA.

Even so, childcare remains among the larger reasons cited for paid leave, and costs for covering public salaries is expected to decline as the economy gradually reopens. Already costs for paid leave have tapered off sharply, falling from 67 per cent of all working hours in late March to 11 per cent in the beginning of June.

Wudrick also questioned the inability of the Treasury Board to provide paid leave information for all 88 federal public service organizations, saying it points to a lack of public transparency.

“If you’re running a department, how can you not know how many of your employees are not working? I really would expect that they would be able to provide that information relatively easily,” he said.

Meanwhile, the federal government in recent weeks signed two new agreements with PSAC, the main union for public employees, to provide pay raises for a combined 94,000 bureaucrats.

The tentative contracts come after years of negotiation, and the salary increases of 6.64 per cent over three years is lower than initial requests by the union, and was reduced in order to account for Ottawa’s current fiscal situation, according to one person familiar with the discussions.

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