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37th PARLIAMENT, 2nd SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Monday, June 9, 2003

1535

The Vice-Chair (Ms. Beth Phinney (Hamilton Mountain, Lib.))

Ms. Sheila Fraser (Auditor General of Canada)

The Vice-Chair (Ms. Beth Phinney)

Ms. Sheila Fraser

The Vice-Chair (Ms. Beth Phinney)

Ms. Sheila Fraser

1540

The Vice-Chair (Ms. Beth Phinney)

Mr. James Lahey (Associate Secretary, Human Resources Reform, Treasury Board of Canada Secretariat)

1545

The Vice-Chair (Ms. Beth Phinney)

Ms. Val Meredith (South Surrey—White Rock—Langley, Canadian Alliance)

Mr. James Lahey

1550

Ms. Val Meredith

Mr. James Lahey

Ms. Val Meredith

1555

Mr. James Lahey

Ms. Val Meredith

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Mr. Roger Gaudet (Berthier—Montcalm, BQ)

Mr. James Lahey

Mr. Roger Gaudet

Mr. James Lahey

1600

Mr. Roger Gaudet

Mr. James Lahey

Mr. Roger Gaudet

Mr. James Lahey

Mr. Roger Gaudet

Mr. James Lahey

Ms. Hélène Laurendeau (Assistant Secretary, Human Resources Management Office, Risk Management, Treasury Board of Canada Secretariat)

Mr. Roger Gaudet

The Vice-Chair (Ms. Beth Phinney)

Mr. Tony Tirabassi (Niagara Centre, Lib.)

Mr. James Lahey

Mr. Tony Tirabassi

Mr. Richard Burton (Assistant Secretary, Human Resources Management Office, Organization and Classification, Treasury Board of Canada Secretariat)

1605

Mr. Tony Tirabassi

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Ms. Sheila Fraser

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Mr. James Lahey

1610

The Vice-Chair (Ms. Beth Phinney)

Ms. Sheila Fraser

The Vice-Chair (Ms. Beth Phinney)

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP)

Mr. James Lahey

1615

Ms. Judy Wasylycia-Leis

Ms. Sheila Fraser

Ms. Judy Wasylycia-Leis

Mr. James Lahey

1620

The Vice-Chair (Ms. Beth Phinney)

Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Canadian Alliance)

Mr. James Lahey

Mr. Paul Forseth

The Vice-Chair (Ms. Beth Phinney)

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Mr. Roger Gaudet

1625

Mr. James Lahey

Mr. Roger Gaudet

Mr. James Lahey

Mr. Roger Gaudet

Mr. James Lahey

Mr. Roger Gaudet

The Vice-Chair (Ms. Beth Phinney)

Ms. Val Meredith

Mr. James Lahey

Ms. Val Meredith

Mr. James Lahey

Ms. Val Meredith

Mr. James Lahey

Ms. Val Meredith

1630

Mr. James Lahey

Ms. Val Meredith

Mr. James Lahey

Ms. Val Meredith

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Ms. Sheila Fraser

The Vice-Chair (Ms. Beth Phinney)

Ms. Judy Wasylycia-Leis

Mr. James Lahey

Ms. Judy Wasylycia-Leis

Ms. Hélène Laurendeau

Ms. Judy Wasylycia-Leis

Ms. Sheila Fraser

Ms. Judy Wasylycia-Leis

Mr. Richard Burton

The Vice-Chair (Ms. Beth Phinney)

Mr. Richard Burton

Mr. James Lahey

1635

Mr. Richard Burton

The Vice-Chair (Ms. Beth Phinney)

Mr. Paul Forseth

Mr. James Lahey

Mr. Paul Forseth

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Mr. Roger Gaudet

Mr. James Lahey

Mr. Roger Gaudet

Mr. James Lahey

Mr. Roger Gaudet

Mr. James Lahey

1640

Ms. Sheila Fraser

Mr. Roger Gaudet

Mr. James Lahey

Mr. Roger Gaudet

Mr. James Lahey

Mr. Roger Gaudet

Mr. James Lahey

Mr. Roger Gaudet

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Ms. Val Meredith

Mr. James Lahey

Ms. Val Meredith

Mr. James Lahey

Ms. Val Meredith

1645

Mr. James Lahey

Ms. Val Meredith

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Ms. Judy Wasylycia-Leis

Mr. James Lahey

Ms. Sheila Fraser

Ms. Judy Wasylycia-Leis

Ms. Sheila Fraser

The Vice-Chair (Ms. Beth Phinney)

Mr. James Lahey

Ms. Judy Wasylycia-Leis

The Vice-Chair (Ms. Beth Phinney)

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Mr. Richard Burton

1650

The Vice-Chair (Ms. Beth Phinney)

Ms. Sheila Fraser

Ms. Kathryn Elliott (Principal, Office of the Auditor General of Canada)

The Vice-Chair (Ms. Beth Phinney)

Mr. James Lahey

Ms. Judy Wasylycia-Leis

Mr. James Lahey

Ms. Judy Wasylycia-Leis

Mr. James Lahey

1655

The Vice-Chair (Ms. Beth Phinney)

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Mr. James Lahey

Ms. Val Meredith

The Vice-Chair (Ms. Beth Phinney)

Ms. Val Meredith

Mr. James Lahey

Ms. Val Meredith

Mr. James Lahey

Ms. Val Meredith

Mr. James Lahey

1700

Ms. Val Meredith

Mr. James Lahey

The Vice-Chair (Ms. Beth Phinney)

Ms. Judy Wasylycia-Leis

The Vice-Chair (Ms. Beth Phinney)

Ms. Judy Wasylycia-Leis

Mr. James Lahey

Ms. Sheila Fraser

Ms. Judy Wasylycia-Leis

Ms. Kathryn Elliott

Ms. Judy Wasylycia-Leis

1705

Mr. James Lahey

Ms. Hélène Laurendeau

The Vice-Chair (Ms. Beth Phinney)

Ms. Sheila Fraser

The Vice-Chair (Ms. Beth Phinney)

CANADA

Standing Committee on Public Accounts

NUMBER 035

2nd SESSION

37th PARLIAMENT

EVIDENCE

Monday, June 9, 2003

[Recorded by Electronic Apparatus]

¹ (1535)

[English]

The Vice-Chair (Ms. Beth Phinney (Hamilton Mountain, Lib.)): I call to order this meeting of the Standing committee on Public Accounts, Monday, June 9, 2003, pursuant to Standing Order 108(3)(e), consideration of chapter 6, “Reform of Classification and Job Evaluation in the Federal Public Service”, of the May 2003 report of the Auditor General of Canada.

Today we have before us the Auditor General, and with her Ms. Elliott; and from the Treasury Board, we have James Lahey, Richard Burton, and Hélène Laurendeau.

I think we'll ask the Auditor General to begin.

Ms. Sheila Fraser (Auditor General of Canada): Thank you, Madam Chair.

We thank you for the opportunity to appear before you today to discuss chapter 6 of our May 2003 status report on the reform of classification and job evaluation in the federal public service.

As you mentioned, I am accompanied today by Kathryn Elliott, a principal in our human resource management audit team who has conducted two of the three audits on this topic.

Madam Chair, 13 years ago the government wanted to renew its public service by simplifying employment and human resource management in order to redirect resources toward service to the public. The reform of classification and job evaluation systems in the public service was one of the key projects--

The Vice-Chair (Ms. Beth Phinney): Excuse me, but do you have your report in French?

Ms. Sheila Fraser: We should.

The Vice-Chair (Ms. Beth Phinney): Okay. We just didn't get it distributed, that's all.

Sorry, go ahead.

Ms. Sheila Fraser: To continue, the reform of classification and job evaluation systems in the public service was one of the key projects under the PS 2000 initiative launched in 1990.

The government has been attempting to introduce a new universal classification system since 1991. During the three-year period from 1998 to 2001, the government estimates that it incurred over $200 million in incremental costs. This obviously did not include the ongoing costs of the classification divisions in departments or the cost of time invested by managers and employees in writing work descriptions and evaluating them against the proposed new standards. Despite our recommendations that costs be tracked, there are no overall cost figures on the full project to date, and we are concerned that costs for the third attempt are not being captured.

During this whole period of reform, departments have had no choice but to continue using the old outdated classification standards, which do not reflect the work of the 21st century. For example, in the program management classification standard—the PM group, which is now part of the PA group—over 50% of the benchmarks for positions represent work no longer done in the core public service, and the remaining benchmarks are seriously out of date. Emerging jobs, such as knowledge manager, call centre manager, and intelligence analyst are not reflected in the standards. Indeed, those involved in policy development are difficult to place under the existing system, because the positions may be assessed under a variety of standards. Although the knowledge of and use of computers and various software have revolutionized the way everyone's work is done, this element is absent from most standards.

[Translation]

In chapter 6, we reiterated the problems of the system: too complex, too costly to operate, and too time consuming. As well, many of the classification standards were obsolete, cumbersome, and not responsive to pay equity concerns. Moreover, since 1999, as a result of reducing the 72 occupational groups to 29, some of these groups have no single classification standard applicable to the occupational group. As long as the government continues with the existing system and standards, these problems, and their associated risks, must be managed.

Over the last 12 years, because the Treasury Board Secretariat was planning to implement the Universal Classification Standard, it exercised minimal oversight in the way departments were classifying positions. Audits were stopped in 1992. Today, nobody knows how many of the 28,000 positions that were reclassified from 1993-99 may have been misclassified.

Madam Chair, I am very concerned about this situation since classification and job evaluation systems serve as the main basis for establishing the pay of some 168,000 employees, which represents a payroll of about $9 billion.

Classification and job evaluation do not exist in a vacuum. They are directly linked with compensation and, in the federal public service, with the collective bargaining system, as negotiations are carried out on the basis of occupational groups. These three areas—classification and job evaluation, compensation, and the collective bargaining system—must be managed in an integrated manner.

¹ (1540)

[English]

It is urgent that the government restores the integrity of the classification of positions in the public service and manages the existing system while it finds a sustainable solution for modern and robust classification and job evaluation systems for the 21st century. At a time when the government has launched an initiative to modernize the way it manages its people, a lack of fundamental reform of this basic function could have an impact on the breadth of reform achieved.

Classification is integral to the management of people and is the foundation of compensation in the public service. At a broader level, recognizing and valuing the work being done by today's public servants is key to maintaining a competent and effective workforce for delivering services and programs to Canadians.

We recommended that the government should put in place a compensation policy that will help it balance the competing demands of internal equity, market forces, and affordability. Until new standards are in place, the government needs to take all necessary steps to restore and sustain the integrity of the classification of positions, including conducting timely audits. The risks inherent in the existing system, including pay equity risks, need to be managed.

Finally, we want to see a clearer plan for the government's proposed new approach.

Madam Chair, that concludes my opening statement. We would be pleased to answer any questions the committee might have.

Thank you.

The Vice-Chair (Ms. Beth Phinney): Thank you.

Mr. Lahey, from the Treasury Board.

Mr. James Lahey (Associate Secretary, Human Resources Reform, Treasury Board of Canada Secretariat): Thank you, Madam Chair.

I believe my text has also been made available to the committee. Although I won't read every word of it, I'll cover some parts of it.

Good afternoon, Madam Chair, ladies and gentlemen. Thanks for the opportunity to address you this afternoon as representative of the Treasury Board Secretariat.

As you mentioned, I have with me Rick Burton, assistant secretary of organization and classification, and Hélène Laurendeau, assistant secretary of risk management in the human resources area.

I first of all want to thank the Auditor General and her staff for the professional working relationship we've enjoyed together over the last number of years.

[Translation]

In May 2002, Treasury Board President Lucienne Robillard announced a new direction for classification reform as one of the key building blocks to modernize human resources management in the public service of Canada. The new approach is balanced and incremental, recognizing that reform in an organization as large and varied as the public service requires sustained coordinated effort. Solid progress has already been made and we are confident that the Treasury Board Secretariat is moving in the right direction to modernize classification.

Altering our approach to classification reform was a tough but appropriate decision. Even if we had had unlimited funds, we would not have implemented UCS. As we said in May 2002, after careful consideration and analysis, we determined that applying a single standard and a single pay structure to all the positions in the federal public service would have created too rigid and inflexible a management framework for the widely varied work of our employees.

[English]

The UCS investment nevertheless has generated a substantial return. Most notably, we have developed modern work descriptions. In addition, some of the tools we developed, and continue to use, include: a classification standard that captures all aspects of work and describes work in a manner that minimizes gender bias, which we'll use as the basis for developing group-by-group standards; a new streamlined policy for the management of conversion grievances and an automated grievance tracking system; a database of all public service positions; and a proven methodology for estimating the salary costs of future classifications.

In her report the Auditor General made three recommendations, and the first was that we should complete the work of developing and adopting a corporate compensation policy. As we indicated in our comments in the report, we're in the process of preparing such a policy.

The second recommendation was that we should ensure that timely audits of classification are conducted to ensure the integrity of the classification positions in the public service. We agree with the Auditor General on that as well. In keeping with the Treasury Board policy on active monitoring, departments are responsible for monitoring how positions are classified within their organizations, and the Treasury Board is responsible for supporting departments and monitoring the overall situation across all departments. We're implementing a new monitoring program in 2003-04 on both departmental and government-wide levels.

The third recommendation has to do with articulating the objectives and expected outcomes for classification, and developing a global plan for addressing the root problems inherent in the old classification system. Once again we agree with the AG on the need for a plan, and we have one. In fact, since the AG's report was written, but before it was made public, we did prepare this annual update report indicating our plans for the next three years. We intend to update this annually and roll it forward.

One of the things we think we learned from the UCS experience was that we shouldn't try to undertake a megaproject but rather more modestly set goals for the next three years that we can attain.

¹ (1545)

[Translation]

There was some discussion, when the Auditor General appeared before this committee last week, regarding pay equity. I know that everyone here is aware that this is a serious challenge for the government. We are committed to ensuring that we have a non-discriminatory approach that provides equal pay for work of equal value. We are committed to work on our wage setting practices and to monitor the impact of wage settlements in light of the gender composition of our workforce. We also want to continue to improve gender balance across occupational groups. I believe that we have made real progress on this and we have considerable results to show.

That being said it was the view of the government that the whole regime for pay equity needed to be reviewed. That is why, in 2001, the government announced the establishment of the Pay Equity Task Force to review section 11 of the Canadian Human Rights Act with a view to ensuring clarity in the way pay equity is implemented in the modern workplace.

The task force, under the leadership of Prof. Bilson, is expected to make its report soon and we are looking forward to its recommendations on how to achieve and maintain pay equity in Canadian society.

[English]

That's basically our opening statement. I welcome questions from the chairman and the members.

The Vice-Chair (Ms. Beth Phinney): Thank you very much.

The first questioner is Ms. Meredith.

Ms. Val Meredith (South Surrey—White Rock—Langley, Canadian Alliance): Thank you, Madam Chair, and thank you to Ms. Fraser, Ms. Elliott, Mr. Lahey, Mr. Burton, and Ms. Laurendeau for attending.

I notice that you feel you did gain.... You gave in here four areas where you felt you could take from the 12 years of exercise and use that—or at least that's what I assume you're telling us—in the next review. But I didn't see anything in here or hear anything that gave me any confidence that you had reviewed what went wrong with the last 12 years—why it didn't work, why you vacated that program, and why you're starting a new one. I didn't hear anything about your doing an evaluation on what was wrong with attempt two, and how you were going to do things differently with attempt three.

Did you evaluate the last 12 years and come to some conclusions as to why that process didn't work?

Mr. James Lahey: I would say we are still in the process of assessing our experience of the last 12 years. We do have some lessons that we think are important and that we are taking into account in our future work. I guess one of the most important ones would be that we don't think what you would call the “megaproject” approach is workable or feasible. We find quite often in other fields, information technology or elsewhere, not only in government but also in the private sector, that such projects have difficulty succeeding because they become so complex.

As I sometimes say, if you have an arrangement where in order to do anything you have to do everything, the result tends to be that you don't do anything. That's why we're adopting a more modest step-by-step approach as we go forward. We're saying that we will target selected groups that need their standards to be modernized more urgently than others. We will develop those, and we will move forward step by step.

I think a second lesson we would have learned—and which we have taken action on, as I believe the Auditor General has acknowledged in her report—is that it's very important, when you're dealing with a subject like classification, to recognize that it's part of a bigger set of subjects. It's connected to collective bargaining and how wages are set through collective bargaining. It's also connected, of course, to pay equity. It's connected to how departments are shaping their workforce.

In the Treasury Board Secretariat I would say we may not in the past have been sufficiently conscious of the need to bring all of the parties internally together and to make sure we were all sharing a common understanding of how we move together, taking sufficient account of the various perspectives. We have in fact reorganized the human resources part of the Treasury Board Secretariat in part to address that issue.

Those are two examples of lessons we have learned. As well, Mr. Burton is sponsoring a government-wide symposium, this week in fact, and one of the topics is discussing with the stakeholders their perspective on what the lessons are from the past number of years of effort.

¹ (1550)

Ms. Val Meredith: One thing I haven't heard in your comments with regard to your evaluation of job classification in your workforce is what you're going to do with redundancy. If you're finding, in this re-evaluation, that you have people who are redundant to the operations, is that also being considered?

I say this because one of the concerns I hear when I talk to people about the civil service is the size, the growing size of it. For instance, the issue came up about the 20% increase over the last four years in the management level of the bureaucracy, There's a feeling out there that this is becoming just this monolithic group of people that nobody has a whole lot of control over.

I guess from this chapter, and from the comments about learning some lessons but still breaking it down into manageable sizes, what I'm hearing supports what people are concerned about: You have this monster that has reached a point where you can't control it. You can't reclassify it. You can't get rid of people who no longer really have a role.

What makes you think attempt number three is going be any different from attempts one and two?

Mr. James Lahey: On the first part of your question, relating to the size of the public service, I would say that growth in the public service is essentially a separate point. It's essentially a budgetary point. It has to do with the resources that government approves, that Parliament approves, for delivery of programs and so on. There have been additions to programs in recent years, and they have led to growth in the public service.

Nevertheless, it is the case that our workforce is large in Canadian terms. However, I would say the more pertinent point isn't really the size but more the diversity of the jobs. If we had 170,000 or whatever who basically did the same thing, it could be quite straightforward. But as you know, we have medical doctors, research scientists, those who run public museums.... I won't name them all, but I think you're well aware of the tremendous diversity of the public service. And that does bring a great deal of complexity.

On your second--

Ms. Val Meredith: But with all due respect, you have major corporations and large organizations in the private sector that have the same kind of diversity, and they seem to handle it. They can make the divisions between a guy with a medical degree and a guy who's pushing a broom. They don't seem to have difficulty saying, “This is what it's worth for a guy who has umpteen years of university and who has a responsible position, and this is what it's worth for somebody in janitorial services.”

Why is it so difficult that, after 12 years of looking at it and spending a couple of hundred million dollars, you couldn't have come to grips with it?

¹ (1555)

Mr. James Lahey: The approach taken required us to do the legwork of creating the job descriptions and assessing them. That did take a long time and there were two attempts at it, as the Auditor General pointed out.

We do have a system. It isn't up to date, but we do have a working system.

Ms. Val Meredith: It's 40 years old.

Mr. James Lahey: Well, it's not all 40 years old. I realize that it was introduced beginning 35 to 40 years ago, but a number of the standards were updated over the 20 or 30 years following that, some as recently as the early nineties. So it's not all 40 years old. But the system as a whole, yes, is based on 40 years ago.

Basically, we had to work through the approach taken of a universal system. Once we had done all the work and looked at all of the factors, pro and con, we took what we think was a sensible business decision, that we shouldn't proceed because it would be too constraining and too inflexible to reflect that diversity.

The Vice-Chair (Ms. Beth Phinney): Thank you very much, Ms. Meredith.

Monsieur Gaudet.

[Translation]

Mr. Roger Gaudet (Berthier—Montcalm, BQ): Thank you, Madam Chair.

In your opinion, what would the ideal structure be? I'm talking about a structure that is simple. As I see it, it would be better to start with a simple structure, which could later be made more complicated if necessary. If you start off with something complicated, it becomes even more complicated over time.

Mr. James Lahey: That's a good question. At the present time we have a two-part structure: the former structure, with some 72 groups, and a system adopted three or four years ago with 28 or 29 groups bringing together the former 72. I would say that ideally, we could have somewhat fewer. However we do have to take into account an important reality, namely the fact that we now have 16 independent unions representing our employees. Some of these unions are very small in the context of our organization even though they may be linked with larger unions, and others are very large, such as the Public Service Alliance, for example.

Our policy has been to respect the mandates of the present unions. If we decide to stick with this policy, then we would have about 30 groups. That's strikes me as a reasonable and manageable number for all sorts of reasons: for payroll management, for classification and for bargaining with the unions.

Mr. Roger Gaudet: Thank you.

Do the unions take part in your discussions or do you present them with a work plan following your discussions?

Mr. James Lahey: According to their statements, the unions would prefer classification to be negotiated at the bargaining table. But that has not been the federal government's policy from the outset. It is a management responsibility but we recognize that it is important to consult the unions since the wage scale is something that will have to be ultimately negotiated. We did consult the unions about modernization priorities, for example.

Last year, we had discussions with the unions to determine which groups were in urgent need of modernization. It is our intention to work with the unions in these particular cases, but we do retain the ultimate responsibility for decisions relating to structure while recognizing that salaries and wages will be negotiated at the collective bargaining table.

º (1600)

Mr. Roger Gaudet: So there hasn't been much progress in 12 years.

Mr. James Lahey: No, but you must realize that it was a huge undertaking. The establishment of a single standard for such a complex and diversified group and the negotiation of a single pay line while at the same time respecting the traditional work of men and women was a considerable challenge. We had to do this work, come up with job descriptions and analyze the results before we made a decision. We came to the conclusion that this would impose too great a restriction on us and that it was not flexible enough for the management of the public service.

Mr. Roger Gaudet: Today, when someone enters the public service, what group would he or she be in? Do you make an immediate determination?

Mr. James Lahey: Each group is defined quite precisely and it is fairly easy to put the person in the right group according to his or her expertise and the kind of work being done.

Mr. Roger Gaudet: Would these new employees meet the criteria for each union? If there were 2,000 people a year and they had to be classified, would things proceed smoothly?

Mr. James Lahey: Yes. Do you have something to add, Hélène?

Ms. Hélène Laurendeau (Assistant Secretary, Human Resources Management Office, Risk Management, Treasury Board of Canada Secretariat): I'd simply like to mention that these people enter into existing occupational groups and if appropriate, would be represented by the union of their occupational group. So people are placed in the professional group that corresponds to the kind of job that they will be doing. For example, a clerk will be put in the general clerical group and will be represented by the Public Service Alliance. A lawyer would be included in the lawyers' group and represented by the Professional Institute if he or she is a member of the group of unionized lawyers. If they join the Department of Justice, which is the case for the majority of lawyers, then they will not be represented.

Mr. Roger Gaudet: Thank you.

[English]

The Vice-Chair (Ms. Beth Phinney): Mr. Tirabassi.

Mr. Tony Tirabassi (Niagara Centre, Lib.): Thank you, Madam Chair.

I'd like to thank our witnesses, the Auditor General, her official, and the department officials, for being here.

I noticed in the report, and in the audit report and the statement given by the Auditor General, that the universal classification standard exercised minimal oversight in the way departments were classifying positions. She alludes to the figure of 28,000 reclassified from 1993-99...and that may have been misclassified.

My question for Mr. Lahey, or for the department really, is how do we intend to address this particular question?

Second, do you intend to reinstate central monitoring of classification? Again, according to the audit, this was suspended by Treasury Board Secretariat.

Perhaps you could answer those two questions, please.

Mr. James Lahey: Thank you for the questions.

I would like to ask Mr. Burton, who has a particular responsibility to follow up on the monitoring, to answer that, if that would be agreeable.

Mr. Tony Tirabassi: Yes, by all means.

Mr. Richard Burton (Assistant Secretary, Human Resources Management Office, Organization and Classification, Treasury Board of Canada Secretariat): Thank you very much.

As I think Jim Lahey mentioned at the outset, this is one of the recommendations of the Auditor General that we certainly agree with. We in fact have a program in place now to actively monitor the departments on how they do their classifications.

I should say and remind you that it is a two-level system. The departments are accountable for monitoring the wisdom of their classification decisions, and we in turn are accountable for managing the health of the overall system, “monitoring the monitors”, if you will.

I'm looking into a number of departments and I'm finding that deputy ministers are taking this role very seriously and that in fact the level of misclassifications is not as high as you might think.

Our program, therefore, is happening on two levels. First off, from a corporate level, this year we are looking at two occupational groups who work primarily for most departments of government—the computer CS group, employed in all the information systems and so on; and the financial group. We picked those because we thought they gave us the broadest coverage and the best look into a number of departments in terms of how they're actually doing their monitoring.

With regard to the departmental level, we're working with departments now—and many of them do have active assistance—to either realign their current systems with our approach or to help them set up a new approach. We are taking one department this year, Natural Resources Canada, and actually working with that department, (a), to test our methodology, and (b), to begin a continuous monitoring cycle over time.

So the bottom line is that we do take it very seriously. We acknowledge that there's more we need to do in that area, and we have a plan in place to do that.

º (1605)

Mr. Tony Tirabassi: Thank you.

I have another question. Do you think trying to develop a single compensation system to support the universal job classification system for the whole federal government is the way to go? Or have you considered other approaches, such as a compensation system that incorporates multiple pay structures as perhaps an alternative proposal? Has any consideration been given to that ?

Mr. James Lahey: That actually is our proposal at present, that we would develop standards and associated pay lines for each of the 28 or so groups that currently are the legally designated occupational categories in the public service. We didn't think a single pay line for....

A single pay line basically means you classify all 170,000 jobs and kind of lay them all out, one in relation to another, notwithstanding their diversity and notwithstanding that in the external labour market, supply and demand for different kinds of skills fluctuates over time. So we thought it would be too rigid, too inflexible, and would make it difficult for the public service to respond.

Just to elaborate briefly on that, there were suggestions that you could have special allowances over and above the single pay line that could take account of these labour market fluctuations, but I think we feared or felt that this kind of undermined the whole idea. If you were going to do that, you might as well go directly to having standards and pay lines that relate to the various groups.

So that in fact is our proposal, and that is the program we're pursuing at present.

The Vice-Chair (Ms. Beth Phinney): Ms. Fraser.

Ms. Sheila Fraser: Madam Chair, I'd just like to raise one point of concern.

Mr. Lahey has indicated how difficult it is to have a pay line and classification for all of the employees, but one group, the PA group, represents 45% of the public service. One of the concerns we raised is that we don't see how.... I mean, if the universal classification system won't work because of all these complexities, how will it work for half of it, for 45%? There are still the same complexities. This group is across all departments. It goes from quite junior people to quite senior people. It would appear to us that the same complexities are there, and we don't see how the approach has changed to make this attempt more successful.

Mr. James Lahey: Should I comment on that?

The Vice-Chair (Ms. Beth Phinney): Yes, you can. You have two minutes left.

Mr. James Lahey: Thank you.

Well, we have our trepidations too about the PA group, being so large. However, a few points. First, it's not nearly as diverse as the whole public service. At the core of this PA group—“PA” standing for program administration—are clerks and secretaries, as sort of the lower half, and then the upper half is mainly comprised of program administrators or administrative officers who provide financial services or administrative services in departments.

So in that core of administrative-type work, we actually think it's long overdue for there to be an easier possibility for people to come in at the lower levels and rise through the ranks. It's not that they can't right now, but there's sort of this psychological barrier between the so-called officer levels and the support staff. We think the PA group offers the possibility of making that more of a continuous flow.

Some parts of the program administration group are less obviously part of that continuum. There are information officers, welfare officers in the prisons, and a couple of other groups like these that are less obvious, but they're relatively few in number, and we will have to consider the best way to make sure they fit. Overall, though, we think the PA group can work.

º (1610)

The Vice-Chair (Ms. Beth Phinney): Do I have any privileges as chair? I guess I'll do exactly what everybody doesn't like a chair to do.

I was the customs and revenue parliamentary secretary when it became CCRA, and I'd like to ask you, Auditor General, whether you think the system is working within that agency. Should we go with smaller groups and let each department do its own thing? Would that be any easier, or would it work any better? Is it working in CCRA?

Ms. Sheila Fraser: Madam Chair, we haven't specifically looked at the HR management within CCRA. I know that's one of the reasons often given for having created the agency, to give it more flexibility. We were actually talking about coming back in, I think, in two years; I think we have an audit slated to look at it to see if it was successful.

I think the decision on whether to go department by department or universal is very much a government policy decision. There was a decision to go with the universal one, and government has now for various reasons said, no, that wouldn't be the most appropriate. I think it would really be up to government to decide how they wanted to structure that.

The Vice-Chair (Ms. Beth Phinney): Fine.

Ms. Wasylycia-Leis.

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): Thank you, Madam Chairperson, and I'd like to thank the Auditor General and her staff, and the folks from Treasury Board, for being with us today.

It seems to me, from my reading of this report, the Auditor General doesn't mince words. It's a stronger report than some of the others I've read. For instance, she says:

I am very concerned about this situation since classification and job evaluation systems serve as the main basis for establishing the pay of some 168,000 employees....We want to see a clearer plan for the government's proposed new approach.

She's very critical, and very clear.

Do you accept, Mr. Lahey, that there are serious concerns and that there is a great deal of pressure on you and your office to try to deal with 12 years of problems and come with some clear answers about how we're going to get onto a better classification system in short order?

Mr. James Lahey: We do take very seriously the need to build a modern classification system; therefore, basically we do agree with the perspective of the Auditor General.

I would say it is relatively clear in our minds what we need to do at this stage. Basically what we've said is that there are three tracks of work that we're pursuing. The first one is that the most pressing occupational categories should have new standards developed. We said last year that we thought the three to start with were the foreign service category, the PA group we just talked about, and the economists.

As we say in the report I referred to a little while ago, we expect to be ready to negotiate, in the current round of collective bargaining this year, with the foreign service group. We've done quite a bit of work with the large departments, and on the PA group, but we think it's going to take not this round but the next round to actually implement it. With the economists, we've started.

In the report we also indicate other groups we're starting to work on. So that's part one.

Part two—and we acknowledge this—is that we needed to get back into the business of monitoring the application of the classification system in departments. Mr. Burton has already outlined our approach there.

In regard to that second one, I should say that we need to provide more support to departments to apply the existing standards while we're developing the new ones. So we're taking a number of steps in that regard. We could go into more detail if you want.

The third part has to do with building capacity. There has been some attrition in the classification specialist area. There have been some new people hired over the last year, and we want to support those people so they have the skills to be able to support managers and the other HR professionals.

So those are the key elements of our plan. We do take it very seriously. We've undertaken to report annually on where we got to, and we're going to give a three-year plan rolling forward. I expect you'll be calling us back from time to time to see what progress we've made.

º (1615)

Ms. Judy Wasylycia-Leis: To the Auditor General, what do you think of that plan? Does it address your recommendations, particularly the one for defining very clear objectives and expected outcomes for classification reform?

Ms. Sheila Fraser: Thank you, Madam Chair.

This document came out, I think, the Friday before we tabled the report, so we have looked at it in only a sort of cursory fashion. As in all plans, we would have liked to have seen more specificity and more details and more information like that. There's also the question of the management of the current payroll. Although some steps are being taken and some initiatives have been announced, there is still more that should be done there, with a better evaluation of risks, again, and how those are going to be managed.

I guess where we would still like more on is what is going to make this attempt successful that failed them the last time? How is this really going to be different? Has there been a good analysis of why the last reform initiative didn't work well? Has everything been done to make sure this one is successful?

I think we all recognize this one really has to be successful. This is very important that government do this. It is a necessity that this be done. There is no doubt about that. I think there's been recognition for a very long time that the system needs to be reformed. I guess it's just a question of whether all the pieces are in place to be as successful as possible, and of whether the government has adequately assessed all of the different possibilities and all the various factors. If you start off by running down the same track as you were before, you'll end up at the same place.

Ms. Judy Wasylycia-Leis: It's particularly important, I think, from the point of view of accomplishing pay equity. As I think you point out in your report, a failure to get it right with respect to classification has an impact on compensation and has long-standing ramifications for the goal of pay equity. And we all know there are forces out there who want to see pay equity fail.

To Mr. Lahey, are you specifically addressing paragraph 6.94 in the Auditor General's report, ensuring that the Canadian Human Right Act's requirements are addressed in your new tailored approach to classification?

Mr. James Lahey: The first level of that, I think, is that the actual standards in themselves need to be gender-neutral. We're basing ourselves on work done under UCS, and I think we're going to be able to do that.

The second level has to do with how you anticipate pay equity considerations in your negotiating of collective agreements across groups. We're strengthening our analytical capacity to be able to do that. We obviously need two to tango in that regard, but it's certainly important for us to do that analysis.

I guess the third level, which is sometimes overlooked by talking about pay equity, is employment equity. It is another factor. One of the things that's been noticeable over the last 25 years, since the Canadian Human Rights Act was first passed, is the growth and the participation of women in some of the professional and highly paid occupational groups. I'm thinking of economists, lawyers, and groups like that, where there was 10% or 15% female participation, and now, in the case of lawyers, it's basically 50:50. I think for economists it's 45:55 or something like that. So that is another dimension of it.

I should also point out, as the Auditor General mentioned in her report and as I think I mentioned it in my opening remarks, that the government did ask Professor Bilson and two others to conduct a review with all the stakeholders of not only the public service pay equity but also the pay equity in the federally regulated labour force.

Their job was to take another look at what makes sense in terms of applying pay equity now, in this century, and with the labour force as it is and so on and so forth. They're expected to report soonish, although I'm not sure exactly when their report will be completed. We're looking forward to being informed by what they have to bring to the table.

º (1620)

The Vice-Chair (Ms. Beth Phinney): Mr. Forseth, four minutes, second round.

Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Canadian Alliance): To use a case example to illustrate some of the problems you're up against, I want to talk about your experience with the computer systems group. We heard for a time that you couldn't find computer people anywhere for government service, because they were being scooped up by the private sector. Even the private sector was having a tough time trying to find certain competent people. Their price in the market, you might say, was being driven right through the roof. So there was a real difficulty, with real gaps in providing these people in government service.

In terms of the comment you made earlier about special bonuses and whatever to reflect some kind of a hot market, this situation later turned around, and we had some big, huge layoffs in the IT sector. There are all kinds of really competent people floating around trying to find a job.

So we go from one extreme to the other, and I'm wondering how we can build in that kind of responsiveness and flexibility so that we are not grossly underpaying when we need people. On the tail end of that, when it comes back the other way, I'm wondering how then, if we give compensation then it's stuck at that high level forever, and if there are lots of people floating around...how we can bring that back to normalcy so that the private sector is always setting the benchmarks for what we pay in the public service. And here was a group that had great swings in supply and demand.

So maybe you can help us with that one.

Mr. James Lahey: You pick a very interesting and illustrative case. As you say, it's particularly difficult to deal with.

I would say, just as an observation, the public service tends to be relatively slow to adjust, if only because we tend to have three-year collective agreements and we don't usually adjust wages in between times, and also because we tend to be kind of conservative. We're not really big fans of large increases.

So we do tend to proceed somewhat cautiously, and there was a period where it would have probably been the case that you could show that people in the private sector were earning more for the same work than they were in the public service. This helps us later on, so to speak, when the labour market switches in the other direction and we're not caught as high and dry as some others. But the fact is, as a practical matter, as an observed phenomenon, there's very little in the way of wage reduction, or even freezing, other than when the whole system is frozen for fiscal reasons. So as a practical matter, it's something you tend to have to try to get back to over time.

I guess what I'm acknowledging to you is that it is difficult. We're much less responsive than the private sector in terms of quick changes, but we are trying to be guided by, not to lead, the private sector in general.

There's no magic formula here, because I don't think it's a practical matter to say we're going to get rid of a whole lot of people in order to hire the people who are now available. We've invested in folks. They know the business. Mostly they want to stay, and you do want to keep them committed to their work.

So change tends to be gradual in public service remuneration, but one of the things we're determined to do is to introduce part of Bill C-25, as you'll recall. Pay research, compensation research, is a responsibility of the Public Service Labour Relations Board, and that will help us adjust to the labour market.

Mr. Paul Forseth: I have--

The Vice-Chair (Ms. Beth Phinney): I'm sorry, your time is up.

You'll have to give shorter answers.

Mr. James Lahey: I promise to give shorter answers.

The Vice-Chair (Ms. Beth Phinney): Did you have another question, Mr. Gaudet?

[Translation]

Mr. Roger Gaudet: In paragraph 6.39 of the report, we find the following:

6.39 In developing such a pay structure, the Secretariat had to work with the following constraints:

- Costs needed to be kept within available funds.

- The salary protection policy could not be changed (no employee was to suffer a financial loss as a result of the conversion).

- Salary protection rates...

Has a model pay structure been tabled with the government? So far $200 million has been spent and the Auditor General, unless I am mistaken, said that that's just the way it is.

º (1625)

Mr. James Lahey: Are you referring to paragraph 6.39?

Mr. Roger Gaudet: Yes.

Mr. James Lahey: That paragraph sums up some of the constraints that have to be taken into consideration when developing a pay structure.

Mr. Roger Gaudet: What I want to know is whether you have tabled a model pay structure with the government. We have spent $200 million over the past 12 years setting up this pay structure.

Mr. James Lahey: The $200 million was spent on developing a universal standard. However, after having done so, we concluded that a universal standard would not be flexible enough to manage the public service in the future.

We therefore proposed that these factors be taken into consideration for each separate group, and the government had agreed to us going ahead step by step, in other words, group by group.

Mr. Roger Gaudet: Thank you.

[English]

The Vice-Chair (Ms. Beth Phinney): Ms. Meredith.

Ms. Val Meredith: Forgive me if I come across as being really skeptical on this, but this just seems like a great job creation project, quite honestly. I'm horrified to hear, on the example that Mr. Forseth put on the table, that government is slower to react; that we can't replace people; that we have to keep people on.

When I asked you about redundancy in job classifications, you didn't really give me a definitive answer. What I hear is that in the public service, people have stability. They don't get laid off. They don't get moved around. If their job becomes redundant, they get shuffled off to find some other place for them. And yet we're paying them....

We try not to lead in the job payment? What happened to the days when there was a trade-off between job stability and making a little bit less than in the private sector? Does that no longer hold?

Mr. James Lahey: Most public servants probably would argue that they're paid less than their private sector counterparts, and we need the research I was referring to earlier to really make that comparison.

On your point about redundancy, which I think is important to comment on, there are basically two ways in which people become redundant. One is that budgets are cut. We lived that in the nineties. The jobs of many tens of thousands of public servants disappeared, and the people did too.

So we have lived through that. The other is--

Ms. Val Meredith: Just let me break in there. Did the people actually leave government service or did they just move to this other entity? Because my understanding is that a person doesn't really lose their job; they go into a lateral kind of holding position and sit there until another job is found for them.

So when you say you lost thousands of jobs, is that because people went and found something else, or did they just go into the warehouse?

Mr. James Lahey: At the time of program review, many thousands of jobs were eliminated and the people left.

Ms. Val Meredith: They were no longer hired by the Public Service of Canada.

Mr. James Lahey: They were no longer employed.

In the more sort of day-to-day circumstances, it's true that there is a workforce adjustment policy, negotiated with the public service unions, that provides a period of time in which people are given priority to be placed in jobs they're qualified for, or for which they can be retrained. And in many cases they are placed in other jobs, but in some cases they're not, and they do end up being laid off.

Ms. Val Meredith: What percentage are we talking about of redundant jobs that disappear from the civil service? For instance, when you reclassified, how many jobs did you feel were there that shouldn't have been, that there wasn't a need for?

º (1630)

Mr. James Lahey: Usually reclassification doesn't address the question of whether you need the job or not.

Ms. Val Meredith: So when do you address that, at what point? Is it only at budget time?

Mr. James Lahey: Through the budgetary process, yes, because that's what gives you the resources to pay salaries. If you have sufficient, you keep; if your budget is cut back, you have to find a way to restrict.

Ms. Val Meredith: So there isn't another process that says, “We have this program going and we find we're 20% over-hired for this program, so we really don't need these people”? If you keep getting the money through the budgetary process, you keep that 20% on?

Mr. James Lahey: Actually, reallocation does goes on, a lot of it by individual managers who take the initiative to transfer people from lower- to higher-priority activities. At the level of the whole government, in the last budget Treasury Board was given an undertaking to review departmental programming over a five-year cycle. This is the first year. We will be doing that. There will be many issues looked at, including whether we are resourced at the right level for these programs.

The Vice-Chair (Ms. Beth Phinney): Ms. Fraser would like to make a comment.

Ms. Sheila Fraser: I just wanted to add, in response to the comments from both Ms. Meredith and Mr. Forseth, that one of the recommendations we had is that government needs to have an overall compensation policy, which is not something that existed but which you would expect from a large organization like this. The secretariat has begun work on it, and I believe is planning to have one for this fall. That should certainly indicate....

One of the considerations, obviously, is around the private sector and external factors, and around how government sets compensation vis-à-vis those factors. We would expect to have that broad framework in place.

The Vice-Chair (Ms. Beth Phinney): Thank you.

Ms. Wasylycia-Leis.

Ms. Judy Wasylycia-Leis: I'd like to go back to where we left off on pay equity with reference to the pay equity task force. I think one of the outstanding issues with respect to the pay equity task force is the failure for us to be able to get access to the research and studies commissioned as part of the pay equity task force.

You may recall that I've written the minister, and that we have a motion in the House. Stakeholders have tried to get the research documents. It's been suggested to us that it's not possible because they're not translated. I'm wondering if it would be possible for us to ask officially through this committee today for access to all the documents and the research that's been done for the pay equity task force.

Mr. James Lahey: My understanding from Hélène, who's been working on this, is that the Department of Justice is the reference entity for this task force. Would you mind, then, if Hélène elaborated on this one?

Ms. Judy Wasylycia-Leis: That would be great.

Ms. Hélène Laurendeau: You are quite right in saying that there are some problems, as we understand it, in releasing the research paper. Treasury Board is an employer like any other in that respect, and we have no control over that. It is indeed the Department of Justice primarily, in conjunction with HRDC, that has the issue that's to be addressed. Unfortunately, then, in that respect we're in the same position you are. We haven't seen them.

Ms. Judy Wasylycia-Leis: Perhaps the Auditor General would like to take this up.

Ms. Sheila Fraser: Sorry, but I don't think so.

Voices: Oh, oh!

Ms. Judy Wasylycia-Leis: I wanted to ask Mr. Burton a question. He mentioned in his earlier remarks that there may not be as many misclassifications as we think.

Would you be able to tell us how many of the 28,000 positions reclassified from 1993-99 may have been misclassified?

Mr. Richard Burton: I can't tell you precisely, but it's about...I was going to say “about 138”, but that would be precise.

If you look at that number of jobs and you look historically--when there was a lot of intense auditing and monitoring going on, 6% of those reclassifications were misclassified, either up or down--it's been about a 50:50 split between those that are under-classified and over-classified.

The Vice-Chair (Ms. Beth Phinney): Just to interrupt with a short question, have they been fixed? Has that 6% been corrected?

Mr. Richard Burton: Well, I'll get to that.

Mr. James Lahey: This was a historical number, experienced from 1990 or so.

º (1635)

Mr. Richard Burton: So you're getting down into a relatively small range, I'll say, although any number is too high. It's certainly down in the 200 range.

The other point I would make is that we do monitor grievances very closely at the Treasury Board. Grievances are put by people who feel their job has not been properly classified. The experience as we watch and monitor it, although admittedly not with the intensity the Auditor General is suggesting we should show, is that we find most of those decisions are being upheld. In other words, when they're the subject of grievance hearings, we participate in all of them, and we are finding a lot of those basic grievances are not upheld. In other words, the individual who has complained that they were misclassified is not getting the satisfaction....

The other element of the current accountability of deputy ministers is that they must inform Treasury Board whenever there is any wholesale reclassification of certain occupational groups to meet a different organizational structure, perhaps, or to respond to a new priority or program. We do monitor those very closely. We participate. There's been a handful, maybe five or six in the last few years, and those are where the big numbers really occur. We do monitor those very closely and are confident there's not a lot of over-classification.

The Vice-Chair (Ms. Beth Phinney): Thank you.

Mr. Forseth.

Mr. Paul Forseth: Thank you.

To get back to the computer people again, we know this sector had high volatility in compensation problems. Could a solution have been that in that sector you go to basic personal service contracts, where a person's going to be hired for a year, and they're always out to bid? You could then continue to write the kind of training you're looking for and the kind of end product result you're looking for. That often is the way it is happening in the private sector; they're job-specific.

That way the public interest and the taxpayer is well looked after in a market where we get the brightest and the best when we need it and we're not continuing to pay more than we're supposed to be paying in such a changing technology, where a highly trained person paid $100,000 one year is all of a sudden out of the loop and doesn't know anything any more because the technology's changed.

Is that a solution for areas of high volatility?

Mr. James Lahey: I think it is, and can be, and has been used. For example, in HRDC, where I worked previously, there was significant use of such contracts on large projects. So it is something that can be used and I think it can have the effect that you described.

Mr. Paul Forseth: Okay.

Looking at a very basic philosophical position, does government, and Treasury Board on behalf of the government, state anywhere that compensation in the federal public service and its levels are going to be set by the benchmarks in the private sector, and that's the philosophical approach that you bring to the bargaining table? I see in Bill C-25 you're now building in some research to back that up, but all kinds of stuff is out there and available.

Does it say anywhere that you outline that kind of philosophical principle?

Mr. James Lahey: The Auditor General correctly points out that we do not have a published compensation policy, so it doesn't say it in the way you describe. However, as a practical matter, that is our approach. We will be publishing--or I hope we will, subject to approval of the Treasury Board--this autumn a policy, and I think you'll find that one of the principles will be along the lines you just mentioned.

Mr. Paul Forseth: Okay, thank you.

The Vice-Chair (Ms. Beth Phinney): Monsieur Gaudet.

[Translation]

Mr. Roger Gaudet: Thank you, Madam Chair.

How many employees have reached the maximum pay level? It is a good question, isn't it?

Mr. James Lahey: I do not have the figures to hand, but we could find out and send the answer to the clerk.

Mr. Roger Gaudet: How many employees have been taken on over the past five years?

Mr. James Lahey: Once again, I don't have exact figures, but I...

Mr. Roger Gaudet: Give me an approximate number. You do not have to give me the exact number, give me a figure to the nearest one or two thousand.

Mr. James Lahey: I would say, subject to verification, that over the past five years we have taken on between 20,000 and 25,000 employees. In fact, we took on more than that because we had to replace those who were leaving but, the total number of employees rose by 20,000 to 25,000 during this period.

I do not have the exact figures. I don't know whether the Auditor General has the figures to hand.

º (1640)

Ms. Sheila Fraser: I couldn't tell you off the top of my head.

Mr. Roger Gaudet: Is 169,000 a fixed objective or does it increase every year?

Mr. James Lahey: It varies, it goes up and down. At the beginning of the 90s, more than 200,000 were hired. The figure then dropped to around 140,000 employees, a figure which included the creation of some separate agencies. We do not count them, but some of them are still around.

Over the past two to four years, however, the figure has been on the rise given that the public service has taken on new responsibilities and created several new programs.

Mr. Roger Gaudet: In light of all the fluctuation that you've experienced over the past few years, I cannot understand why you haven't adopted a uniform pay structure for evaluating and classifying employees. You have been juggling this for the past 12 years, perhaps not you personally, but other people.

Mr. James Lahey: We really did try to set up a single, uniform system. However, after having done the work, we concluded that it would not be flexible enough. That is why we are currently trying to set up a new system based on the 28 or 29 existing groups.

Mr. Roger Gaudet: What does flexibility involve?

Mr. James Lahey: It involves being in line with the labour market outside of the public service. It involves, for example, being in line with salaries offered by private companies.

Mr. Roger Gaudet: While taking into consideration the benefits that public servants enjoy.

Mr. James Lahey: Exactly. We take the whole package into consideration.

The Vice-Chair (Ms. Beth Phinney): Have you finished?

[English]

Ms. Meredith.

Ms. Val Meredith: Just to follow up on your comments in response to Mr. Forseth, if you're bring the pay in line with the private sector, are you also bringing in the merit principle, where if you're not doing the job, and you're showing that you're incapable of doing the job, you're let go, the same way you would be in the private sector? Is there still this protection--being in the civil service, being under a union contract--that doesn't allow you to remove an employee who shows themselves not qualified or capable of earning the private sector salary they're getting?

Mr. James Lahey: This is an issue that many managers believe is fundamental to good functioning of the public service. In fact--and I'm going to get the details wrong, but perhaps Mr. Forseth knows them--in Bill C-25 there are provisions that move away from termination being based on incompetence to being based on non-performance, subject of course to grievance and so on. It's a different standard, and one that's probably more demonstrable. It is our intent to be more rigorous, using this standard, in insisting that people perform in return for their remuneration.

Ms. Val Meredith: How is it, then, as we've heard many times in this committee, performance bonuses are considered to be just part of the pay package and have absolutely nothing to do with performance? We have an organization--and I won't name it, but I'm sure people around here will remember--that had a 60% turnover in staff because of poor management, and yet all of the managers were still getting their performance bonuses.

Mr. James Lahey: The system of performance pay for managers is one that we also believe needs to be tightened up. We will be encouraging deputy ministers to be very rigorous in the application of the program.

There is an external advisory committee, chaired by Carol Stephenson, that looks at executive pay. They've certainly encouraged us to go in that direction, and we intend to do so.

Ms. Val Meredith: So what you're trying to assure me is that steps are being taken to make sure a person is given a proper salary based on what they could get in the private sector; that their expectations would be equally as high; that they could be replaced if they were not performing; and that they certainly wouldn't be getting performance bonuses if they weren't earning it by their performance.

º (1645)

Mr. James Lahey: Correct.

Ms. Val Meredith: Thank you. I'm going to hold you to that in a year's time.

Mr. James Lahey: We'll do our best.

The Vice-Chair (Ms. Beth Phinney): Ms. Wasylycia-Leis.

Ms. Judy Wasylycia-Leis: I'd like to come back to where I started, and that's with the tone of this report, and whether or not the response of the department is commensurate with the urgency and seriousness of the report.

The Auditor General just commented that she thinks there is progress being made but doesn't sense that you've really understood and grappled with the roots of the problems with the old classification system and the attempts at the new universal system that's been put on hold or discarded.

In fact, she says in her report that she was shocked when she went into the department to find that no comprehensive post mortem was done to determine the root causes of the reform project's demise over the last 12 years, and certainly over the course of the standards project since 1995.

How can you go forward if you haven't done that, and are you still going to do it?

Mr. James Lahey: Well, we didn't write everything down, that's true, and part of being an auditor is to look for things that are written down, but I can assure you that we talked about it a lot. We talked about it a lot in the context of deciding not to proceed with the UCS program, and we talked about it a lot in deciding what we would do instead. And we continue to talk about it.

We should, nevertheless, take the further step...and we did prepare a draft that we shared with the Auditor General. But we hadn't really sat around the table and debated it among ourselves enough for me to sort of say, “This is it.”

We need to do that more. One of the opportunities to do that, as I mentioned earlier, is the symposium Mr. Burton has organized for the classification community, in fact this week.

The short answer? No, we didn't write it all down, and yes, we should do more, but we've done a lot of thinking and worrying and hand-wringing about how to make sure we succeed this time.

Ms. Sheila Fraser: Can I add a comment?

Ms. Judy Wasylycia-Leis: Please.

Ms. Sheila Fraser: You know, it isn't just an auditor wanting things to be written down. I think we can all see in government departments how people are not there for very long periods of time. Given that change, if it isn't written down the corporate memory goes. How do you ever avoid making the same mistakes if people aren't informed of that?

So unless Mr. Lahey is committing to stay there until it's all done and completed, I would like to see it written down.

The Vice-Chair (Ms. Beth Phinney): Maybe one of our recommendations...[Inaudible—Editor]...at your meetings, like most business people do. It's very simple, but....

Mr. James Lahey: Just to be clear, I'm not opposed to writing it down. Your question was, did we do any of this, and my answer was, yes, we did. It just wasn't all written down, and it needs to be written down.

So we did lots of it. That was my only point.

Ms. Judy Wasylycia-Leis: Fair enough. I guess my point was that in fact it didn't appear that you had done this comprehensive, big post mortem of the system before you decided to scrap it and move on, and I think the Auditor General is saying that might be helpful to set out the future agenda.

So, yes, it would be great if you could write it down and let us know, but also give us some more detail in terms of....

I think what's missing from the report today is a sense of the vision. Where are you going? What do you want to accomplish? What does it look like in the future? What are the timelines for getting there?

Can give us any of that today?

The Vice-Chair (Ms. Beth Phinney): I'll even give you extra time.

Voices: Oh, oh!

Mr. James Lahey: I'm going to ask Mr. Burton, if that's okay.

The Vice-Chair (Ms. Beth Phinney): Mr. Burton.

Mr. Richard Burton: As I was sitting here listening to the question, one thing that occurred to me was that there may be a misunderstanding. It isn't a question of moving away lock, stock, and barrel from a universal classification project to something new. The reality is, we've abandoned or moved away from the universal application of a standard, but we are still using that standard. Departments are still writing all of their job descriptions in the UCS language, and we're enabling them to make the translation from the current standards to the UCS standards.

So it's very much an active system. This whole thing is about change management, and I think we need to acknowledge there's a reasonably long process that goes on here to make those kind of changes. I'll give you one example.

If you went back four or five years ago, to the start of UCS, and you actually talked to people about the willingness to do generic job descriptions, you would find no acceptance of it. Everyone wanted a single, unique job that described what they did. We've now moved to a point where we have a very effective database of generic jobs across the public service that make the whole process work faster and so on.

I just wanted to make the point that there is an evolution here. We haven't just abandoned all the work done in UCS. It's all being used as we develop the new standards.

º (1650)

The Vice-Chair (Ms. Beth Phinney): Ms. Fraser.

Ms. Sheila Fraser: Ms. Elliott understands this better than I do, and there is a nuance here that I think the committee should be aware of.

Ms. Kathryn Elliott (Principal, Office of the Auditor General of Canada): In our view, and I believe we say this in the chapter, one of the difficulties is that the work descriptions are being written in the new format. I think we agreed that the standard developed, as we felt in 2000 when we assessed it, was quite a good standard, and we're still of that view. The problem is, people are writing these work descriptions in the new format, which is gathering a lot of information about what people are doing, but those are being assessed using the old standards, and they don't value quite a lot of that work; it's not in the old standards.

So we see that as problematic.

The Vice-Chair (Ms. Beth Phinney): Mr. Lahey.

Mr. James Lahey: I feel we didn't answer your question adequately.

Ms. Judy Wasylycia-Leis: No, and just before you answer that broader question, I wouldn't mind if you answered Ms. Elliott's point about using new work descriptions with old standards.

Mr. James Lahey: Yes. I referred, in the second part of our activities, to assisting departments by providing them with tools to use the existing standards while we developed the new standards. One of the things we're doing in that regard is develop tools that help them do exactly what Kathryn is referring to, and that is to take account of what's in the new job descriptions as fully as possible with the existing standards.

On your main question, first of all on the vision, at its simplest I would say the vision is that for all those standards that are out of date, we need to have modern standards in place. Those standards need to support the work of departments and allow us to be able to recruit and replace the people we have, and also be gender neutral and evaluate fairly the work of both men and women. So that's the vision.

How are we going to get there? We're going to go group by group. In this update, which I referred to before, we set out the priorities and the ones we're working on first. We've also indicated the work we're doing in the meantime to be able to use the existing standards as well as to develop the capacity.

I agree with your point, though, that it would be nice to see some more timelines and so on and so forth. I can assure you that the 2004 edition will have those.

We're building. We're focusing very much on getting “restarted”, so to speak. This describes what we're doing, but we will be moving more to standard timelines and deliverable dates and so on in the future planning documents we put out. And you'll be able to assess that because we'll be doing it every year.

Ms. Judy Wasylycia-Leis: Can you give us any sense now of rough timelines?

Mr. James Lahey: For example, it says in here that we hope to be able to do the FS group in 2003, depending on collective bargaining. For the PA group, it's probably going to be the next round, which is probably 2006, but there's a lot of work to do to get ready for that. The economists could be somewhere in between, depending on how we work it out. The other groups will probably be sometime between 2005 and a date we haven't determined yet.

We haven't tried at this point to say “Here's when it's all going to be finished”, because for us the important thing right now is to get some points on the board in terms of delivering some standards. We think that will add more credibility than any amount of “This is what's going to happen by 2008.”

Nevertheless, we've committed every year to having a rolling three-year plan, so every year we'll update what we've done and what the next three years look like.

º (1655)

The Vice-Chair (Ms. Beth Phinney): We more than doubled your time, but I'm going to continue with your questions, if that's okay.

I think you said earlier there were 28 groups.

Mr. James Lahey: Yes.

The Vice-Chair (Ms. Beth Phinney): At this rate, you might get to 2040-something...?

Mr. James Lahey: Well, it doesn't quite work that way. As we said, the PA group is 45% of the public service. If we implement them and the other groups that are covered by this plan--

The Vice-Chair (Ms. Beth Phinney): If you are a large group, 45%, as opposed to a small group, does it take longer to figure out your classification?

Mr. James Lahey: Typically, yes.

The Vice-Chair (Ms. Beth Phinney): Why would it take...?

Mr. James Lahey: Mainly because it affects all departments, and you want to make sure you set up an approach that is going to work in terms of the business requirements of at least the big departments. We've done a lot of that work.

Yes, it will take the next couple of years to be ready, and then we have to have the collective bargaining to set up the pay lines.

The Vice-Chair (Ms. Beth Phinney): So a secretary in one department is not the same as a secretary in another department, or an engineer in one department is not the same as an engineer in another department.

Mr. James Lahey: No, I'm not saying that. I'm saying that the structure for the program administration group covers not just secretaries; it covers secretaries right up through senior-level officers who aren't executives.

You need to be confident that you have a number of levels that will reflect real distinctions in work that need to be remunerated. You want to make sure, by testing against the future plans of the big departments, that this model will work in terms of being able to get the work done. And that's what we've been doing.

The Vice-Chair (Ms. Beth Phinney): So you figure it would take less than, say, 2056 or something.

Mr. James Lahey: I guarantee.

The Vice-Chair (Ms. Beth Phinney): So 2030, or 2020, or...?

Mr. James Lahey: No, no, no, I'm not going to pick a number.

The standards we're working on over this three-year planning period, when implemented--which might or might not be during that period, or it might be a little bit later--would cover 74% of the public service. Many of the groups have very small numbers of employees.

The Vice-Chair (Ms. Beth Phinney): But they still have to be settled.

Mr. James Lahey: Oh, yes. And some of them are not so out of date, as well.

Ms. Val Meredith: That's the question I'd like to ask. When you're doing this review, if you have a manager for 30 people and then you end up in a situation where you have managers for one- and two-person teams, where do you draw the line at the number of managers you have?

If everybody says, “Well, this is our little group, and we're separate from those guys”, and then you find you need a manager for that, you could just create one heck of a nightmare in the upper management level where, with every two people, one's a manager and one's an assistant manager because they do a different thing from the guys down the way.

When do you ever look at that kind of thing?

The Vice-Chair (Ms. Beth Phinney): Yes, the drivers who drive the green buses always tell us there are more managers than there are drivers.

Ms. Val Meredith: And that's not an anomaly. That would appear to me, from the outside, to be the norm in government services--three people with two managers.

Mr. James Lahey: My understanding is that the total number of people in the core public service of 170,000 or so who supervise at least one person is in the order of 40,000. So it's in the order of 20% or so.

Ms. Val Meredith: Still, that's 40,000 people who supervise one person?

Mr. James Lahey: No, I didn't say that, I said they supervise “at least” one person.

I'm just trying to give you an order of magnitude. The number of people who would have substantial management responsibilities--and we could debate exactly what that is, and in fact we're going through that debate in the public service--is probably in the order of 6,000 to 10,000 below the executive level, there being 4,000 executives, for the 170,000 public servants. So the executives are around 2.5% to 3%, or something like that.

That gives you some idea of the hierarchy. In the whole public service it's not two people, three managers, I can assure you.

Ms. Val Meredith: But there are situations where you have a small group, such as the Groupaction people, where you have a handful of people and a whole bunch of managers. It doesn't make sense. To the layperson out there who's paying the taxes to pay these people, it doesn't make sense.

Mr. James Lahey: Well, I agree with you that wouldn't make sense, but there are forces in the system to lead higher managers to not want to do that, because they have only so much money for salaries and they want to get value. They have an incentive to have a management structure that is appropriate to the work they're trying to do.

» (1700)

Ms. Val Meredith: Well, I would argue with you that when you see cuts in human resources, and I don't care whether it's at the school board level or at the federal government level, the cuts seem to happen at the delivery of the service as opposed to the management level.

So if you need to save money, and you find out that you have six less immigration officers at the intake site but you still have the two or three managers who now have less people to supervise.... Until somebody comes to grips with that aspect in your “re-” job classification, or wherever you deal with that, at some point you have to say, gee, we have so much money, maybe we should be cutting some at the management level.

Mr. James Lahey: I don't disagree with that.

The Vice-Chair (Ms. Beth Phinney): Judy Wasylycia-Leis, any more questions?

Ms. Judy Wasylycia-Leis: What does “change management” mean?

The Vice-Chair (Ms. Beth Phinney): Who are you asking?

Ms. Judy Wasylycia-Leis: Anybody.

Mr. James Lahey: That's business jargon, and not just public service jargon, for the whole process whereby you make change effective. It's not just you coming in and announcing something; you have to work with people, you have to persuade them, you have to give them tools, you have to inspire them, and you have to listen to them and adjust accordingly. That's what change management's about.

I don't know whether you want to add to that.

Ms. Sheila Fraser: No, that's fine.

Ms. Judy Wasylycia-Leis: I was just worried, because it sounded like the whole process we went through from health protection and risk management, that we were going from a concept of integrity to one that was watered down and meaningless. So I'm glad for the clarification.

I didn't understand the response to the point that Kathryn Elliott made. Did you understand it, and are you satisfied that the issue about using new job descriptions on old standards is okay?

What's happening on that front?

Ms. Kathryn Elliott: We did see, in the latter part of the examination, some of the work the Treasury Board was doing; in our chapter we talked about the mapping where they've taken.... It's a little bit complicated. In the new universal classification standard, and the new job descriptions, the standard had the four factors required by the Human Rights Act. There were 16 elements assessing those various factors. So those have all been captured in the new job descriptions.

Many of the old standards, quite a few of them actually, don't have all four of the factors they assess, and they assess different things. So the Treasury Board has tried to say, okay, here are the 16 elements in the new work descriptions, and with each of the old standards they've put what those old standards are assessing and they've tried to map where you would find the information in the new job descriptions and how it would be assessed with the old standards.

There are some places where there are gaps. For example, in some of the old standards, as we've mentioned in the chapter, the number of people you supervised gave you more points, or the size of your budget gave you more points. In the new work descriptions, that responsibility is described differently. So they actually have to go back and capture that information.

Similarly, I would argue that the new work descriptions are much richer. They're clearly more up to date in terms of the kind of work people are doing. And I would say there's much in those new job descriptions that doesn't get assessed against the old standards.

I mean, we think the Treasury Board is trying to...given that they have these old standards that, until they're replaced, still have to be used. It's a reasonable way of at least trying to do that crosswalk. We just feel the old standards really have quite a few problems.

Ms. Judy Wasylycia-Leis: Doesn't this again raise problems for pay equity? If you lose some of those four key components, doesn't this then have a negative impact in terms of advancing the pay equity agenda?

Given that, as we know from the Auditor General's report, the universal classification system really was to help address outstanding pay equity issues, with that in effect being scrapped as a broad concept, what takes its place other than our waiting for the pay equity task force? How do we still make steady progress towards full implementation of pay equity?

» (1705)

Mr. James Lahey: This is Hélène's area of responsibility, so if you don't mind I'll ask Hélène to comment.

Ms. Hélène Laurendeau: Thank you.

Two comments on that. First, you're quite right that if we were to use a classification standard or evaluation tool that did not meet the four factors required by the equal wage guidelines, we wouldn't be complying, in doing a pay equity analysis, with the Human Rights Act.

On that first point, the truth of the matter is, we never did and never will use a classification standard for that purpose if it doesn't meet the requirement. If you look at our past history, we've used the Hay system, which has been recognized as meeting the four factors, when we needed to do such pay equity analysis. So on that front, we are covered.

With respect to how we're going to do it for the future, we are in fact planning to use the universal classification standard if it fits pay equity analysis or any other tool that is available for pay equity purposes when we do such analysis to make sure that we do in fact assess in accordance with the equal wage guidelines. The intent at the time with UCS was to use the classification standard for both purposes--job evaluation for pay equity analysis and classification. Having concluded that the single pay-line approach was not doable, then we have to fall back on using other tools for pay equity analysis when we have to do such analysis.

The Vice-Chair (Ms. Beth Phinney): Okay. Thank you very much.

I think we'll wind up now.

Ms. Fraser, do you have a final comment to make?

Ms. Sheila Fraser: Thank you, Madam Chair, and I thank the committee again for its hearing.

I would just like to reiterate that we do have two main concerns coming out of this audit. The first is the management of the current payroll, which is $9 billion; the classification system is sort of the fundamental base to that. We are pleased that the Treasury Board Secretariat has agreed with the points we made in the audit and has accepted our recommendations, and has indicated that they will be introducing monitoring and some other corrective action going forward. But there is still much to be done on that area.

The second one is of course the whole reform of the classification system. This is a really important issue for government. Unfortunately, I think sometimes issues like this don't get as much attention as others, so I would certainly hope that Parliament and this committee or others would continue to be interested in the issue. We will of course monitor it over time, but I think this is important. I'm sure the people at the Treasury Board Secretariat are going to need to have support in going forward on a very complex and difficult issue, and I think parliamentary interest would be worthwhile.

Thank you.

The Vice-Chair (Ms. Beth Phinney): Thank you very much.

The meeting is adjourned to the call of the chair.