PACC Committee Report

Pursuant to Standing Order 108(3)(e), the Standing Committee on Public Accounts has the honour to present its

THIRTEENTH REPORT

The Standing Committee on Public Accounts has considered the final report of the Advisory Committee on Labour-Management Relations in the Federal Public Service (Fryer Report) and has agreed to report the following:

INTRODUCTION

The effective, efficient provision of government services depends on the skills, professionalism, and dedication of Canada’s public servants. Since Confederation, these men and women have built a public service that is widely regarded as among the best in the world.

The federal public service has recently been confronted by numerous challenges. Changes in the kinds of services governments provide and the way in which they provide them have resulted in significant public service restructuring. The public service has also been called on to play its part in the effort to eliminate an unsustainable federal deficit. This has meant the elimination of 45,000 positions and a suspension of pay increases. Remaining public servants have had to do more with less. In the face of these circumstances, federal public servants have continued to perform their duties and provide the best service possible. This resilience is testimony to the professionalism of Canada’s public servants and justifies the esteem in which they have been traditionally held.

Nevertheless there are clear signs that the federal public service has been placed under considerable stress. Many experienced public servants have taken early retirement or have accepted employment in the private sector. The remaining core public service is aging and recruitment of new employees is proving to be difficult. Internal surveys reveal that public service job satisfaction and morale are low and that levels of frustration are high. These factors are not conducive to the best possible delivery of government services or best possible value for taxpayers’ dollars.

Several approaches to solving these problems have been adopted by the government. Most are at an early stage. Efforts are under way to improve recruitment and to update and streamline job classification. The government is also searching for ways to retain its best employees and to improve both the access to, and quality of, training. Greater care is also being taken to ensure that the public service is representative of all Canadians. While these are welcome efforts, more needs to be done.

An additional way to ensure that Canadians have the federal public service they need for the 21st Century is to make sure that the relationship between the government and its employees is a healthy, constructive one. Currently this relationship is managed by the Treasury Board Secretariat and unions representing public servants, and has not always been harmonious or productive. Accordingly, in October 1999, the Secretary of Treasury Board Secretariat established the Advisory Committee on Labour-Management Relations in the Federal Public Service under the chairmanship of Dr. John L. Fryer. The Committee was given 18 months to undertake a thorough review of union-management relations and collective bargaining relationships between the federal government and the unions representing federal workers.

The Office of the Auditor General of Canada and this Committee have taken a close interest in the state of human resource management in the federal public service. On 3 May 2001, the Committee held a hearing on the Post-secondary Recruitment program in the public service. On 15 May 2001, it met with the Secretary of Treasury Board Secretariat to discuss the need to streamline the human resource management regime in the public service. A further meeting was held on 17 May 2001 with the Clerk of the Privy Council and Mr. Ranald Quail to learn about the work of the Task Force on Modernizing Human Resources Management in the Public Service headed by Mr. Quail.

The Committee believes that getting labour-management relations in the federal public service right is key to improved human resources management and better services for Canadians. It therefore decided to examine the final report of the Advisory Committee on Labour-Management Relations in the Federal Public Service (the Advisory Committee, Fryer Committee). To help it understand this complex issue, the Committee met with Dr. John Fryer, former Chairman of the Advisory Committee and Penny Driscoll, the Advisory Committee’s former Executive Director, on 25 October 2001.

OBSERVATIONS AND RECOMMENDATIONS

The Advisory Committee was given a mandate to review the state of labour‑management relations in the federal public service, including federal collective bargaining legislation and that of other Canadian jurisdictions. In addition, the Committee was asked to evaluate how well the system of labour-management relations created by the Public Service Staff Relations Act (PSSRA) has served Canadians. It was also asked to examine labour-management relations at three levels — the public service generally, as well as the departmental and the local levels.

In May 2000, the Advisory Committee released its first report, Identifying the Issues, in which it defined the problems in existing labour-management relations. This report established the basis upon which the Advisory Committee would develop its proposals to improve the relationship between the federal government and its employees. After over a year of work and an expenditure of approximately $1 million, the Committee released its final report entitled Working Together in the Public Interest.

In the opening section of its report, the Advisory Committee explained the underlying rationale for the changes it proposes. It noted that labour-management relations in the federal public service have been mixed since 1967, and that they worsened in the 1990s. Fundamental reasons for this include a separation of labour-management relations from human resources management and the development, over time, of a negative relationship between the government and unions representing public servants.

The Advisory Committee determined that the key to establishing better labour- management relations lies in changing the relationship from a confrontational one to a co‑operative one. To achieve this, it calls for legislative, structural, and cultural change. To bring these changes about, the Advisory Committee made a total of 33 recommendations, which were endorsed unanimously by its members who came from backgrounds in government, academia, and labour unions.

In his appearance before the House of Commons Standing Committee on Public Accounts, Dr. Fryer outlined the Advisory Committee’s recommendations and the rationale behind them. Among other things, these recommendations call for the updating of the Public Service Staff Relations Act, simplification of grievance procedures, union involvement in staffing and classification, and the creation of a public interest dispute resolution commission to resolve disagreements between the unions and government before they result in work stoppages. The Advisory Committee best summarized the collective direction and intent of these recommendations when it wrote:

The labour legislation and institutions governing these relations [between public servants, public service unions, and the government] must enable the parties in labour-management relations ― the employer and the unions ― to prevent and resolve disputes and to work together in the public interest.[1]

The Committee generally endorses the Advisory Committee’s report and recommendations, which it believes represent a comprehensive and sensible approach to improved relations between the government and its employees. Several of the Advisory Committee’s recommendations were of particular interest and deserve mention.

Recommendation 32 asks that union meetings be permitted to take place in the workplace during working hours. Dr. Fryer testified that this is probably the Advisory Committee’s most important recommendation. Currently, such meetings may only take place outside of working hours at an external location. As a result, union meetings are poorly attended and union agendas are often set by a small number of people who may not represent the interests of most employees. In such circumstances, union leadership and union demands are not always accorded much legitimacy, either by the employer or the employees. The solution, according to the Fryer Committee, is to make union meetings more accessible to employees by holding them in the workplace during working hours. This would ensure greater union responsiveness to majority wishes and increase the legitimacy of union leadership in dealings with the employer. The Committee agrees and therefore endorses this recommendation, which it believes would strengthen union democracy.

The Committee also endorses the concept of co-development proposed by the Advisory Committee in its third recommendation. Under this arrangement, the unions and the government would be required to work together on staffing (recommendation 4), classification (recommendation 5), and management of the pension fund (recommendation 6). If these recommendations are adopted, these issues will be determined jointly rather than unilaterally.

Another recommendation made by the Advisory Committee shows promise. The Advisory Committee proposes the creation, in its twentieth recommendation, of a public interest dispute resolution commission. The commission would be responsible for representing the public interest and for assisting the employer and the unions in resolving disputes. Its members would be drawn from unions, management, and third-party neutrals representing the public interest. The commission would exercise several powers including the authority to mediate between the parties, refer issues back to the bargaining table, and issue reports outlining the terms of a settlement that could be adopted or imposed on the parties. The commission’s reports would be made public following release to the parties. The Committee believes that such a commission could play a valuable role by bringing the interests of the public to the table and by resolving contentious issues before they result in potentially disruptive job actions.

The Committee was also pleased to learn that the Advisory Committee has proposed to streamline and consolidate the grievance procedures in the public service. Dr. Fryer pointed out that at the moment there are 22 different mechanisms for resolving rights issues that federal government employees have in the workplace. The Advisory Committee proposes (recommendation 16) that these mechanisms be replaced with one. Not only would this make sense, it would probably, as Dr. Fryer indicated, save money.

Another series of recommendations that caught the Committee’s attention dealt with the ability of separate employers to conduct collective bargaining on their own behalf. Separate employers are government organizations operating more at arm’s length from government. Examples include NAVCANADA and the Canadian Customs and Revenue Agency. Employees working in these organizations are covered by some sections of the Public Service Staff Relations Act but not others. Management has greater discretion in terms of hiring than do their counterparts in other federal departments and agencies. However, when it comes to negotiating with their employees, these managers must get Treasury Board approval. They must adhere to the mandate given them by Treasury Board for rates of pay and allowable percentage increases. According to the Advisory Committee, these requirements result in delays, creates uncertainty among employers and employees, and leads to unsatisfactory results.

This issue is of particular interest to the Committee because the Office of the Auditor General of Canada, whose Estimates are referred to the Committee, is a separate employer. In a report to the House of Commons in which he summed up his tenure, former Auditor General Denis Desautels labelled the arrangement under which the Office’s budgets are negotiated with Treasury Board as an “uncomfortable” one. He added that the Office “needs to have more administrative autonomy in the areas of staff remuneration and collective agreements.”[2] The issue also surfaced when the Committee met on 24 April 2001 with current Auditor General of Canada, Ms. Sheila Fraser, to review the Office’s Estimates for 2001-2002. At that time, the Committee learned of the difficulties being experienced by the Office surrounding pay equity as a result of its status as a separate employer.

While the Committee recognizes that separate employers may need added flexibility when it comes to negotiating with their employees, it does have some concerns. The Committee is not certain of the impact that this proposed change would have on the overall budget of government and the government’s need to restrain spending increases. Furthermore, the Committee wonders if such flexibility might lead to a situation in which employees of separate employers might enjoy higher salaries for performing the same duties as their counterparts in the core public service. A final concern has to do with potential impacts on job classification in the federal public sector generally. As Dr. Fryer acknowledged, “if you move to allowing departments to set different salary levels for what are ostensibly similar jobs, then the notion of a merit-based public service … gets really damaged.” Therefore, while the Committee does not oppose the recommendations concerning separate employers, it does advise caution and further study before these recommendations are adopted.

The possible introduction of the concept of performance pay into the public service was an idea that interested several Committee members. This practice is common in the private sector where employees are rewarded for efforts that exceed expectation. It is noteworthy that a somewhat similar arrangement is already in place for executive-level government employees. It would be logical, therefore, to consider making a similar arrangement available for other public servants. It is also the Committee’s understanding that following the downsizing of the public service, many remaining employees have had
to redouble their efforts in order to maintain service delivery. In these circumstances, it might be appropriate to consider the establishment of a performance pay regime as a way of rewarding these extra efforts, and as a way of encouraging the best delivery of services possible.

Although the Advisory Committee did not examine the issue of performance pay, its recommendations, if implemented, offer the prospect of developing the kinds of structures and conditions under which such a proposal could be constructively reviewed by management and labour. This would equally apply to another concept that interested the Committee, that of “cafeteria” benefits that would allow employees to tailor benefits packaged to suit their own needs.

There are some areas in which the Committee is in agreement with Dr. Fryer that there should not be any change. On the understanding that the government does not intend to dispense with unions in the public service, collective bargaining must be retained. As Dr. Fryer testified, “collective bargaining is the most imaginative, flexible arrangement for dealing between employers and employees in a unionized environment.”

The legal right of public servants to strike is a contentious issue. Dr. Fryer noted that opinion is divided, even within management and unions. Some would prefer binding arbitration to take the place of the right to strike; others would rather have strikes than arbitration. As it stands, public servants have that right, but it is counterbalanced by Parliament’s ability to legislate government employees back to work. Some argue that this renders the right to strike meaningless and that Parliament should not be able to legislate in this area. The Committee disagrees. Parliament, as one Committee member noted, represents more people than public service unions. It also bears a responsibility for ensuring that Canadians continue to receive necessary public services.

The right to strike and Parliament’s ability to put an end to work stoppages does create a problem in that it provides an excuse to both labour and management to avoid serious negotiations in the belief that Parliament will resolve the issue ― and take the credit, or the blame, for the outcome. This creates an obstacle to compromise, mutually acceptable outcomes, and accountability.

Arguments over the right to strike and Parliament’s role in back-to-work legislation may become mute, however, if the Advisory Committee’s recommendations are adopted. As Dr. Fryer indicated, the “whole purpose of this report is not to take away that right [to strike] but to create an environment where it is virtually never needed.” The Committee accordingly accepts the status quo but believes that it will work more efficiently and effectively if the Advisory Committee’s recommendations are accepted.

One of the Advisory Committee’s last recommendations struck a chord with the Committee. In its thirtieth recommendation, the Advisory Committee calls for the creation of an overall labour relations accountability plan. The Advisory Committee writes that this plan “should specify the roles and responsibilities of the various parties, including line managers and union representatives as well as government boards and agencies,” including its proposed public interest dispute resolution commission. The Committee believes that the success of all of the other proposals made by the Advisory Committee rests in large part in introducing greater clarity and accountability into labour-management relations in the federal public service. It therefore concurs fully in this recommendation.

CONCLUSION

The Committee has noted openness on the part of government to the kind of constructive change that the Advisory Committee advocates. During its hearing of 15 May 2001, the Committee heard from Mr. Al Claydon, the Secretary of Treasury Board Secretariat, that the government is “working to build a more positive labour-management relationship,” and that he considers that “modernizing [the government’s] human resources management practices is a team effort.” Later on during the same hearing, he told the Committee that the government is “working on a strong partnership with the unions.” In his Eighth Annual Report to the Prime Minister on the Public Service of Canada, Mr. Mel Cappe, Clerk of the Privy Council, showed that the government is open to change, admitting that

No matter how you look at it, it is clear that we are not able to keep pace because our current people management regime is too linear, inflexible and complex.

The Committee believes that the Fryer Committee has performed an invaluable service to the government, its employees, and to the people of Canada, by proposing constructive change to a key element of the people management regime referred to by Mr. Cappe. The Advisory Committee’s proposals point the way out of a confrontational and counterproductive 19th century model of labour-management relations that works against the public interest. In its place, the Advisory Committee has provided the foundations for a new relationship based on co-operation, trust and compromise. The Committee finds that this proposed new foundation is sound, logical, and appropriate. It therefore recommends:

RECOMMENDATION 1

That the report and recommendations of the Advisory Committee on Labour-Management Relations in the Federal Public Service be seriously considered and expeditiously acted upon.

In closing, the Committee wishes to thank Dr. Fryer and his committee for their excellent work. In particular, Dr. Fryer made a compelling witness and an eloquent and persuasive spokesperson on behalf of his committee and its proposals.

Pursuant to Standing Order 109, the Committee requests that the government table a comprehensive response to this report.

A copy of the relevant Minutes of Proceedings (Meeting Nos. 28 and 36) is tabled.

Respectfully submitted,

John Williams, M.P.
Chair