Public sector employees to collect $6 billion in ‘severance’ while remaining on the job

Andy Radia
Politics Reporter
Canada Politics

"It's nice work if you can get it. And if you get it, won't you tell me how."

These lyrics from George Gershwin's 1937 hit seem apropos when it comes to working for the federal government.

In yet another story of public sector opulence, hundreds of thousands of core public sector employees are collecting $6 billion in severance packages even while they remain in their jobs.

According to CBC News, the payouts are part of the Harper government's move to scrap a long-standing public service perk that gives federal workers severance pay when they quit or retire.

As a means to fulfill their obligations from previous collectively bargained agreements, however, the government has agreed to compensate all existing public servants for all of the severance they have accumulated to date at the rate of one week's wages for each year of employment.

Government officials say the average payout to date has been roughly $20,000, but the highest-paid government executives and military brass could be getting cheques up to $150,000.

Scrapping severance for those who quit or retire will save taxpayers about $500 million a year, according to CBC News, but the total cost of severance payouts to employees who aren't leaving their jobs could total up to $6 billion.

[ Related: Public sector sick days cost taxpayers $1B a year ]

But that's not all.

CBC News has also learned that in exchange for getting rid of the severance provision, the Harper government is giving public servants a special 0.75 per cent increase in wages, a move that will cost taxpayers further hundreds of millions of dollars a year.

Dan Kelly, head of the Canadian Federation of Independent Business, says the government is right to be killing the severance perk, but asks, at what price?

"To spend billions of dollars in severance package for people that are not losing their jobs, people that have the best form of job security in the country, that have gold-plated pensions to leave to, just seems nuts," he told CBC.

"This should be taken away from civil servants.… But to trade it off for higher wage increments, I think will not pass the smell test for average Canadians."

To add insult to injury, these  payouts come at the same time the Harper government is cutting 29,600 public sector jobs.

For those who get to keep their jobs, however, life just keeps getting better.

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Here are just a few -- of many -- other taxpayer funded perks for the federal public service:

Wages: According to a recent article in the Vancouver Sun, a comparison of pay reveals that government and other public-sector employees receive wages that are 8-per-cent to 17-per-cent higher than similarly employed workers in the private sector. Adding in non-wage benefits, the overall public-private compensation gap rises to 25 to 30 per cent.

Pension: Newly retired members of federal public service received an average annual pension of $35,799 in 2010-11, according to government figures.

Bridge benefit: According to Postmedia News, workers in the private sector can start collecting the Canada Pension Plan as early as age 60, but must swallow lower monthly benefits if they do so.

In the federal public service, workers can collect their full public sector pension as early as age 55 (although the normal retirement age is 60) and use what's called a 'bridge benefit' to effectively top up their CPP until they reach age 65 so they don't take a hit to their benefits.

Maternity leave top-up: While most Canadians only receive 55 per cent of their salary, through EI, when on materinity leave, workers in the federal public service receive 93 per cent with a taxpayer funded top-up.

Sick Days: According to a recent CBC News report, an internal Treasury Board report indicates federal public servants are staying home an average of 18 working days a year, or almost a full month off the job.

That is about 2½ times the average rate of absenteeism in Canadian private industry.