Good afternoon, Madam Chair and members of the committee.
Thank you for Inviting me to appear here today. I will be speaking to you about the report called "Fiscal Analysis of Federal Pay Equity", prepared by my office and published on November 4, 2020. I'm accompanied today by the analysts who prepared the report, Robert Behrend and Salma Mohamed Ahmed.
The Parliamentary Budget Officer supports Parliament by providing independent and non-partisan analysis to Parliament. As the legislation states, we do so for the purpose of raising the quality of parliamentary debate and promoting greater budget transparency and accountability.
In keeping with our office's mandate, we have prepared an independent analysis of the federal pay equity system. The report provides an overview of the spending measures associated with the Government of Canada’s proactive pay equity regime within the federal public and private sectors.
Madam Chair, I would be pleased to respond to any questions you may have regarding our federal pay equity analysis or other PBO work.
In December 2018 the Pay Equity Act received royal assent, establishing a proactive pay equity regime within the federally regulated public and private sectors. Approximately 1.3 million employees fall under the aegis of the act—about 390,000 in the public sector and 900,000 in the private sector.
While budget 2018 and the 2018 fall economic statement identified new money to establish the government's new administrative framework for the act, no details were provided regarding the anticipated fiscal impact arising from consequential changes to remuneration.
Based on information provided to the Office of the Parliamentary Budget Officer by the Government of Canada, we estimate that the ongoing cost for regulatory oversight in federally regulated sectors of the economy is $5 million. The ongoing administration of pay equity within the federal public service is estimated to be $9 million.
The PBO requested the government's fiscal analysis of how much more money is expected to be spent to comply with the legislation. However, the government refused to share this data, citing confidence of the Queen's Privy Council for Canada. Nevertheless, we used alternative sources in our analysis of employee compensation for the core federal public service. These data suggest that once the act is fully implemented, the federal wage bill could rise by $621 million starting in 2023-24.
The core federal public service represents approximately 30% of the federally regulated workforce. It does not include Crown corporations, the Prime Minister's and ministers' offices, parliamentary institutions, or the private sector. Therefore, the impact on all federally regulated workplaces will likely be substantially greater.
Given the depth of expertise required and the possession of employee-level administrative data, the federal government itself is best placed to report on the cost implications to employee compensation. Parliamentarians may therefore wish to encourage the federal government to provide estimates of expected increases to federal public service employee salaries, along with analysis of the potential impacts on pensions and other future benefits.