In previous posts, I outlined an approach to wage-setting that combined three wage elements that are already baked into wage rates for the Public Service:

• R — The “rack” rate, i.e., how much it costs for you to get out of bed;
• C1, C2, C3, C4, C5 — The commuting compensation to leave your house to go to a job site; and,
• L — the cost for actually expending energy to do the “physical” labour of the job.

Now, I have to confess. I broke out the rack rate and commute rate from the overall wage rate (call it W) because everyone should understand that those elements are already built into the current wage rates. And because they are not the same evidence base as the calls for regular wage increases. There is rarely anything new to include in the rack or commute rates, so the focus tends to be just on inflationary pressures (for basic human needs) or elements that may be changing in the way they work (like childcare).

But negotiators don’t actually negotiate the pieces separately, there’s no rack or commute rate listed in the collective agreement, just a single pay rate that combines all three.

Now that I’ve addressed the first two, that leaves the direct labour aka the “L” portion of wages, which can increase due to other economic or external factors, tenure, performance improvements, skills growth, or role expansion. Unfortunately, addressing those issues in a union environment for all employees at once is often an unsatisfactory experience for members.

Understanding how an individual’s pay changes over time

As noted, an individual’s pay in the PS is not negotiated by the individual; rather, the union negotiates rates for everyone in a specific classification and at a specific level. The union also negotiates band levels within those classifications and levels.

In my original post, I talked about AS rates, and this time I’ll show the same thing with EC rates, again picking a mid-range level of EC-04. I am copying the info directly from the TBS website at https://www.canada.ca/en/treasury-board-secretariat/topics/pay/collective-agreements/ec.html#tocxx338387

Effective Date	Step 1	Step 2	Step 3	Step 4	Step 5
$) June 22, 2021	74,122	76,658	79,309	82,916	85,778
A) June 22, 2022	76,716	79,341	82,085	85,818	88,780
X) June 22, 2022 – Wage Adjustment	77,675	80,333	83,111	86,891	89,890
B) June 22, 2023	80,005	82,743	85,604	89,498	92,587
Y) June 22, 2023 – Pay Line Adjustment	80,405	83,157	86,032	89,945	93,050
C) June 22, 2024	82,013	84,820	87,753	91,744	94,911
Z) June 22, 2024 – Wage Adjustment	82,218	85,032	87,972	91,973	95,148
D) June 22, 2025	83,862	86,733	89,731	93,812	97,051

Let’s start with a brand new EC-04 on June 22, 2021 and look at inflation and ignore annual band increases.

They would start at $74,122, aka the first cell (Row $). After a year, they would increase to $76,716 (Row A), representing a pay raise of $2,594. That is primarily an inflationary “raise” to cover cost-of-living pressures, and is about 3.5%. Continuing down the first column, you would have a bump for cost-of-living and small pay line adjustments to X (1.25%), B (3%), Y (.5%), C (2%), Z (.25%) and D (2%) by June of this year. Overall, from June 22, 2021, to June 22, 2025, pay would go up from $74,122 to $83,862, aka $9,740, which is about 13.1%. During the same time frame, actual inflation from 2021 to 2022, using the Bank of Canada CPI inflation calculator (https://www.bankofcanada.ca/rates/related/inflation-calculator/), put inflation at 15.4%.

And some people reading that will think, “Ah-hah! Our wages haven’t kept pace with inflation!”. Except that’s not entirely accurate. It is much narrower than that in reality. “Step 1” rarely has much to do with people who are already in the public service, unless they’ve been moving up the ranks quickly. Let me put a pin in that for a second.

Let’s look at step / band increases. These are increases that are designed to offset loyalty and experience/moderate skills increases. You’re in the job, you’ve been doing it for a year, you should get a bump to reward that you’re basically better at your job. This would be a horizontal bump which is a bit hard to process mentally for some people from outside the PS as most private sector organizations and even many public sector organizations have either horizontal or vertical bumps, but not both. In theory, over five years, and ignoring cost-of-living increases, a new EC-04 would go from 74,11 to 76,658 (3.4%), 79,309 (3.4%), 82,916 (4.5%), and 85,778 (3.4%) along the first row of the table.

Yet when you look at an individual who started as an EC-04 on June 22, 2021, they didn’t move horizontally or vertically. They moved diagonally through the table:

• June 22, 2021 – Step 1 (Base): 74,122
• June 22, 2022 (1) – Step 2 (CoL + Step): 79,341 (7%)
• June 22, 2022 (2) – Step 2 (Wage adjust): 80,333 (1.25%)
• June 22, 2023 (1) – Step 3 (CoL + Step): 85,604 (6.6%)
• June 22, 2023 (2) – Step 3 (Wage adjust): 86,032 (.5%)
• June 22, 2024 (1) – Step 4 (CoL + Step): 91,744 (6.7%)
• June 22, 2024 (2) – Step 4 (Wage adjust): 91,973 (2.5%)
• June 22, 2025 (x) – Step 5 (CoL + Step): 97,051 (5.5%)

If you just want to compare the base to where the employee is at 4 years in Step 5 aka $97,051 vs. the original $74,122? The overall increase is 30.9%, coincidentally (?) double the rate of inflation in the same time frame. This is absolutely NOT what the union says ever. And many employees conveniently forget that when they want to complain about not meeting inflation. EVERY individual employee got raises that outstripped inflation when the two are combined.

Depending on your perspective, you can argue that is two separate parts…a CoL increase from the first part from $74,122 to $83,862 ($9,740 nominally in the vertical column) aka the 13.1% AND then a performance rate increase from $83,862 to $97,051 ($13,189 in the last row) aka 15.7% (the % don’t add up as there is a stacking element in the first half). If you prefer to think of it as the performance increase comes first (row 1, going from $74,122 to $85,778, an increase of $11,656) aka the 15.7% and then a CoL increase and wage adjustments to go from $85,778 to $97,051, it would be another $11,273 or the same 13.1%.

Why is this relevant? Because unions don’t negotiate individual rates, they negotiate all EC-04s in this example at the same time aka the WHOLE table at once. CoL year over year AND performance improvements year over year. And while they want to argue about column 1 only, arguing that it is all CoL and some small wage adjustments, and that’s what shows up in the press releases and new articles, TB is also negotiating the WHOLE table too.

And they know that NO ONE is facing CoL only in their paycheque. While it is important to align the first column with CoL, individuals in this category are moving up every year automatically. No required decision by management whether you deserve a raise or not, no individual performance ratings, no bonuses if you had a big project; it is your automatic increase in pay for having worked there another year. You could be on a performance improvement plan, performing relatively poorly in your job, and you would still receive a step raise, same as our CoL raise.

So when the union argues “inflation is so high”, well, it’s not over 30% over four years and most bands are about that combined value. Now here is where people got offended in my first post. They argue that the step raises should not be included or considered. I half-agree — they shouldn’t be included, absolutely agree. It confuses the CoL question.

However, you can’t argue you need CoL increases on YOUR WHOLE salary, if your salary is also changing at the same time. These too need to be segmented. Just as we did with rack and commute rates.

If you want to dial it back to hourly rates, it works out to about $38 per hour for an EC-04 at the base level in 2022 and $43 per hour in 2025. Or basically $1.25 extra per hour per year for cost of living and another $1.69 per hour per year in performance improvements for four years. But you should know when you compare it to the private-sector announcements, true comparisons would include both since most large-scale unionized private-sector jobs don’t have CoL and steps separated. So they’ll announce they got 3.8% in a negotation, and PS unions will say, “Hey! We only got 2.5%!” as their CoL. Except that 3.8% private-sector number included both categories — it wasn’t just the CoL. Why don’t unions do the same? Because their step increases take them well above inflation. Not a good look for negotiations if you want any public support. So they talk only about CoL.

Let’s go back to the sub-categories for L-related increases

There are five main elements that I mentioned at the beginning that are designed to be covered by wage increases for the L component.

Economic or external factors. This includes average cost-of-living pressures, obviously, with unions arguing that compensation has not kept up with inflation. This one gets a little bit dicey though, when comparing with other sectors, partly for the above disaggregation/aggregation of step increases and partly because other sectors generally don’t have as generous non-wage compensation packages, such as the PS pension plan. If you want to compare compensation to inflation, you have to compare the entire benefit package, not just the wage component.

For employees, we often focus only on the improvements to our paycheque, while TBS rolls all of it together into one dollar amount overall. The unions like to state to the public that they are only asking for, say 3%, but then table all these other tweaks or perks that raise the “ask” to 6 or 7%. It’s a little disingenuous, but that’s part of negotiating. It works fine for comms, but TBS knows otherwise (you can’t fool them), and ultimately it only fools the public and sometimes the membership.

If we compare with other public sector organizations within the provinces, there isn’t a huge disparity. To the extent that there is, it is either sectoral / classification specific or somewhat lower than federal packages.

Some other external factors, such as an individual getting a better offer from a private-sector firm, are not something that can be easily leveraged by unions, as employees are part of broad categories in a union environment and are not individually paid. In the private-sector, you might argue “Pay me what I’m worth or I bounce” and get a raise, but in the public-sector, you’ll merely get forms to fill out for your departure. The more likely scenario in government is that you “threaten” to leave to go to another department, but it means nothing for wages — an EC-04 at Health gets the same pay as an EC-04 at Transport. No “extra pay” to leverage, at least not at level.

Now, in a private-sector environment, you might be able to argue for what’s called internal salary compression, where people get locked into categories not that far removed from the entry-level scales. The Foreign Service had this problem for years. They used to have only two levels, FS1 and FS2. And if you were halfway decent, you started being eligible for FS2 not too long after your first posting, and definitely by the end of your second posting — call it 2y before posting, 3y on posting, 2y again in HQ, and you’d be hitting the promotion opportunities at 7y in to FS2. Assuming a 3y posting on average again, you’d be definitely “there” in year 10. And get the only official promotion you might ever have. So huge swaths of people at FS1 level for up to 10 years and then a huge swath again at FS2, some finishing their careers at that level (20y). Others got promoted to EX or left. But the stagnation of pay rates had people maxing out their levels, not too far from or long after new recruits were starting. Eventually, they negotiated a new classification of FS1 to 4 and spread the salaries out more like other classifications (like EC-2, -3, -4, -5, -6, and -7, with -8 on its way out).

Interestingly? Internal salary compression is often a good way to argue with TBS about the need for raises, but that’s generally “solved” by having more levels and more bands. Some others, like CS, have a low entry level, frequently quick promotion up one level, and then stagnation, leading to rate comparisons with the private sector that are NOT favourable. A disaggregated classification with more levels and bands MIGHT help fix the competitiveness in those categories, but as far as I know, there’s been no major movement in that direction. It’s more complicated than I’m suggesting here, but in layman’s terms, it would be like taking CS-03 and CS-04 levels and breaking them into 3, 4, 5, and 6 levels, maybe even a -07 to make them similar in structure to AS/PM and EC. As it stands, there are people in the CS-03 band with a wide variety of responsibilities; some feel burned out and maxed out for their band, ready for a promotion and raise, and the private-sector has better pay rates, if less generous benefits and pensions perhaps, yet less compression of salaries.

A last area that works in the private sector “somewhat” is that a worker might be able to show direct contributions to profitability, OR that the company is making tons of money. That generally does NOT work in negotiations for the public sector, and it can frequently hurt. Rarely is the government bragging about record tax revenues, and they are always talking about the need for fiscal restraint to balance the budget and reduce the deficit. That is not the same negotiating environment at all. The only real exception to that is pointing to MPs and Senators voting themselves raises, which is a good talking point, yet does little for negotiations in general.

So what do you get out of this? Cost-of-living in general, with potentially more specific CoL elements in the rack or commute rates.

Tenure. In a private sector company, this often looks good — it looks like loyalty from the employee or retention by the employer.

It might point to managing change over time, commitment to the company with low absenteeism, maybe the terrible threesome of free overtime or free coverage or strong role performance where you hope that becoming indispensable leads to a raise or promotion. Or taking on crappy projects or files gets rewarded.

In return for tenure/commitment/retention, the PS gets a yearly bump above CoL, which is the band increase. The problem for the union is that they are NOT negotiating for an individual. An individual might be a rock star, going above and beyond, or they could be thinking like the famous quote from Office Space, that it only motivates people to “do just enough to not get fired, Bob”. Either way? Everybody gets the retention/band bump.

About the only “extra” option managers have is some form of pride and recognition award for the rock stars, often in the form of a Tim Horton’s gift card or a PDF certificate they have to print themselves. Or the infamous team pizza lunch, which is despised in both the public and private sectors. I occasionally think it is slightly less egregious in the public sector, as employees know it is NOT the employer paying (there are very strict limits on ANY hospitality, and doubly so if it is all internal employees). If it happens, it is because a manager or director ponied up to say thanks out of their own pocket. Because it’s all they’re allowed to do. They have no say in your individual pay rate. Still insulting, but we mean well, within our pitiful level of influence on compensation.

So, as I said, it’s hard for unions to point to a single “classification” or “level” within that classification that deserves a bigger bump than anyone else. You can be a rock star, you can be average, you can be a dud — the union’s negotiating the same wage rate for you.

And if you think it’s bad now, wait until you see what happens with performance in general.

Performance improvement, skills growth or role expansion

Let’s look at the EC-04 in the example. Depending on the work you’re doing and in which department, EC-04s may be considered your basic entry-level workhorses. They’re trained, they progressed from EC-02, they can run around on their own, they’re solid. They’re not totally independent yet, but they’re solid. A former director of mine used to say that an EC-04 could draft elements of an MC/TB sub; an EC-05 could draft sections; an EC-06 could draft multiple sections and lead analysis to support stakeholder engagement; and an EC-07 could manage the whole process of development, engagement, writing and submission.

I have a more generalized view of broad policy ECs, something along the lines that there are five main functions:

• Secondary research and analysis (aka not primary quantitative or qualitative reserach, but reviewing the findings of others);
• Stakeholder engagement, both internal and external;
• Writing in multiple forms (QP cards, briefing notes, Q&As, reports, MCs, TB subs, etc.);
• Briefing/managing upwards aka towards Directors/DGs/ADMs/DMs/Ministers (through decks, verbal presentations, or meetings); and,
• Managing teams and/or resources.

When rating generalists, I tend to see the levels as often corresponding to how well the EC can handle the various functions “well”. While all generalists have experience with almost all, have they “mastered” each skill? EC-02s and -03s tend to have one mastered (often the research and basic analysis but could be engagement instead). EC-04s often have two mastered, -05s three, -06s four and the -07 all of them. Frequently getting the last one — managing teams and resources with full HR and $$ responsibilities — only happens upon becoming an -07, which is often a limitation of the EC category in general. There are another 10 “lesser” skills that they might have varying combinations of, but that’s kind of my list, and things like “working well with others” or “comms in general” is more a horizontal issue across all of them.

It’s not this mechanical in reality, but it helps for the metaphor.

In my mind, if you are mostly getting better at just one skill, and you’ve mostly mastered it but you are gaining more experience, etc., that is exactly what your in-year “band increase” is designed to compensate. In some situations, the metaphor could be extended to suggest that in the first year, you’re mostly learning how things work and probably get about 70% of your base learning from the job. In year 2, if you stay, you’re figuring out how various pieces interact and can make minor to moderate improvements, with most of your learning about how to manage change and make the improvements, not so much the improvements themselves. In year 3, if you’re still in the role, you know how it all works and now you’re starting to figure out how to put your personal stamp on things, prioritizing some things and deprioritizing others, making better links. And so on.

Some of the metrics could be improvements in speed or # of files processed perhaps, cost savings, development of improved processes, completing a certificate in a program related to your role, mastering a specialized skill for your main roles, becoming a subject-matter expert or increasing institutional knowledge through tenure, taking on more complex or visible files of the same type, etc.

Put simply, you’re still learning and doing the job well in the meantime.

You might even be going above and beyond. Perhaps you’re training / mentoring people to your level, completing a big project, getting recognition for your work, cross-training with other functions or skills, increasing engagement with external stakeholders through travel or presentations, etc. And while that argues for better than average compensation in the private-sector, it would be caught by the same type of in-year performance / step increase as above. Yet since it isn’t individualized, and everyone gets the same, it really sucks being a high performer with potentially no reward other than what others get too.

Finally, we come to the elements that people want to use to argue for a big raise. Again, going back to my metaphor for ECs, to me this is more about mastering additional elements of the EC category, say two or three or four out of the five “skills”. Often, the evidence would be exceeding any performance metrics, taking on responsibilities of a higher role or employee, getting outstanding performance reviews, acquiring new certifications of skills, or the big kahuna, taking on management or supervisory duties. Equally, there is often the suggestion of getting a raise because you have been battle-tested through high-stress or demanding situations such as an emergency response, high-pressure deadlines, high-visibility or high-risk situations, etc.

Interestingly, some employees seem to think this doesn’t exist in the PS, given the lack of ability to reward individuals. But going “above and beyond” with high performance metrics of levels above your current level of expected performance? That’s the evidence that you’re ready for a promotion. It’s the PS, so it isn’t simply “here’s a promotion”; the manager has to have the cash, for one thing, to cover your increased salary (not just your starting band but all the way to the end of the bands i.e., if they promote an EC-02 to EC-04, they need not just the $74K to pay them in year 1, they have to have the budget to pay you $97K in year 4 and beyond) + a box to put you in at the higher level + approval from on high to do a promotion for anyone + a strong rationale / justification / rationale / evidence to justify that you “merit” the promotion against official merit criteria (cuz you’re funded by taxpayers, there is legislation that controls what “merit” means).

But if salaries were confusing before, with the diagonal movement, they don’t get any clearer with a promotion. If, for example, the EC-04 is promoted after a couple of years to EC-05, they move to the start of the EC-05 Step 1 bands. Using the earlier example, if the EC-04 spent three years at level and went through Step 1, Step 2 and Step 3, they would be at 91,973 (Step 4 of 2024 year). Let’s say they then get promoted to EC-05, they would jump to $98,299, or a 6.9% increase. The next year, they would go up a band and be at $103,324 (5.1% with inflation and step).

That promotion seems alright on the surface, with nice big numbers above inflation. However, when the EC-04 transitions to the EC-05 level, they would be starting work at an initial pay level that had lost purchasing power from three years prior due to not keeping up with inflation. In real terms, the other people already in the category started at a higher rate than the new ones just promoted.

Equally confusing is that the top of the EC-04 bands overlaps the bottom of the EC-05 bands, so often if you are at Step 5, a promotion would on paper make it look like a DECREASE in pay. As such, the promotion process comes with a built-in rule — every promotion must result in at least a 4% increase in pay. To accomplish that in this example, you would move not to step 1 of the next level, but to step 2, to ensure it is at least 4%. Some categories do not overlap like that, but most do at this point.

Now here’s the kicker. Mobility between ranks and levels shows that individuals are NOT restricted to just the base CoL, nor the CoL and the in-year raises for bands, but instead are actually getting even higher rates of raises. If a whack of, say, EC-04s are staying at EC-04 level only three years and then moving up, then it’s hard to argue they all need raises because of inflation, because they’re already getting tens of percents on TOP of inflation just by moving up the ranks.

Again, I know people want to argue that people deserve full CoL AND their tenure bump AND their greater-than-normal promotion bumps, but when the union goes to the negotiations and complains that individuals are suffering with just CoL increases? It only refers to those who are at the top of their bands and haven’t qualified for promotions (yet). Like me. I became an EC-07 way back in 2005, I reached the top of my band in about 5 years or so, and unless I move to the EX-01 level (that I don’t generally want) or find an open EC-08 (that is being filled rather than eliminated), I will only get the CoL increases each year. No promotion bump, no tenure bump. At least, not in pay. I do earn improvements in leave each year, at a glacial rate. But I’m also at a decent salary, I don’t need a raise. I’m well-compensated for what I do. When I act for my boss, I receive acting pay.

What does all of this have to do with wanting a raise?

The rack rate has room to examine Cost-of-Living increases, but none of it is very sexy and is really hard to build momentum.

For the commute rate, the union lost any space to potentially discuss transport or childcare issues, and the RTO/WFH premium that is already being paid forestalls just about any conversation on those issues (with an exception I’ll explore in my next post). We’re already getting it, and any suggestion that we should get it again looks like self-entitled double-dipping at the expense of taxpayers who have been hit much harder than public servants in the last five years (our paycheques were never in danger). There is little public support for the plight of federal public servants. Heck, even teachers and nurses working through the pandemic are seeing less residual support than expected. And the FMs who claimed CERB while working for the federal government? Yeah, that hurt goodwill for federal employees with ANYONE, either taxpayers or those involved in negotiation mandates.

Finally, to summarize the Labour component, cost-of-living is the primary focus. These are the often-quoted year-over-year totals, and often fall short of inflation in the same timeframe. That is because of two factors:

• Unions trade off some of the CoL increase to get improvements in other areas of compensation (leave, benefits, pensions);
• TBS knows that no one faced ONLY the first column, they received or had already received both the CoL increase and the in-line performance increase.

Because of the structure, there is little argument to wage increases based on “everyone” doing better or doing things “really well”.

It means, and has meant for some time, that most public sector unions aim for inflation plus some adjustments. If they matched inflation, they declared victory for members; if they didn’t, they declared victory on other features or that the government “screwed” them. It is telling how many times over the last forty years, particularly in PSAC, the union recommended against offers that the members subsequently voted on and said, “No, we’d like to take this offer.” CAPE has had the same issue; most other PS unions have as well. I find it fascinating, as an aside, that so many unions say, “We negotiated on your behalf based on what you told us that you wanted, this is the current offer, and we don’t think you should take it as it isn’t what we think you want / should want.” Then the members say, “No, we think it is what we want, and we’re voting yes”, either because it is good enough, what they want, or to avoid the alternative (like a strike, with likely little improvement). Yet no one seems to suggest that this is a failure of the union. Members are quick to point out things that WEREN’T achieved in negotiations, but do not seem to say, “Hey, WTF, why are you recommending against an offer that we want to take? Did you REALLY misread our position that badly?”. I know, I know, there’s also political gamesmanship to recommendations similar to the grid below.

	Union recommends against	Union recommends for
Membership rejects offer	Strong negotiating position to continue, some disgruntled who wanted to settle	Union appears weak and/or out of touch with their membership, possibly even bargaining in bad faith
Membership accepts offer	Everybody ignores it, moves on	Strong negotiating position for next time, union knows what membership wants, but some are disgruntled who wanted more

But I digress. I’ll save my views on union operations for a future post.

To summarize, I don’t see much room in any of these three rates for a wage increase. Not with the current rhetoric, not with the current environment, not with the current negotiation options.

Something has to change, and it is unlikely to come from TBS. I have some ideas on what we MIGHT try arguing for, but I doubt there is any appetite from the unions. They will achieve their CoL updates, minor tweaks in otherwise good contracts, and continue much as they have to date. And that is both despite and to spite some of the FMs who have made their negotiations harder.

I’ll share my ideas in the next post, for what they’re worth.