The Functionary
 A newsletter about the federal public service. 
Brought to you by 
Kathryn May
Hi everyone. It’s a busy week for things that can affect the public service. Finance Minister Chrystia Freeland tabled her Fall Economic Statement, the Emergencies Act inquiry continues, and Ontario has invoked the notwithstanding clause. For anyone interested in digital government, I hope you caught the very good FWD50 conference, which just wrapped up a packed three-day agenda in Ottawa on digital government and using technology to “make society better for all.” Put it on your calendar for next year. In the meantime, a couple of bread-and-butter issues – wages and return to work – are bubbling up and are worth watching for their impact on the public service workplace.  
Here goes.
* IT contracting: What else could $4.6 million buy?
* Wages: After quiet negotiations, a pivotal first settlement. 
* A small union, out in front: The AFCO gets ahead of the mighty PSAC. 
* Business lobby says: Time for public servants to get back to the office.
* Real estate: A list of Ottawa properties is coming soon from PSPC. 
Value for money? This week I wrote about the $4.6 billion spent on IT contracting for the government. Contracting data doesn’t show what value or outcomes Canadians got for that spending. But what else could $4.6 billion buy? Carleton University’s Amanda Clarke has a few cost comparisons. Clarke is leading a research team digging into thousands of federal contracts awarded between 2017 and 2022. Here’s her tally of what $4.6 billion could buy. (A Flora Footbridge, by the way, is an Ottawa bike/pedestrian bridge.) 
Source: Amanda Clarke
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We’re hiring, but …. The government has to make it easier to hire much-needed IT talent. Catherine Luelo, the government’s chief information officer, talked about the problem this week at the FWD50 conference. Luelo urged public servants at the conference to go out and recruit five people and “if one or two of them stick, I will be super happy.” The federal government has about 7,000 openings for technology workers at the moment. Big number.
The drama begins. Two big issues dominate at the negotiating table in the ongoing round of collective bargaining: working from home and wage increases that keep up with inflation. Both issues landed in the spotlight this week with lots of drama and machinations behind the scenes on what’s next.

The first domino falls. The Association of Canadian Financial Officers (ACFO) is the first of the federal unions to reach a wage settlement with Treasury Board. It was quietly negotiated under the radar. Treasury Board sent out a press release late on a Friday that the contract had been ratified – but skipped over the most important question: how big a raise are these 6,500 financial workers getting?
The deal. A four-year contract with an 11-per-cent raise plus a one-time allowance of two per cent for all employees upon signing. Here’s how it rolls out:
  • 3.5 per cent increase, effective Nov. 7, 2022
  • 3 per cent increase, Nov. 7, 2023  
  • 2 per cent increase, Nov. 7, 2024
  • 2 per cent increase, Nov. 7, 2025.
ACFO also negotiated a one-time merger allowance of 0.5 per cent in 2023 as financial workers such as financial officers and auditors move to a new occupation group called the comptrollership group.
The pattern is set. This is a big deal in the dance of contract negotiations between Treasury Board and the 17 unions because the first union to settle typically sets the pattern for all the rest. Once the pattern is set, Treasury Board sticks to it and doesn’t move. The pattern even extends to 8,000 federal executives whose raises – much to their chagrin – have been in lockstep with unionized employees.
There are currently negotiations underway for 43 contracts and that will hit by 50 by the end of the year.

Little guy gets out ahead. It’s not very often that a small union gets out in front of the giant Public Service Alliance of Canada (PSAC). (Some argue it may even be too small to set the pattern). PSAC was the first at the bargaining table in this round – partly to make sure they lead the way in setting the all-important pattern. PSAC, the most militant of unions, has historically set the precedent with its settlements.

This time, PSAC went to the table demanding raises of 13.5 per cent over three years to keep up with soaring cost of living.  (That’s 4.5 per cent a year.) Treasury Board rebuffed that and offered 8.25 per cent over four years. The government offered ACFO a better deal, but is not likely to keep up with inflation over the life of the contract – especially if Bank of Canada’s projections are overly optimistic. Will it be a game changer?

Now what? Some expect smaller unions to follow ACFO’s example and settle for the same increase since they don’t have the people and clout to effectively strike.  A number of deals will probably be done by Christmas.
PSAC will likely be the last holdout. PSAC and Treasury Board are at loggerheads. They hit an impasse in the spring, which put the union and 165,000 public servants on a strike path. The ACFO deal comes as Treasury Board and PSAC are getting ready to square off at the Public Interest Commission with hearings beginning this month to break the impasse. The government is likely to offer the same deal it gave ACFO, but that and whether PSAC takes it remains to be seen.
Did ACFO hedge its bets? A big question many are asking is whether ACFO negotiated a “me-too clause” so that if PSAC does reach a better deal, it will get the same increase. Unions with “me too clauses” were able to get the bigger damage payments PSAC negotiated to compensate public servants for the disastrous Phoenix pay system rollout. No comment from ACFO. 
Gathering clouds. The landscape has changed since bargaining started months ago. Unions were feeling emboldened with inflation, low unemployment and a continuing talent shortage. The Liberal pact with the NDP signalled a labour-friendly government. Now there’s a looming recession, a push for government to rein in spending and unload some of its pandemic hiring. Finance Minister Chrystia Freeland is telling ministers to cut spending if they want money for new programs in the upcoming budget.
And then there’s the possibility of a not-so-labour-friendly Pierre Poilievre government sitting across the negotiating table in 2025. Look at Ontario, where Premier Ford is using the notwithstanding clause to impose a contract on education workers and ban their right to strike.   
What do you think of the ACFO deal? Let us know
And now… a new pressure
Canada’s business lobby, led by the Canadian Chamber of Commerce, wants the federal government to back bring public servants back to the office as quickly as possible.
Source: Reddit.
A letter to Treasury Board President Mona Fortier was signed by 32 business associations, including heavyweights like the Business Council of Canada and Retail Council of Canada.
It argues the government is a major employer and anchor for towns and cities across Canada and, in a post-pandemic economy, it should “lead the way to a return to normal.” It singles out Ottawa-Gatineau, saying the rate of return to the office is the lowest of any capital in Canada. It argues good public policy needs in-person collaboration and consultation. A return to work will improve “efficient and productive” engagement with Canadians and fix the “deficiencies” in public services – like delays in passports, immigration and airports that Canadians face.
The government could order public servants back to the office, but many question whether its buildings have the bandwidth and wifi to support a full return of the workforce. After nearly three years at home, public servants moved to video technology, with tools like MS teams and Zoom now the norm.
In a statement from her office, Fortier didn’t back down from her commitment to hybrid. Government is moving from “remote-by-necessity to hybrid-by-design.” She said shifting the country’s largest workforce will take time, and Treasury Board “is providing guidance to promote a coherent approach across departments.”

The "audacity" ... On social media, public servants’ response to the business lobby was swift, many indignant that where and how they work should be linked to supporting local business. It was reminiscent of the Subwaygate backlash.

On the bargaining front, the ACFO deal made no gains on getting provisions on remote work embedded in the contract. Treasury Board and the union agreed to “work together” on hybrid.

Remote work is a tough one for unions to manage. Employees have big expectations, but unions have few levers to negotiate because the organization of work is a management right.
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Coming soon: Ottawa properties on the block
Meanwhile, the government is charging ahead to reduce its massive real estate portfolio. The rollout of GC Workplace continues, which is expected to trim 30 per cent of its office space over 25 years. This is redesigning offices around activities. No assigned desks. Instead: quiet rooms, big and small meeting rooms, nooks, lounges – different spaces that suit how people work or what work they are doing. 

Public Service and Procurement Canada officials recently told the Ottawa real estate industry it will soon release a list of properties for disposal by sale or redevelopment. That could reduce the government’ s Crown-owned office space in Ottawa by 20 per cent.
Kathryn May writes about the federal public service for Policy Options magazine. She is the Accenture Fellow on the Future of the Public Service, providing coverage and analysis of the complex issues facing Canada’s federal public service. She has spent 25 years writing about the public service – the country’s largest workforce – and has also covered parliamentary affairs and politics for the Ottawa Citizen, Postmedia Network Inc. and iPolitics. The winner of a National Newspaper Award, she has also researched and written about public service issues for the federal government and research institutes. Twitter @kathryn_may. 
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