Higher public service labour costs driven mainly by new hires, inflation: PBO

OTTAWA – The parliamentary budget office says the cost of paying the federal public service rose by $7.8 billion between 2001-02 and 2011-2012, but almost all of the increase was due to new hires and inflation.

A new report says public service wage gains in the early part of the 10-year period were ahead of inflation, but those gains slipped away in later years.

It says recent federal job cuts and the 2009 Expenditure Restraint Act, which limited wage increases in new contracts, have successfully limited growth in federal labour costs.

However, it adds that some labour cost growth is inevitable if public servants are to maintain a constant standard of living.

Over the 10 years surveyed, the federal government spent $354 billion on compensation for its employees, exclusive of the RCMP and the military.

The report responds to a request from NDP MP Paul Dewar, who asked the budget office to determine the main forces driving increases in federal labour costs.