The provincial finance minister says a “modest retirement package” that eligible government employees can take advantage of will hopefully reduce the number of layoffs expected to coincide with the spring budget.
“Hopefully, if some senior people choose to retire, that will leave room for younger people to stay in the public service,” said Jerome Kennedy, who met with reporters outside the House of Assembly late Tuesday afternoon.
Earlier that afternoon, executive council clerk Robert Thompson sent an email to core public-service employees advising them of a voluntary retirement incentive package.
“The incentive is being used as a means of minimizing the impact of budgetary reductions on the public service,” he wrote.
Under the arrangement, employees who retire by April 30 can receive pay equal to 12 weeks of salary. They must have at least 25 years of civil service experience as of March 31, 2013, and also be retirement-eligible by that date.
The offer is also open to employees who meet those requirements as of March 31, 2014, and who also have paid leave, annual leave or overtime to bridge the one-year gap.
The offer has been extended to employees in core government departments and the Newfoundland and Labrador Housing Corp.
Kennedy said members of the Royal Newfoundland Constabulary are exempt from the offer.
According to Kennedy, approximately 400 employees are eligible. He said the province does not have a target figure in mind for how many it hopes will accept the offer.
“It’s another way to try to reduce the number of layoffs to achieve the reduction of positions in the core public service,” said Kennedy. “I have no idea at this point how many people will avail of the proposal, but I’m hoping that there will be a good uptake.”
Kennedy could not offer an estimate of how much money the province hopes to save through the initiative.
“Let’s say, for example, that there were 200 people who took advantage of the proposal. Well then, what we’d have to look at is how many of those positions would be absolutely critical to fill. … The rest that weren’t filled, the positions would be eliminated and thereby result in savings in future years.”
As for the cost associated with offering the equivalent of 12 weeks’ salary to 400 civil servants, Kennedy said it would be in the millions, “but not excessive millions.”
A hiring freeze has already been announced, and Kennedy said it will not last as long as some people have suggested.
“I’ve seen commentary that they expect the hiring freeze could last years — it’s nothing like that,” he said. “We’re looking at getting through the budget process and then seeing where we are at that point.”
Kennedy said there have been approximately 31 layoffs within government in the last few days. He said the province will have a clearer view of how many layoffs can be expected once the budget is ready.
Even if all 400 eligible workers were to accept the offer, there would still be layoffs, the finance minister said.
“We have targets that we’re trying to meet in terms of developing our plan to return to a balanced budget, and at this stage, I can’t even tell you when that will be,” said Kennedy.
“It’s a fairly aggressive plan, and to meet those figures, we then have to ensure that there’s a significant reduction this year, but we’ll know more as we move through this. But it will all be announced, and on budget day, what we’re hoping to do is to announce the impact on the public service in terms of layoffs and other budget reduction initiatives.”
Choosing to leave
NDP Leader Lorraine Michael said she is worried too many senior employees will choose to leave the public sector as a result of the government’s incentive package, and questions whether the government has fully analyzed the implications of making the offer.
“If you get a lot of people deciding to take retirement at the same time, you’re going to have, first of all, bulk payouts, and you’re going to have quite a number of people at the same time taking money from the pension plan. Have they costed all of that?”
Michael said if too many senior employees retire simultaneously, it will leave behind a knowledge gap and create a heavy workload for those who continue to work in government.
“I really do think it’s extremely serious to have large groups of people with the same length of (work) experience leaving any workplace all at the same time,” said the MHA for Signal Hill-Quidi Vidi. “It really does create a knowledge vacuum, and I think that’s very serious. Neither would I want all younger people laid off at the same time.”
Of the 400 eligible employees, Michael wonders if they are equally distributed among different departments or if some will be overburdened with retirements in the event employees accept the offer.
Liberal Leader Dwight Ball was surprised by Tuesday’s news of voluntary retirement incentive packages.
“It’s kind of forcing the hands of some of the people that are working in the civil service, and I think really what it does, it’s actually demoralizing in some ways.”
Within government offices, senior civil servants will feel pressured to retire, Ball said.
“If you don’t go, then the axe falls to me,” he said, speaking from the hypothetical perspective of a younger civil servant.
Ball accused the government of failing to adequately plan ahead to deal with its looming deficit, labelling its approach as “managing on the fly.”
He said eligible workers should have been given more time to make such an important decision.
Thompson’s email said those willing to accept the offer need to confirm their decision by March 20.
“Those kinds of announcements in advance would have given people an opportunity to actually make some sensible plans,” said Ball. “This does not. You’ve got to make this decision in merely a few weeks.”
While understanding the government’s intent to use this option to reduce layoffs, Ball said the amount of time it is giving employees to decide one way or another is disrespectful.