Layoffs come at a price

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You have to spend money to make money. And apparently, you have to spend money to save money, too.

And that’s how the provincial government finds itself in the curious balancing act it’s now facing. In order to save money over the next few years, the provincial government announced layoffs that they pegged at 935 jobs. Since then, other layoffs outside the core civil service have swelled the number into somewhere over 1,000, and some have set the number at almost double that.

The government has not been clear about where the jobs have disappeared, and even documents like the government’s salary details aren’t offering much information beyond the bald numbers. In fact, the government printed the following disclaimer about its salary costs: “The salary details report reflects those positions that were eliminated as of March 31st. There are additional positions that have been eliminated, however those individuals will exit government post-March. These position eliminations will be reflected in next year’s salary details document.”

One thing that is detailed in this year’s financial documents, though, is the expected cost of laying off employees — remember, the government maintains  it will be back in the black in the next two years.

And what does the government expect to pay out as a result of its 5.4 per cent reduction of the size of the core civil service?

Well, for that you have to look at Section 2.1.02 of the provincial Estimates, “Ex-Gratia and Other Payments — Non-Statutory.”

That subhead has grown dramatically, rising from $9.9 million in last year’s estimates to

$69.7 million this year. The single-year 700 per cent growth in that category is the result of severance and other payments to employees who are being laid off.

You can argue that those payments are the direct result of the astounding growth in the size of provincial civil service over the last decade. When the money was flowing, the province was hiring. As oil prices fell (and they are still falling), so did our ability to support that number of civil servants, but with each passing year we have been expanding our financial commitment to those hired.

If we’re lucky, the provincial government is correct about its eventual return to prosperity. If we do get back in the black reasonably, perhaps we should stop and think about what constitutes a reasonable size for government in this province, instead of once again performing like the grasshopper in “Aesop’s Fables” and fiddling our good fortune away.

Even cutting jobs can be wildly expensive, as this year’s estimates clearly show. The only real way to avoid that is to not go on hiring binges in the first place. And that’s something that, even after a  decade, this administration has not shown it is capable of doing.

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Recent comments

  • Great commentary, WONDERING.
    April 26, 2013 - 13:47

    TO: WONDERING Dear Sir or Madam, you have conveyed in your commentary a wonderful message to all the Business Men and Business Women of the World. If only all business owners use the ethics and honesty you spoke of to run their Business, What a Wonderful World it would be. It would be a far more Equitable World and much more Securer and Safer. Every worker in the world needs a fair salary and good working conditions to run a happy family unit, but sadly many workers in this World today don't have have the luxury of having either. Look at the corruption in the Garment Industry in Bangladesh spurred on by the unethical business people of the Western World, it is sick and covetous, indeed to see these workers having to work and live under such unsafe conditions.! The Politicians and Corporation Heads need to get their heads together and stop the madness they have created in the the name of Capitalism. The Capitalistic Society that we are living under today has gone horribly wrong and it needs to be brought back to its original ideals.l

  • Wondering
    April 25, 2013 - 14:52

    Mr Business man , You say it is not who I am as a person , but as a businessman. Isn't this a silly statement. You are a person with a character. As a person, a human person, you have characteristics that define you as a father , as a lawyer, as a businessman, and as a husband , as a neighbour, as a friend, etc, etc. You have personal ethics that define your character. Your ethics in a whole range of actions define who you are as a person, and who you are as a business man is just one part of that. But it is a part of the whole of you. If you sell weapons of war or terror for a profit to people who will be killed that you do not know, is it ok because this is you, the business man, not you the person? I too am a businessman. There are some businesses I wouldn't pursue regardless of he profit, because it conflicts with my personal ethics. I and the business man in me are part of the whole. You are also a lawyer. many lawyers think as you do, unfortunately. It is a character flaw, I suggest. A lack of ethics . Not to suggest anyone is perfect. But it shows why your views conflict with most people. And it is not easy to turn aside from easy profit, even if immoral. You seem to suggest that there is no morals, no ethics in business, just the Almighty Dollar? You seem uncertain of your view, as if looking for advise why it may be wrong? Do you get the meaning of the Good Samaratin parable? Or you understand it but don't believe it?

  • crista
    April 25, 2013 - 14:04

    To a businessman:not only just a businessman reading your comments it seems, you like making money,you like being in control of what you do,you said you are in to business you are in to law it seems what you say you worry about you and family and friends,you do not regret to do things you believe in, as you said, not only door knocking for the government and looking after your own interest that you seem to have no problem with???? not being sarcastic replying to your opinion and comments.IS it what you are saying you like making money,just wondering are you looking for work,because if you are and you are as good as you say you are???? and you do not have to slave???? that is not what is being said,why don't you make your self public for business not only just business and you never know,you could get what you like doing and what you do not like doing???? and not trying to solicit.As a comment has said and suggested, BUSSINESSMAN COULD HAVE A POINT????

  • Doug
    April 25, 2013 - 11:14

    Smuggly Mctorry....what goes around comes around....I hope you get your layoff soon! Cheers.

  • Good Start
    April 24, 2013 - 16:03

    It's great to hear that we finally have some people rightsizing the government. There's only 500k people here. If the province can lay off 1000 people with no real consequence, then they shoudln't have been employed there in the first place. Next up, we need to revisit Smallwood's resettlement plan. Close down services for the most costly remote communities. Government can spend money now to save a ton later. There's no need to be paying for roads, ferries, services for extremely remote communities.

    • coco
      April 27, 2013 - 09:01

      The government hasn't said why all these people were hired in the first place and surely you are aware that it cost us approximately $75 Million to sack them. The next time you need a government service, don't complain about it being cut or reduced. With regard to turning the coves into summer places your post implies that people don't need services in major centers. Really? Then why are the taxes so much higher in the major centers?

  • BUSINESS MAN, you sound like the most awful employer that ever existed.
    April 24, 2013 - 14:38

    Business Man asked the question " How would one impose poverty on anyone anyway"? Here is how you would impose poverty on someone, you said it in your own words invest in call centers, fast food restaurant and packaging companies....simply because the workers have no control and can be replaced with minimal effort. The choices for the workers are minimum wage for life, or the door". I will let the readers of this site read your commentary of April 24, 2013 at 12:38:07 and let them decide for themselves what a pitiful employer you must be.

    • a business man
      April 24, 2013 - 15:05

      Thank you for quoting my comment accurately. If you read it carefully, you will see that I said that "the CHOICES for the workers are minimum wage for life, or the door." How can you can I m imposing anything on anyone when it is their CHOICE to work under those conditions? They are not forced to apply or accept the job, and they are free to complain if my conditions are in violation of any legal laws or regulations. Do you know what impose means? You are not imposing poverty who has chosen to work a minimum wage job. I would actually argue that the individual has imposed poverty on themselves by only acquiring the skills that are worth minimum wage in the market. They should have obtained an education and/or skills that would command a wage that provides a decent standard of living for themselves and their family. They made the decision not to do so, and that is why their choices are minimum wage for life or the door. I wanted more choices in life, so I did something about it. I went to law school and business school. Also, I am not a pitiful employer. In fact, my fast food and call center and packaging investments are all just investments - I don't work there, I don't go there, I don't know the people or what they actually do. I probably never will, because I have no reason to. I know very little to tell you the truth. I just invested in the companies as a result of word of mouth opportunities, like friends of friends who want to put some money together and make a larger investment (like a fast food chain), and the reason I decided to invest is mainly because the business model was based on the logic that the work done is so simple that a "minimum wage or the door" approach is a viable and extremely profitable strategy because if they do no accept minimum wage, someone else will CHOOSE to accept the job. This will not work in all sectors, but it will work in some. Fast food, call centers, and packaging companies are just a few.

    • Business Man Does Have A Point
      April 25, 2013 - 11:45

      When you read what "Business Man" has wrote and you remove all his garbage you can see he does infact have a valid point. Everyone in Newfoundland is demanding higher wages and better living, but at the same time a company that posts a job for between $10-$15 an hour can expect hundreds and sometimes a couple thousand resumes for a "minimum wage position". So perhaps individuals should start sending the message to employers that your wages are low by not applying for positions. Also for those with only High School Education perhaps the onus should be on that individual to better themselves without expecting assistance from the government.

  • It is frightening to read commentaries from BUSINESS MAN and SMUGGLY MCTORRY.
    April 24, 2013 - 10:03

    TO: A BUSINESS MAN and SMUGGLY MCTORRY, are you one and the same? I hope you are since I wouldn't want two of your type hanging around this site. You both exhibit the same selfish, greedy attitude that has been prevalent among Politicians and the Business Owners for far too long. In Your Opinion it seems you think, the natural resources of this province belong to You, the Politicians, and the Corporate World. In My Opinion you would let everyone else starve to death from the poverty you would impose upon them, like the genocidists, who have exterminated Millions of people throughout the History of the World who espoused that selfish philosophy. It is time for major Reform in the Political and Corporate Sectors so as to snuff out such greedy thoughts and behavior that have caused the Capitalist System to go so horribly wrong.

    • a business man
      April 24, 2013 - 11:08

      Honestly, I conduct my business affairs in a selfish manner with no regard to anything except the bottom line. It is not who I am as a person, but it is who I am as a business man. Regarding natural resources, I do not think they belong to me, I KNOW they belong to the people. That is why I DO NOT invest in resources...because it gives workers too much control. I invest in call centers, fast food restaurant and packaging companies....simply because the workers have no control and can be replaced with minimal effort. The choices for the workers are minimum wage for life, or the door. I could care less which they choose. I would never impose poverty or starvation on anyone, but I would certainly not use the wealth that I have earned to save people who are not my family or friends. How would one impose poverty on anyone anyway? For example, I went to law school and business school? How could someone IMPOSE poverty on me? I don't get it......ANYWAY, I would not steal from people, but I do not have to help anyone. I would not go into one's house and steal their food, possessions and land, but I would (and have) bought a factory in a community with the intent of closing the factory to drive down the prices of real estate in the community and then buying up the property. I have bought factories near small communities with the end of causing people to go bankrupt and cashing in on a fire sale. I conduct myself with the utmost respect for the laws and regulations that govern our economy. I do nothing to impose anything on anyone. I just use my knowledge of the law and of business to conduct profitable transactions that may or may not cause hardship to people that I do not know. Since it is people I do not know, I can't be bothered to determine if my transactions cause hardship or not. I simply does not matter to me either way because I don't know the people, and I know my actions are legal.

    • Politically incorrect
      April 24, 2013 - 12:36

      I have to disagree with you Business man. Natural resources belong to whatever company buys them from whatever government lets them cash in on them. If people are stupid enough to elect governments that give away their natural resources for a few bucks to private companies, so much the better. If people are smart and elect governments that actually believe the absurd notion that natural resources should benefit the people, they have to be "democratized."

    • a business man
      April 24, 2013 - 15:14

      Thanks for your post Politically Incorrect. While you may be right in that natural resources belong to whatever company buys them from whatever government lets them cash in on them, I still find resources to be risky because the worker and unions have rights, and the government is usually involved in some way. Don't get me wrong, resources is a very lucrative sector. But I am just an investor. I have a day job, and I just want a quick way to make extra money. While I am okay with losing my investment money because I have a good job, I wouldn't invest in resources because the workers and unions have too much power. For me, it is just easier to deal with sectors and industries in which the jobs can outsourced or off-shored very easily if wages increase here or if there are cheaper wages elsewhere. Call centers are a good example of this, so is shipping and packaging. Fast food is not good, because location is key, but I got into that because the big fast food chains are pretty much free money for investors. There restaurants serve millions of meals annually, and I have to do nothing. It is much easier than dealing with resources.

  • saelcove
    April 24, 2013 - 09:50

    every time some one gets laid of we bail them out with our taxes, EI people wake up,Business man, you also help thanks

    • a business man
      April 24, 2013 - 15:26

      Fair enough, but I would like to help less and keep more money for myself. Do we really have to help everyone? Can we not leave people to fend for themselves after a certain point? In all seriousness, it is not fair for those of us who have made a nice living for ourselves and our families to constantly have to bail out those who contribute very little to society? At some point, is someone's value and contribution to society SO low that they are a burden on the rest of us? The tax base is limited, and at some point, enough is enough.

  • a business man
    April 24, 2013 - 09:22

    Honestly, the price of saving money over the next few years is layoffs. I support the layoff because I don't want to pay more in taxes to keep these workers employer. They are not my family, so I do want to spend MY money to provide for THEIR family. I would rather keep my money in my pocket, or spend it on MY family. I did not go to law school and business school to work 9 hour days to pay for someone else's family. Frankly, I would like to see more layoffs. Yes layoffs have a price, but it is better that paying more money to provide for the family of other people.

    • Brad
      April 24, 2013 - 10:40

      But in your numerous comments, you have no problem using foreign workers so you don't have to pay tax to the govt. So why don't we ship you to China for medical care and see how that works out for you then. PS. Where do you practice? in NL? Im really curious...haha

  • Petertwo
    April 24, 2013 - 09:09

    I suspect lay offs could have been avoided if the government members and everyone in the civil service. health care, education, et cetera took a five percent cut in salaries and wages., maybe even less than five percent. But I seriously doubt that that would ever happen, though it would put them in tune with the private sector who live with insecurity ever day. When times are good everyone should benefit, and when times are not so good everyone should help to shoulder the burden, not just dump it all on those who can afford it the least, that's soul destroying.

    • W Bagg
      April 24, 2013 - 13:54

      Those layoffs could have been avoided if taxes were raised by 5% The economy is white hot, 5% wouldn't even be missed from your income.

    • a business man
      April 25, 2013 - 11:39

      Honestly, I would rather have the layoffs instead of paying 5% more in taxes. You are right though, the economy is hot. Personally, I would not miss 5% of my income, and I likely would not even miss 25% of my income. That said, I support the layoffs because I don't want to pay for other people's families. I would rather see them lose their home so that I can buy it cheap. I have nothing against these people, but I do not know them and I have no obligation to them. Their success or failure in life is irrelevant to me. I do not hate them, and I do wish them well, but they are just strangers and thus irrelevant. I would rather keep that money for my family, and spend it when we go to Asia this summer. I would rather see these workers laid off if it means I can keep my money for me. If you want them to have a job, them you hire them and you pay them. I am happy they are gone and I hope there are more layoffs to come.

  • Smuggly McTorry
    April 24, 2013 - 08:03

    Layoffs? I don't see a problem. I have a job, my taxes are low, I don't use social services. Austerity is working for me. As for those laid off, here's some advice: pull yourself up by your bootstraps, get a job and don't expect me to bail you out with my taxes. Get with the times. You people sitting around all day whining abotu your situation make me sick.

  • Calvin
    April 24, 2013 - 07:46

    Remember when the Telegram editorial articles used to be fun to read? They used to deal with a variety of issues, whether they be social, political, religeous, etc. Now, it is a daily reminder that everyone is sick of the current PC party that is running our great province. The once proud editorial page has become a breeding ground for political fodder. Kathy and her crew have had their 15 minutes of fame, we get it, time to move on now boys. I mean, if we are just going to use this forum to bash government, let's recall a time where the Liberals were mired in a multi-million dollar spending scandal, or when the NDP..... well the NDP hasn't really had a chance to do anything wrong yet, haha.