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The Progressive Economics Forum

Federal Job Cuts…the Real Numbers

Andrew Jackson has started off this discussion with his post today looking at the job impacts of federal cuts.  I wanted to add my own two sense and some calculations that I’ve whipped up.

Thankfully the federal budget has started to fill in some of the details of its latest round of cuts.  In particular, it now estimates 19,200 positions lost due to its latest round of cuts (Federal Budget 2012, pg 221).  Although it is nice to have an initial estimate, this hardly show the full picture as it excludes the other two rounds of cuts that overlap on the 2012 version.

Table 1: All Cuts ($mil)

2011-12 2012-13 2013-14 2014-15
2007 Strategic Reviews

     395

   403

   403

   403

2008 Strategic Reviews

     586

   598

   604

   604

2009 Strategic Reviews

     248

   287

   288

   288

2010 Strategic Reviews

     194

   271

   569

   525

Total–Strategic Reviews

  1,423

1,559

1,864

1,820

2010 Personnel Budget Freeze

           1,800

           1,800

           2,000

2012 Cuts

1,472

3,061

5,142

Total–all cuts

1,423

4,831

6,725

8,962

 

The same is true for the number of jobs that will be lost.  While the government has been repeating that only 19,200 positions will be lost, what it is not saying is that that figure is only for this round of cuts and it is only the core public service impact.  So for instance, any jobs lost resulting from the 10% cut to CBC will not be included in that 19,200 figure, as the CBC is not the core public service.  In addition, any job cuts that resulted from previous budgets will not be included

So first we need to get clear on simply the core public service impact.  The 19,200 is the largest of the 3 rounds of job cuts that will hit between 2012-13 and 2014-15 but it certainly isn’t the only one.  The two other rounds will likely push the figure from 19,200 to over 35,000 positions lost.

Table 2: Job Impacts of the Three Waves of Cuts

Wave of Cuts Public Service Positions lost between 2012-13 and 2014-15 Source
2007-2010 Strategic Reviews 6,300 2011-12 Reports on Plans and Priorities
2010 Personnel Budget Freeze 9,700 Author’s estimates
2012 Budget Cuts 19,200 Budget 2012 pg 221
Total 35,200

 

So how are the job impacts of the other two waves calculated?  The 2007-2010 Strategic Review impacts were already reported in the 2011-12 Reports on Plans and Priorities.  By simply adding up the Full Time Equivalent (FTE) changes for all departments between 2011-12 and 2012-13 the workforce was projected to fall by 6,300 positions.  This was prior to the 2010 budget freeze or the 2012 budget cuts.

In the 2010 Federal Budget, each department was instructed to freeze its personnel budget.  What that meant is that any inflation pressures would have to be dealt with by cutting positions or by cutting spending in other areas.  To figure out the likely impact on employment, I assumed that of that $2.0 billion cut, 45% would come from the salaries and benefits line, the other 55% would come from the rest of the $80 billion operations envelop.  These proportions match the overall spending, so 45% of the $80 billion operations spending is spent on salaries and benefits.  The number of positions by department was simply the cut value in that department divided by the average cost per employee including salary and all benefits.  This resulted in an aggregate cut of 9,700 positions across the public service to make up for inflation.

When it comes to the 2012 budget cuts, the government estimated that the impact of that wave is going to be 19,200.  I’ll take them at their word that they’ve done the analysis, although it is likely based on a similar method as my own although with better internal data.  Interestingly using the methodology for the 2010 freeze above, but inputting $4,858 for the Canadian impact of the 2012 cuts {$5,236 (total cuts) -$377.6 (International Assistance cut)=$4,858} I get job cuts of 22,000 positions.  Not exactly the same as the 19,200 figure from the government but fairly close.  One of two things may be happening here is that the federal government is hitting better paid positions harder and therefore slightly fewer positions need to be eliminated.  The other is that less than 45% of the cuts may be coming from the Salaries and Benefits line.  If that percentage were reduced to 42% of the cuts then we get pretty close the 19,200 figure of the government.

Now remember that that 19,200 figure is only one wave of cuts but even the 35,200 estimate in Table 2 misses the job impact of over half of the cuts, those that fall on crown corporations or the private sector.  For instance even that 19,200 figure does not include the 10% cut to the CBC which is technically in the same round.  The CBC, as a crown corporation, is not in the core public service.  Table 3 estimates the impact on the private sector vs the public sector.  As is clear, despite the job losses in the public sector, even more money will be pulled out of private sector transactions by 2014-15.

The 2007-2010 Strategic Review are excluded from Table 3 as much of these cuts that impacted the private sector were complete before 2012-13 making the remainder difficult to estimate.

Table 3: Private & Public Sector Impact of cuts ($mil)

Wave of Cuts Public Sector Cuts Private Sector/Crown Corporation Cuts Total Cut by 2014-15
2010 Personnel Budget Freeze $810 $990 $1,800
2012 Budget Cuts $2,094 $3,142 $5,236
Total $2,904 $4,132 $7,036

 

Translating the jobs impact to the private sector is more difficult, and the job losses are much less visible.  However, there will surely be an impact.  Informetrica Ltd. does calculate economic multipliers for these types of cuts.  They estimate that for every $1 million in cuts to government expenditures on services, 9 positions are lost.  If we apply this ratio to the $4.1 billion in public sector cuts, we arrive at another 36,900 positions that will be lost in the private sector and crown corporations.

If we put all the job losses together, we arrive at Table 4.  The full picture is very different than what the federal government is reporting.  The federal government have been reporting only 19,200 positions in the public service.  However, this is for only one wave of cuts.  Will all waves included, the figure is over 35,000 positions between now and 2014-15.  However, there is likely an even bigger impact on the private sector and crown corporations which will see almost 37,000 positions lost.  In total, these moves over the past several positions could lead to the elimination of over 70,000 full time equivalent positions.

Table 4: Job Impacts by 2014-15

Wave of Cuts Private Sector Public Sector Total
2007-2010 Strategic Review Unknown 6,300 6,300
2010 Personnel Budget Freeze 8,900 9,700 18,600
2012 Budget Cuts 27,900 19,200 47,100
Total 36,800 35,200 72,000

 

So what does this mean in terms of regional impacts?  Unfortunately, the private sector impacts are not something that I can model regionally.  However, the federal government impacts can be modelled regionally.  Table 5 shows the regional impacts of all of the cuts between now and 2014-15.

Table 5: Job Impacts by region by 2014-15

Total Positions Cut Ottawa-Gatineau BC Prairies Ontario Quebec Atlantic
                 35,608       17,493       3,001       4,103       3,758       3,125       3,526

 

For a breakdown by department by region, see the more extensive spreadsheet here.  Note that despite all of the cuts over various years, Corrections Canada is the only department that manages to add over 1000 positions over this period.

 

Enjoy and share:

Comments

Comment from Paul Tulloch
Time: April 4, 2012, 1:45 pm

Great work David.

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