Municipal governments have a problem, albeit one they don’t want to talk about. Over the past decade they have routinely increased operating spending beyond population and inflation growth. To fuel the overspending councils have overtaxed. Property taxes, in particular, have put a heavy burden on small business owners who already pay far more in taxes than the services they consume.
With this context in mind, responsible municipal councils should be looking at reasonable measures to control spending. As many municipal agreements in the province are being renegotiated right now, here’s one that should be looked at: reform municipal sick day policies.
In a new report, The Cost of Banking Sick Days in the Public Sector, Queenie Wong, an Economist with the Canadian Federation of Independent Business, looks at government sick day policies at the federal, provincial and municipal levels and finds some costly practices that are wildly out of step with common sense.
For example, if one assumes that a “sick day” should be used for actual sickness, then why should sick days be bankable? Many private sector companies don’t allow banking of vacation days let alone sick days. Only three per cent of private sector plans allow employees to bank sick days compared to 28 per cent of government plans. Even more puzzling than banking is the policy of allowing for cash payouts of unused sick days when someone leaves the public service.
In some cases, governments may be using sick day policies to work as insurance for employees against a short term disability. A far better approach would be to implement a short-term disability plan. Employees should be able to take time off when they are sick, but current government policies are creating the incentive to confuse sick days with a vacation entitlement.
Of the 16 municipalities across Canada the report looked at, six do not allow for banking of sick days including, Calgary, Edmonton, and Toronto, which changed its policy in 2008. Both Vancouver and Victoria, the two B.C. cities reviewed, still allow banking. The B.C. government, along with the governments of Alberta, Ontario, and Nova Scotia do not allow banking sick days while other provincial governments and the federal government do.
The City of Victoria allows for the banking of up to 130 sick days. Only employees in grandfathered plans can take a cash payout for unused sick days when they leave government. Many other municipalities have reformed these policies and no longer allow for cash payouts except for grandfathered plans.
From a taxpayer perspective, Vancouver is one of the worst municipalities reviewed in the report. It allows for 261 days of banked sick days (employees of the City are entitled to 20 sick days a year). In addition, the City gives employees something it calls “gratuity days.” Each year employees are credited with three gratuity days, which can be banked to a maximum of 120. These days can be taken as time or as a cash payout.
A Treasury Board report and a Macdonald Laurier Institute report show that public sector employees take more sick days than private sector employees. Is it any wonder this happens when incentives such as banking them and cash payouts encourage employees to see sick time as extra vacation?
Vancouver, Victoria and other B.C. municipalities with these policies should follow Toronto’s lead and eliminate banked sick day policies and replace them with short-term disability plans for all new employees. It’s a direction that other governments have been moving towards, albeit not nearly fast enough for those that foot the bill.
Laura Jones is Executive Vice President of the Canadian Federation of Independent Business. She can be reached at email@example.com.