The shrinking shadow: Federal contractors expected casualties of budget
By Courtney Symons, The Ottawa Business Journal
April 16, 2012
The federal government says it’s laying off 4,800 civil servants in the National Capital Region, but some believe the actual number of local job losses will be more than double that figure as staffing contracts with the area’s “shadow public service” go unrenewed.
“The easiest people to get rid of are contract and temporary employees,” says Eagle Professional Resources Inc. CEO Kevin Dee. Unions don’t need to get involved and severance packages don’t need to be paid.
“I think it’s absolutely the wrong thing to do, but it’s easy,” Mr. Dee says.
Dan Moorcroft, CEO of QMR Consulting and Professional Staffing, says there is no question the number of government contracts going unrenewed will surpass the cuts to full-time employees. He estimates that between 400 to 600 contracts will be lost immediately, with perhaps more over time.
“All of our clients are anxious to know exactly what is going to happen,” he says. “They want to know if they have a job.”
However, Ottawa Centre NDP MP Paul Dewar says contract workers actually fared well in the aftermath of the Liberal government’s downsizing in the 1990s, and predicts the same will be true this time around after the sector experiences an initial round of cuts.
“At some point, the government is going to turn around and say, ‘Well, we need this work to be done.’”
WHY USE CONTRACT WORKERS?
Many people don’t consider contract workers to be real employees, Mr. Dee says, but in a world where individuals increasingly want control over their lives, contract work becomes an attractive option.
“People choose to be contractors. They’re not second-class citizens,” he says.
The economy benefits from the flexibility of this workforce – there is no training required, and after completing a specific job, contractors are gone without a fuss, he explains.
But while these workers are the easiest to get rid of, they’re also the easiest to bring back, says Keith Parker, managing director of procurement consultancy firm The Proposal Centre.
“History has shown that when these kinds of (cuts occur), gaps emerge,” he says. “The quickest way to fill those gaps will be hiring contract workers and consultants.”
Jeff Lynt, chair of the Canadian Business Information Technology Network, or CABiNET, says he agrees that over the long term, the shadow public service will emerge on top despite the many projects that will be put on the back burner.
“These projects have to be completed at some point,” he says. “If things are important, they’re still going to fund them.”
One positive to come out of the budget, Mr. Lynt notes, is that commonly held beliefs about government procurement are shifting. With the implementation of initiatives such as the Canadian Innovation Commercialization Program, the government is realizing that big companies aren’t the only way to go, Mr. Lynt says.
“They’re beginning to consider that innovation comes from small businesses,” he adds.
HOW TO SURVIVE THE CUTS
With any change comes opportunity, and Mr. Parker points out that local businesses need to keep their ears to the ground to find out how to assist the government in making the changes outlined in the budget and provide innovative solutions to the government’s problems.
Diversified vendors will also fare better, Mr. Parker says, especially those that can also offer goods or services to the private sector.
But Mr. Dee notes he doesn’t foresee the private sector being able to pick up the slack in Ottawa. Instead, he says, companies that are mobile and can move to other burgeoning industries will fare well – to Calgary’s booming oil market or Toronto’s busy financial sector, for example.
TOP 10 CONTRACT AREAS
(National figures from April 2005 to June 2010)
1. Professional services: $3,833,835,461
2. Architectural and engineering services: $3,629,932,477
3. Computer equipment: $3,319,088,496
4. Management consulting: $2,422,039,296
5. IT: $2,179,246,399
6. Business services: $1,329,298,953
7. Telephone and voice services: $1,085,863,138
8. Software: $988,382,443
9. Temporary help: $845,899,781
10. International development goods and services: $697,115,212
Source: Canadian Centre for Policy Alternatives, 2011
THE RISE OF THE SHADOW PUBLIC SERVICE
- Since 2005-06, the cost of federal personnel outsourcing of temporary help, IT consultants and management consultants has ballooned by almost 80 per cent, amounting to nearly $5.5 billion nationally over the past five years
- Outsourcing is concentrated in four large departments: Public Works, the Department of National Defence and the Canadian Forces, Human Resources and Skills Development Canada, and Public Safety and Emergency Preparedness. Together, they make up half of all federal government outsourcing.
- Payroll for those four departments has increased by nine per cent since 2005-06, while personnel outsourcing costs have risen by 100 per cent.
Source: Canadian Centre for Policy Alternatives, 2011
