PBO estimates ongoing annual cost of Federal Pay Equity Act could hit $621 million by 2023-24

The Parliamentary Budget Officer (PBO) today released a new report which provides an analysis of the fiscal impact of increased federal public service employee salaries and benefits resulting from the enactment of the federal Pay Equity Act (the Act).

Pay Equity refers to situations where employees perform work of equal value; where the comparable value is based on the comparable level of skill, effort, responsibility, and working conditions. Pay Equity legislation ensures that men and women performing different jobs of comparable value are compensated equally.

In his report, Fiscal Analysis of Federal Pay Equity, the PBO estimates the financial cost of implementing the Act, which covers approximately 1.3 million employees: some 390,000 in the public sector and 900,000 in the private sector. The federal government has not yet released its own estimate of how much more money is expected to be spent to comply with the legislation.

“Once the Act is fully in force starting in 2023-24, we estimate the federal government's ongoing annual cost could increase to $621 million," said Yves Giroux, PBO. "This amount includes additional contributions to pension and other employee benefit plans, which is estimated at $144 million”.

The PBO’s analysis captures approximately 30% of the federally regulated workforce. It does not include Crown Corporations, the Prime Minster’s and ministers’ offices, parliamentary institutions, nor the private sector. Therefore, the impact on all federally regulated workplaces will likely be substantially greater.