OTTAWA, ON, Feb. 27, 2025 — For nine years, the Phoenix Pay System has stood as a stark warning about the true costs of outsourcing critical government services. What began as a $5.8 million contract with IBM has now ballooned to over $650 million through more than 50 contract amendments - all while failing to deliver its basic function of paying public servants correctly and on time.

As a result, workers are going into debt as a result of ongoing financial insecurity and years of incorrect and unpredictable pay. Their futures are being impacted as their credit scores plummet – some have even lost their homes. Pay errors are also repeatedly reported on T4 and other financial reports, causing difficulties with the CRA and provincial tax agencies, tangling the web even further.

"The government's obsession with outsourcing has created a costly spiral of failure," said the Professional Institute of the Public Service of Canada (PIPSC) President, Sean O’Reilly. "After spending hundreds of millions on IBM for Phoenix, we're now watching history repeat itself by once again choosing costly outsourcing for the new pay system, instead of leveraging in-house expertise.”

“Meanwhile, nearly 300,000 pay transactions remain unprocessed, and that number is only rising.” he continued. “With two-thirds of these cases being over a year old. This is not value for money - this is throwing good money after bad."

The mounting costs extend far beyond direct contracts. The 2024 budget includes another $135 million investment for HR improvements and the next generation pay system. This is on top of the $517 million allocated in 2023 and $521 million in 2024 just to maintain staffing at the Pay Centre to handle the ongoing backlog. The government has also spent millions more on consultants, including $27.7 million to McKinsey to "help improve" a system that fundamentally doesn't work.

"Public servants deliver essential services that Canadians rely on every day, yet for nine years, they've been fighting just to receive their basic pay," noted the Canadian Association of Professional Employees (CAPE) President, Nathan Prier. "From day one, we warned about the risks of outsourcing such a critical system. A rush to find the cheapest option has now cost Canadians more than $3.5 billion and counting. We urged consultation and stressed the importance of maintaining internal expertise. Instead, the government eliminated 1,200 experienced pay advisor positions and replaced them with 550 positions at a centralized location.”

“The results speak for themselves,” he continued. “Thirty percent of public servants continue to experience errors in their basic pay, and thousands wait years for proper processing of promotions, transfers, and retirement benefits. We are long overdue for a renewed damages agreement to compensate our members, which the Treasury Board has been promising but intentionally stalling."

The Phoenix Pay System demonstrates what happens when governments prioritize outsourcing over investing in their own workforce. Public servants have the expertise, dedication, and understanding of complex government operations that external contractors simply cannot match. After nine years and billions of wasted taxpayer dollars, it's time for the government to recognize that strong public services require investment in public servants, not an endless cycle of expensive external contracts that fail to deliver.

About CAPE

With more than 25,000 members, the Canadian Association of Professional Employees (CAPE) is one of the largest federal public sector unions in Canada, dedicated to advocating on behalf of federal employees in the Economics and Social Science Services (EC) and Translation (TR) groups, as well as employees of the Library of Parliament (LoP), the Office of the Parliamentary Budget Officer (OPBO) and civilian members of the RCMP (ESS and TRL).

About PIPSC

The Professional Institute of the Public Service of Canada (PIPSC) was founded in 1920.  With over 75,000 members, the Institute is the largest union in Canada representing scientists and professionals employed at the federal and some provincial and territorial levels of government.

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Media contacts:

Canadian Association of Professional Employees (CAPE), Media@acep-cape.ca

Professional Institute of the Public Service of Canada (PIPSC), jfillion@pipsc.ca

As the US government moves forward with harmful tariffs on Canadian goods, we at ACFO, CAPE and PIPSC stand united in condemning these measures and their devastating impact on Canadian jobs, families, and businesses. These tariffs threaten economic stability and labour. We will not stand by as working people bear the burden.

At a time when Canadians are facing unprecedented challenges—whether it’s rising costs of living, housing shortages, or ongoing economic uncertainty—these tariffs will only make life harder for families, workers, and communities across the country. The people of Canada are already feeling the strain. Adding additional barriers to trade only exacerbates the hardships many are already enduring.

We stand in solidarity with trade unions and all workers affected by these tariffs. Our members, dedicated public service professionals, are always ready to assist Canadians, support affected industries and communities, and deliver any relief measures the federal government enacts. 

ACFO, CAPE and PIPSC members, and all federal public sector workers, have a long history of stepping up in times of crisis—whether during the COVID-19 pandemic or other national challenges. This moment is no different. Our members will continue to deliver the critical programs and services Canadians rely on, ensuring that no one is left behind.

Now is the time for unity, solidarity and strength.
___________________________

Sean O’Reilly – President, Professional Institute of the Public Service of Canada (PIPSC)
Rob Hawkins - President, Association of Canadian Financial Officers (ACFO) 
Nathan Prier – President, Canadian Association of Professional Employees (CAPE) 

We proudly stand with our brothers and sisters in the Canadian Union of Postal Workers who are fighting not just for their own futures, but for the future of public services across Canada. Their struggle is our struggle - a fight to protect good jobs and quality services for all Canadians.

Right now, Canada Post faces mounting pressure to compete with unregulated delivery services that exploit gig workers and cherry-pick profitable urban routes. But Canada Post's mission is different: it serves every Canadian community, from downtown Toronto to remote Arctic villages, regardless of cost. This universal service is a vital thread in our national fabric - one we cannot afford to lose to private companies that put profits before people.

We're witnessing a dangerous trend toward the 'gigification' of work, where stable, full-time jobs are being replaced by precarious, part-time positions. This isn't just about postal workers - it's about protecting the dignity of work itself. When crown corporations are forced to degrade working conditions to compete with under-regulated private companies, we all lose.

CUPW's vision goes beyond defending what we have - they're fighting to expand and enhance our public services. Their struggle today will shape how Canada responds to the challenge of the gig economy tomorrow. We can either race to the bottom with precarious work, or we can build a future with strong public services and good jobs for all.

We demand the federal government take immediate action: resolve this dispute fairly and close the regulatory gaps that allow the exploitation of workers through precarious employment. Quality public services require protected, respected workers.

The time for solidarity is now. Join us at the picket line on Tuesday, December 10, from 7:30 to 9:00 AM ET at 1424 Sandford Fleming Ave to stand with CUPW workers. Bring your PIPSC flags and your fighting spirit. When we stand together, we win together. Your presence on the picket line matters - see you there!

Pay Equity is more than just a legal requirement; it's a call to action to eliminate unjust wage discrimination between men and women. Your PIPSC staff and stewards have been working hard to apply these laws at 18 different pay equity tables for our members.

Watch pay equity leaders and activists for a webinar and question period about how the pay equity analysis might affect your salary and pay. 

Watch the webinar

PIPSC firmly stands with the Indigenous Federal Employees’ Network (IFEN) in advocating for fair treatment of Indigenous public sector workers. Many federal Indigenous employees, including PIPSC members, have raised serious concerns about the implementation of the federal government’s Return-to-office (RTO) mandate. These concerns centre around the denial of exemptions for Indigenous employees living within 125 km of their formal work location.

The federal government’s RTO mandate includes a key standalone exemption allowing Indigenous employees to work from their communities no matter their proximity to the office. This exemption is critical for both cultural identity and personal safety. However, many Indigenous workers have faced repeated denials of this exception.

Denying this exemption directly contradicts the federal government’s obligations under the United Nations Declaration on the Rights of Indigenous Peoples and the Truth and Reconciliation Commission’s Calls to Action. The arbitrary restriction is especially harmful to Indigenous women, whose safety concerns—amid the ongoing crisis of Missing and Murdered Indigenous Women and Girls (MMIWG)—make remote work a vital option. 

The denial of exemptions undermine the well-being of Indigenous employees and Canada’s commitment to reconciliation. Treasury Board President, Anita Anand, needs to step in.

PIPSC, alongside other unions, is calling for immediate action from Anand to clarify the standalone exemption for Indigenous people to all Deputy Ministers, their equivalents, and any relevant senior civil service staff in all federal departments and agencies covered by the mandate before November 28, 2024.

Indigenous employees have the right to work in a way that respects cultural needs, personal safety, and well-being. PIPSC will always advocate to ensure these rights are respected and protected in the workplace.

Read our joint letter to Treasury Board President, Anita Anand.

The Standing Committee on Access to Information, Privacy and Ethics recently tabled their report from their study: “Federal Government's Use of Technological Tools Capable of Extracting Personal Data from Mobile Devices and Computers.”

PIPSC takes our members’ privacy extremely seriously, which is why we’re pleased to see that our insights and concerns influenced the committee’s report and that several of our key recommendations were adopted. Notably, the report emphasized our position on the greater obligation to conduct privacy impact assessments (PIAs) and the need to consult with the Privacy Commissioner before using new or substantially updated technological tools.

Among other issues, the report highlights our concerns around:

• Employee consent, especially given that current privacy policies were formulated before the advent of cloud-based services (pp. 39)
• The significant variation in consent practices across different institutions.
• Conducting PIAs (pp. 37, pp. 41) and the need for real consequences when senior bureaucrats fail to conduct these assessments appropriately.
• The necessity of Treasury Board to establish clearer guidelines on when new and modified programs require new PIAs. 

Read the full report.

PIPSC will continue to defend the rights of our members and advocate that the government accept our recommendations to prioritize your privacy in evolving workplaces.

PIPSC is raising serious concerns about the Canada Revenue Agency's announcement to terminate approximately 580 term positions by mid-December. These cuts can be seen as an indication of broader workforce adjustments across the public service.

"How can Canadians expect the same level of service quality with fewer hands?" says PIPSC President Jennifer Carr. "These aren't just numbers on a spreadsheet – these are skilled professionals who play vital roles in our tax system."

One of the key roles played by CRA workers is protecting revenue sources by going after wealthy tax cheats and off-shore tax havens. Ensuring those groups pay what they owe could eliminate any need for these devastating cuts. 

"The CRA plays a vital role in tracking offshore tax havens and ensuring billionaires pay their fair share,” said PIPSC President Jennifer Carr.  “It’s time to strengthen this capacity, not weaken it." 

Also of concern is term positions traditionally serve as a crucial entry point for new talent into the public service. With the CRA facing a wave of retirements in the coming years, it is a troubling signal for the future of our workforce. 

"Harper’s cuts in 2012 started with term positions – before expanding to eliminate 1,200 jobs," explains Carr. "If this happens again, it could create another lost generation of public servants just when we need them most."

It's time for the government to pause these cuts and engage in meaningful consultation with unions. It's time to build a sustainable workforce strategy that safeguards the quality of public services and secures the future of our public service.

Following a disappointing meeting with Treasury Board Secretariat (TBS) on November 7 2024, PIPSC is voicing concerns over the government’s approach to public service cuts. The union is disappointed by both the lack of consultation, and by TBS’s apparent lack of preparation, despite the fact that these cuts were first introduced in the 2024 budget. 

“We expect genuine engagement with our members and consultation at the departmental level,” said PIPSC President Jennifer Carr. “Without this, we risk seeing the same type of blanket cuts we saw during the Harper era—which had a detrimental impact on the programs and services Canadians rely on.”

While it’s encouraging to see TBS advising departments to cut back on consultants and contractors, only time will tell if departments will follow through. Without firm measures and oversight, this shift could become an empty promise, and our members will bear the brunt.

The government’s reassurance that cuts “will not affect services to Canadians” rings hollow when we consider the reality of attrition. 

“Every position left unfilled represents real work not being done and real services not being delivered to Canadians,” said Carr. “Every vacant position means fewer people doing the same amount of work—or more. Burnout among our members is an inevitable outcome of this approach.”

We are particularly concerned by ongoing cuts to training—as well as temporary, casual, term, and student positions. These roles often represent a first step for young workers into the public service, and cutting them is short-sighted. With a wave of retirements on the horizon, we should be investing in the next generation of public servants, not pushing them away. 

“These cuts threaten to create a lost generation in the public service at a time when we need new talent and fresh perspectives more than ever,” said Carr. 

It’s time for the government to reconsider its approach, ensure departments adhere to TBS guidance, and protect the essential services Canadians rely on.