VIEWS: 7 PAGES: 61 POSTED ON: 10/1/2012
August 2009 Final Report: Nunavut Northern Allowance Tootoo Consulting Prepared by: Final Report Nunavut Northern Allowance Contents 1. Introduction ................................................................................................................................2 2. Contextual Research...................................................................................................................4 3. Survey of Employers ...................................................................................................................8 4. Initial Observations Based on Survey ........................................................................................21 5. The Current Situation.................................................................................................................26 6. Scenarios .....................................................................................................................................33 7. Options ........................................................................................................................................40 8. Conclusions .................................................................................................................................43 Appendix A: Survey of Household Spending ..........................................................................45 Appendix B: All Solicited Organizations .................................................................................46 Appendix C: Questionnaire ......................................................................................................47 Appendix D: Federal Departments/Organizations Following IPGHD ....................................57 Appendix E: Assumptions to Calculate Allowance by Community........................................58 1 Final Report Nunavut Northern Allowance 1. Introduction In June of 2008, the Government of Nunavut (GN) signed a collective agreement with the Nunavut Employees Union (NEU). The agreement included the Memorandum of Understanding No. 9, whereby the GN and the NEU agreed to the formation of a joint Employer – Union Committee to review the Nunavut Northern Allowance (NNA). In January 2009, the Joint Committee mandated Aarluk Consulting, in collaboration with Hay Group and Tootoo Consulting, to conduct a review of its NNA methodology. The project team gathered data from organizations across Canada paying a northern allowance to their employees and carried out research relating to the calculation of various components of the Allowance. As confirmed by the Joint Committee, the NNA has two objectives: 1. to address the difference in the cost of living between Nunavut communities and designated southern communities 2. to equalize the compensation of GN employees across Nunavut who may face different economic conditions in different communities The project team presented a preliminary report to the Joint Committee in June 2009. The objective of the report was to provide the Joint Committee with data to support a decision on how to proceed. Three options were evaluated: 1. Maintain the current framework and have the report proceed with recommendations on possible updates to variables, and extrapolation of impacts on current allowances and cost impacts for the GN; 2. Modify the current framework and recommend adjustments that could be made to the current formulae and the potential impacts of those changes; 3. Discard the entire framework and begin from scratch - the project team would provide a report that summarized the data collected, justified that decision based on the data analysis, make recommendations on what may need to be changed and advise on how to proceed. However, the design of an entirely new framework was outside of the scope of this review. 2 Final Report Nunavut Northern Allowance The Joint Committee directed the project team to proceed with a combination of options 1 and 2 – to update the variables with current costs, remove one component and provide options based on the implications of the updated/modified formula. This report describes our data collection methodology, the results of updating the current variables, issues that arise from the application of the formula, the potential impacts of various scenarios and conclusions. 3 Final Report Nunavut Northern Allowance 2. Contextual Research The project team carried out research across Canada to identify general principles and methodologies of other employers providing similar allowances. These findings provide a context in which recommendations can be made on the NNA. A northern allowance is an allowance typically paid by employers with employees working in the northern regions of Canada to recognize the higher costs of living in these regions. Organizations utilize various methodologies to determine the value of the allowance, often depending on the specific objectives the organization wishes to achieve through the payment and also on the specific components/elements the organization has identified to include as part of the analysis. Before determining the value of the northern allowance, the organization must first determine its objective/purpose in order to identify the appropriate elements to be included in the formula. While the general purpose of a northern allowance is to recognize the higher cost of living in remote communities, specific objectives to be achieved through the payment can vary by organization. For example, an organization may wish to use a northern allowance as part of its total rewards strategy to attract and retain human capital; to equalize the purchasing power of employees across various communities; and to provide competitive salaries relative to similar positions based in southern Canadian cities (see Figure 1). As will be demonstrated in further detail later in this report, the specific objectives of organizations vary slightly in reality. 4 Final Report Nunavut Northern Allowance Figure 1: Objective of the Northern Allowance Value of northern Value of northern Value of northern allowance at allowance at northern northern communities allowance at southern base-city base-city Cambridge Bay Rankin Inlet attract, wance not allowance to Northern allo ployees Pay northern capital and to provide r Pay northern paid to em retain human laries relative to simila allowance to the base-city sa competitive southern jobs equalize the working at Pond Inlet Arviat purchasing power of employees in each community Edmonton Iqaluit Igloolik Resolute Montreal Whitehorse Ottawa Yellowknife Winnipeg A comparison of the cost of living between cities/regions is useful information to obtain when determining the value of a northern allowance. However, because it is very difficult to measure the overall cost of living in a specific region or city, it is also very difficult to complete a global cost of living comparison between cities. A simpler alternative is to divide the analysis into individual components and to measure the cost differential of each component separately. These living expenses may include: • Cost of food • Cost of shelter and utilities • Cost of travel to southern cities • Cost of freight to have goods transported to northern communities Statistics Canada and the Economic Research Institute both provide information that can be useful when analyzing the cost of living in a particular city/region. Statistics Canada does not measure the actual cost of living in Canadian cities because it is extremely difficult to identify and determine a standard measure that will apply to and be relevant for a large portion of the general public. Cost of living varies by individual and by household depending on the values of each individual and on the demographics of the household which guide personal spending habits. Statistics Canada, however, publishes other data that can be useful for this purpose, such as the Consumer Price Index (CPI) and the Survey of Household Spending. 5 Final Report Nunavut Northern Allowance The CPI measures the change of consumer price levels over time but does not provide data pertaining to the absolute value of the items contained in the basket of goods that is used as the base of comparison. The CPI can provide a benchmark against which organizations can validate changes to the value of a northern allowance. The Survey of Household Spending collects data about household spending over a period of time. The focus of the survey is spending behaviours. Appendix A presents the Average Household Expenditure by territory, which is based on the results of the 2007 Survey of Household Spending. The Economic Research Institute produces a number of tools, such as the Relocation Assessor®, which can be useful when determining the cost of living differential between cities. This tool analyzes various cost of living components, such as: • Cost of transportation • Cost of housing, utilities and insurance • Cost of consumables • Health costs This tool also takes family size into consideration in order to estimate the cost of living difference between two cities. Other distinct characteristics related to living in isolated communities, such as access to services, all- season road access and whether or not company housing is provided, can also be difficult to quantify but should be taken into consideration by organizations seeking to attract and retain employees. It is important to note that when comparing the cost of living in different regions/cities, it is imperative to base the analysis on the same criteria. This presents a challenge for organizations with operations in remote communities as it can be difficult to obtain data pertaining to these communities. For example, the CPI is available only for the city of Iqaluit within the territory of Nunavut and the Survey of Household Spending is available only for Nunavut as a whole. Organizations seeking to equalize income in northern and southern communities for similar jobs and/or to provide competitive salaries in the north should also recognize the various prevailing market conditions that can affect the range of salaries being provided across the country. For example, fluctuations in the price of various goods across regions/cities, the housing market 6 Final Report Nunavut Northern Allowance particularities of each region/city and general market conditions, such as an overall labour shortage or surplus, can all affect the level of compensation being provided by the market. It is important that organizations identify the appropriate base-city, when completing this type of comparison. The results of our contextual research conclude that there is not one single best practice to effectively measure the cost of living in a city/region. Each organization must, therefore, establish a methodology to determine the value of a northern allowance that is appropriate, given the specific objectives and the total reward framework of the organization. Data that is widely available, such as the Consumer Price Index and Survey of Household Spending, can be useful information to consider when maintaining the value of a northern allowance. For illustrative purposes, Table 1 presents the most recent CPI data and provides the month-over-month percentage change from February 2009 to March 2009. Table 1: The All-Items Consumer Price Index, Not Seasonally Adjusted¹ % Change from February City CPI as of March 2009 2009 Iqaluit, NU 112.4 0.5% Yellowknife, NWT 114.3 -0.2% Whitehorse, YK 113.6 -0.1% Ottawa, ON 113.6 0.5% Montréal, QC 112.7 0.3% Winnipeg, MB 112.9 -0.1% Edmonton, AB 120.9 -0.5% A robust methodology can be timely and costly to administer, making it more efficient for smaller organizations to follow the methodology established by larger organizations with similar operations and values. Larger organizations, on the other hand, may establish a methodology that addresses the specific challenges they are faced with while also taking into consideration what it can reasonably afford to pay. ¹ Source: Statistics Canada (April 2009). Retrieved from http://www.statcan.gc.ca/pub/62-001-x/2009003/tablesectlist-listetableauxsect- eng.htm on April 23, 2009. 7 Final Report Nunavut Northern Allowance 3. Survey of Employers The second phase of our project was to perform a survey of employers that provide northern allowances to their employees. The objectives were twofold: • Obtain information on methodologies and formulae used by employers • Obtain quantitative data on the level of northern allowances provided. The following discusses in detail our approach and results for the survey. Organizations solicited to participate in the survey The project team generated a list of suggested organizations to be approached to participate in the survey. The list included organizations of differing sizes from various industries with employees based in the north. This list was approved by the Joint Committee and other organizations were added to the list as we proceeded with the data collection process. A comprehensive list of organizations approached to participate in the survey is in Appendix B and the list of participating organizations is on page 10. Data Collection Questionnaire A questionnaire was designed in order to collect both quantitative and qualitative data pertaining to the targeted organizations’ northern allowance methodology. The questionnaire was designed and prepared by the project team in MS Excel format and was presented to the Project Authority before being sent to the targeted organizations. The project team conducted an interview using the questionnaire with a Joint Committee representative from the GN in order to obtain feedback and subsequently revised and improved the questionnaire. The final version of the questionnaire sent to participating organizations is presented in Appendix C. 8 Final Report Nunavut Northern Allowance Solicitation of Targeted Organizations Our first point of communication with each organization was by telephone with a contact person identified by members of the project team. The purpose of this telephone call was to explain our mandate and to identify the appropriate person to whom we should send the survey. The project team was of the opinion that an initial telephone call would increase the overall survey response rate. Furthermore, due to the nature of the questions contained in the survey, it was essential to contact individuals with in-depth knowledge of their respective organization’s northern allowance methodology. Immediately following this initial contact, the questionnaire was sent electronically to respondents, with the option to respond via e-mail, telephone or fax. However, even with the initial telephone call and identification of the appropriate contact person, some of the targeted organizations decided not to participate. The most common formal reason for declining was lack of time or resources to complete the questionnaire. In those cases where we did not receive a formal reason for the organization’s decision to decline, several follow-ups were completed by all members of the project team by both e-mail and telephone. Data Capture Upon receipt of each completed questionnaire, the data was entered into a database created for this purpose. A review of each questionnaire was also conducted in order to ensure accurate and comprehensive completion of the document. A follow-up with the respondent was often required in order to clarify the information provided in the questionnaire or to seek additional information/ details. Some respondents also provided internal policy documents; the relevant information contained in these documents was also entered into the database. Confidentiality of Data All information gathered in the data collection process is confidential and can not be directly linked to the organization that provided it. The only exception to this policy applies to information that is available in the public domain. 9 Final Report Nunavut Northern Allowance Participating Organizations The 12 organizations that participated in the survey were: • Canadian North Inc. • Federal Government of Canada (Treasury Board Secretariat) • First Air • Government of the Northwest Territories • Yukon Government • Inuvialuit Regional Corporation • Kativik Regional Government • Kivalliq Inuit Association • Nunatsiavut Government • Nunavut Tunngavik Incorporated • Public Service Alliance of Canada • Royal Canadian Mounted Police 10 Final Report Nunavut Northern Allowance Description of Participants Most of the participating organizations are in the public or not for profit sector and all have employees based in northern regions of Canada. The Head Offices of the participating organizations are located across Canada. The total number of employees per organization varies, as does the total number of employees that are based in the north. The following graph describes the total number of employees per organization. 0-200 500+ employees employees 33% 42% 200-500 employees 25% Seven of the twelve participating organizations provided a breakdown by location of the total number of employees. The breakdown of the total number of employees within each organization is as follows: • At least 95% of the total number of employees are based in the north in six of the seven organizations that provided this data. • At least 98% of the total number of employees are based outside of major cities in four of the seven organizations that provided this data (major cities include Iqaluit, Ottawa, St. John’s and Yellowknife). 11 Final Report Nunavut Northern Allowance Survey Results Northern Allowance Methodology • Only a few of the participating organizations have an in-depth methodology to follow in order to determine the value of a northern allowance to be paid to employees. • Approximately one half of the participating organizations follow the methodology of other larger organizations and/or model the value of its northern allowance following the value provided by other organizations in order to remain competitive while still taking into consideration what the organization can afford to pay. • The remaining participating organizations were not able to provide an in-depth methodology. Of those participating organizations that follow the methodology of other larger organizations, two follow the Treasury Board of Canada Secretariat’s (TBS) methodology, as described in the Isolated Posts and Government Housing Directive (IPGHD) that is jointly developed by employers and unions under the guidance of the National Joint Council. As a result, TBS’s methodology is the most prevalent amongst the group of participating organizations. Furthermore, as TBS is the employer for many federal government departments and organizations, these departments/organizations would also provide the allowances as per the IPGHD for any employees based at an isolated post. For a list of departments/organizations that do/would follow the IPGHD for employees based at isolated posts, please refer to Appendix D. Summary of Treasury Board of Canada Secretariat’s Methodology1 There are five different allowances included in the Isolated Posts and Government Housing Directive: • Environment Allowance • Living Cost Differential Allowance • Fuel and Utilities Differential Allowance • Shelter Cost Differential Allowance • Special Location Allowance 1 Source: Treasury Board Secretariat of Canada (Dec. 2008). Retrieved from http://www.tbs-sct.gc.ca/hr-rh/gtla-vgcl/menu-ipla-dpicl- eng.asp April 23, 2009. 12 Final Report Nunavut Northern Allowance The value of each of these allowances is determined by considering various factors relating to each community where employees are located. The following sections provide a high-level summary of these factors. Environment Allowance (EA) The value of the EA is determined by assessing three factors relating to the physical and social factors of each community, assigning a point value to each of these factors, calculating the sum of all assigned point values and then slotting this result into one of five classification levels. Each classification level has an associated dollar amount for employees with dependants and for employees without dependants. The three factors are: • Population factor – examines population density • Climate factor – examines wind-chill, the length of period of darkness, annual precipitation and temperature variations • Access factor – recognizes posts with and without all-weather road access and examines the distance to the closest population centre of more than 15,000 in addition to the availability of scheduled air or rail passenger services Living Cost Differential Allowance (LCD) The LCD is paid to employees based at posts where high prices prevail for goods and services. Sta- tistics Canada conducts a survey containing approximately 250 goods and services in order to com- pare the cost of these items at isolated posts with the prices of the same items at an assigned base-city in order to calculate an associated index. The LCD enters into effect when this index reaches at least 115 (the index at the base-city is 100). There are 16 classification levels, which reflect five- point ranges, each with an associated dollar amount for employees with dependants and for em- ployees without dependants. The categories of goods and services included in the survey are: • Food consumed at home and in restaurants • Household services and supplies, including communications • Personal care services and supplies • Non-prescription pharmaceutical products • Public transportation 13 Final Report Nunavut Northern Allowance • Automobile operation and maintenance (including snowmobile and/or boat operation) • Tobacco and alcoholic beverages • Audio/visual supplies • Reading material Each post must qualify for the Environment Allowance in order to be considered for the Living Cost Differential. Fuel and Utilities Differential Allowance (F&UD) A F&UD allowance is only paid when employees at isolated posts are required to pay for one or both of the actual fuel or utilities consumption and when the post experiences 6,000 Celsius degree- days annually or the cost of F&UD is at least 15 per cent greater than the base city average cost. There are 18 classification levels, each with an associated dollar value for employees with dependants and for employees without dependants. Each post must qualify for the Environment Allowance in order to be considered for the Fuel & Utilities Differential Allowance. Shelter Cost Differential Allowance (SCD) A SCD is payable to employees in private accommodation and in government housing at qualifying isolated posts to help offset the higher shelter charges experienced there. Qualifying locations are each assigned a dollar value; employees with and without dependants receive the same amount. (Iqaluit is currently the only community in Nunavut to qualify for the SCD). Special Location Allowance A post will qualify for the special location allowance when it is removed from the Classification of Isolated Posts listing but it qualified for a Living Cost Differential or Fuel & Utilities Differential at the time it was removed, or if the location is 129 km or more from a location having a population of 10,000 or more, is 257 km or more from a location having a population of 50,000 or more, received 45 points or more on the Population Factor (part of the Environment Allowance) and qualifies for a living cost and/or a Fuel & Utilities Differential. The allowance to be paid in these cases is the sum of the appropriate value of the Living Cost Differential and the Fuel & Utilities Differential. 14 Final Report Nunavut Northern Allowance Other Allowances The IPGHD provides other allowances, such as Vacation Travel Assistance (VTA), that are not included in the value of the allowances described above. The IPGHD currently provides a maximum of two VTA payments per fiscal year to all employees based at isolated posts in Nunavut. Differences Between TBS’s Methodology and Other Participating Organizations • The IPGHD provides Vacation Travel Allowance payments separate from the payments for other allowances, as do most other organizations, although one organization includes the value of its travel allowance in the northern allowance formula. • No other organization takes into consideration a population factor or a climate factor when calculating the value of their northern allowance. • Two other organizations take the difference in the cost of rent between northern commu- nities and a base-city into consideration when calculating the value of the northern al- lowance. • Three other organizations calculate a separate value for employees with and for employ- ees without dependants. • Three other organizations also consider road/travel accessibility in the community when calculating the value of the northern allowance. • Three other organizations also consider the cost of fuel and/or utilities in the community when calculating the value of their northern allowance. • One other organization references a survey conducted by Statistics Canada to help deter- mine the living cost differential in various communities when calculating the value of the northern allowance. • Three organizations provide a separate cargo allowance/provisions. • One organization has identified a separate policy, including additional benefits, for man- agement employees. • One organization provides a slightly higher northern allowance to some of its union em- ployees as compared to its non-union employees. 15 Final Report Nunavut Northern Allowance Other Benefits Provided by Participating Organizations • All participating organizations provide a travel allowance. The most common policy is to allot a certain number of round trips per year: - Approximately one half of these organizations provide two round trips. - Approximately one half of these organizations provide one round trip. - One organization provides three round trips. • Most organizations calculate the value of the travel allowance/benefit separately for em- ployees with and for employees without dependants but some organizations provide the same allowance/benefit to all employees. • Seven other organizations provide an average of two additional travel or leave days to em- ployees based in the North. • Two other organizations provide other allowances in certain locations, such as an isolation allowance and retention allowance. General Northern Allowance Information Objective/Purpose of Allowance • Most of the participating organizations provide a northern allowance to compensate for or offset the higher cost of living and/or other lifestyle issues related to living in northern and/or isolated communities. • Some of the participating organizations also provide a northern allowance to equalize the buying power between remote communities and the base-city. • Some of the participating organizations also pay a northern allowance to ensure equity between employees renting or owning accommodation similar to that provided by the em- ployer to other employees. 16 Final Report Nunavut Northern Allowance Frequency of Payment • Most of the participating organizations provide the payment on a bi-weekly basis. • A few of the participating organizations provide the payment on a semi-monthly basis. • At least one organization provides employees with the option of lump sum payment. Payment Eligibility Some groups All employees of employees at qualifying excluded from locations are northern eligible for the allowance northern eligibility allowance 25% 75% Note: non-eligible employees include part-time and temporary employees. • All organizations that provide a northern allowance to part-time employees pro-rate the payment. • Approximately one half of organizations that have employees on short-term assignments in the north do not provide these employees with northern allowance benefits. The remaining organizations that have employees on short-term assignments may provide these employees with northern allowance benefits, often depending on the characteristics of each individual situation. • All organizations that have employees based in northern and southern communities employ the same compensation practices for both groups of employees, except that southern based employees are not eligible to receive northern allowance benefits. 17 Final Report Nunavut Northern Allowance Determination of Northern Allowance Value Group Calculate the communites by northern zone & provide allowance for the same each individual allowance to all community employees in 50% each zone 25% Provide the same northern allowance benefits to all employees 25% • On average, the participating organizations have been using their current northern allowance methodology for at least 13 years. • 58% of organizations do not regularly recalculate/modify the value of their northern allowance. • Of those organizations that do regularly recalculate/modify the value of their northern allowance: - 20% review their northern allowance values annually. - 20% review their northern allowance values approximately every 2 years. - 60% did not provide detailed information. Quantitative Analysis The project team is committed to ensuring the confidentiality of information provided to us by the participating organizations. We therefore require a minimum of three data points in order to divulge the average value of a northern allowance provided to employees in each specific community. The following section presents the results of the quantitative analysis where sufficient data was pro- vided to complete this analysis. 18 Final Report Nunavut Northern Allowance The following assumptions were made in order to complete the analysis: • Seven of the twelve participating organizations have employees based in Nunavut. In total, three participating organizations follow the Isolated Posts and Government Housing Directive. However, the values as provided by this Directive are included only once in the analysis, to represent the Treasury Board of Canada Secretariat’s participation. • All five of the participating organizations included in this analysis pay a travel allowance/provide travel provisions separate from the northern allowance. • In the cases where participating organizations provide the same northern allowance to employees with and without dependants, a single figure was used to calculate the average value of the northern allowance for both employees with and without dependants. General Information • On average, the Isolated Posts and Government Housing Directive provides northern allowance benefits that lead the market. • The average value of northern allowances provided to employees without dependants across all communities in Nunavut is $17,143. • The average value of northern allowances provided to employees with dependants across all communities in Nunavut is $21,001. • The average value of the northern allowance provided to employees across all communities by the Government of Nunavut is $20,962. Break-down by Community We received at least three data points in three communities. Table 2 presents the average value of the northern allowances paid in these communities in comparison with the Government of Nunavut and the Treasury Board Secretariat’s northern allowance value. 19 Final Report Nunavut Northern Allowance Table 2: Average Value of the Northern Allowance in Nunavut Number of Average Value for Average Value for Government of Community Participating Employee with No Employee with Nunavut Data as of Organizations Dependants Dependants April 1, 2008 $15,146 $19,794 $17,883 Cambridge Bay 4 (TBS : $19,876) (TBS : $33,126) $15,025 $19,223 $13,563 Iqaluit 4 (TBS : $15,954) (TBS : $26,590) $17,192 $21,094 $16,795 Rankin Inlet 5 (TBS : $18,138) (TBS : $30,230) Arctic Bay 1 (TBS) $20,654 $34,423 $23,045 Arviat 1 (TBS) $17,210 $28,683 $19,150 Baker Lake 1 (TBS) $19,066 $31,776 $22,114 Cape Dorset 1 (TBS) $17,332 $28,886 $19,029 Chesterfield Inlet 1 (TBS) $20,532 $34,219 $20,995 Clyde River 1 (TBS) $20,648 $34,423 $20,842 Coral Harbour 1 (TBS) $20,526 $34,219 $21,126 Gjoa Haven 1 (TBS) $22,204 $37,016 $23,896 Grise Fiord 1 (TBS) $21,432 $35,719 $31,251 Hall Beach 1 (TBS) $19,098 $31,829 $21,371 Igloolik 1 (TBS) $19,098 $31,829 $20,480 Kimmirut 1 (TBS) $18,798 $31,329 $17,345 Kugaaruk 1 (TBS) $22,988 $38,313 $24,162 Kugluktuk 1 (TBS) $19,038 $31,730 $19,993 Pangnirtung 1 (TBS) $18,260 $30,433 $17,276 Pond Inlet 1 (TBS) $20,654 $34,423 $21,963 Qikiqtarjuaq 1 (TBS) $19,876 $33,126 $20,533 Repulse Bay 1 (TBS) $22,210 $37,016 $19,858 Resolute 1 (TBS) $20,654 $34,423 $25,829 Sanikiluaq 1 (TBS) $18,198 $30,329 $18,406 Taloyoak 1 (TBS) $22,210 $37,016 $27,596 Whale Cove 1 (TBS) $21,160 $35,266 $19,559 NOTE: Only the GN amounts include Travel. TBS provides VTA in addition to the amounts listed below. • TBS values are approximate and reflect the maximum value per community, based on information retrieved from Treasury Board Secretariat of Canada website (Dec 2008). Retrieved from http://www.tbs-sct.gc.ca/hr-rh/gtla- vgcl/menu-ipla-dpicl-eng.asp April 23, 2009. 20 Final Report Nunavut Northern Allowance 4. Initial Observations Based on Survey Observations 1. There is no “best” method for determining a remote or northern allowance. The majority of employers follow fairly standard practices and methodologies using similar variables or simply follow the practices of another employer. 2. While the methodology used to calculate the current GN Northern Allowance is valid and the variables are comparable to other employers in similar circumstances, there exist considerable differences between the dollar amounts provided by the GN when compared to other employers. The GN’s variables have not been updated for many years, highlighting the difficulty of maintaining the current framework. This has resulted in any changes to the amounts provided being a function of negotiation instead of application of a strictly mathematical formula. 3. There are two key differences between employers; how they address travel allowances, and how they address employees with dependants. Table 2 on page 20 shows that the GN, in most communities, provides a lesser amount of northern allowance than other employers. The GN provides an even lower amount when considering the amounts paid by other employers to employees with dependants. This difference is even more significant when you consider that the GN amount shown does include travel, while the amount shown for the other employers that participated does not. 4. The amount of the GN allowance in the three regional centres is similar to other employers’ allowances for employees without dependants. However, the amounts are substantially less than those provided by other employers for employees with dependants. It should be noted once again that the values provided by the GN include the VTA component while other employers deal with this benefit separately. 5. In all but four communities, the amount of the GN allowance outside of the regional centres is higher than that provided by the Treasury Board IPGHD for employees without dependants, but substantially lower than that provided to employees with dependants. 21 Final Report Nunavut Northern Allowance Preliminary Options Based on the results of the preliminary research and employer survey, the Joint Committee met to decide how to proceed. The options considered were: 1. Maintain the current framework and have the project team proceed with recommendations on possible updates to variables, and extrapolation of impacts on current allowances and cost impacts for the GN; 2. Modify the current framework and recommend adjustments that should be made to the formulae and the potential impacts of those changes. 3. Discard the entire formula and begin from scratch - the project team to provide a report that summarizes the data collected, justifies that decision based on the data analysis, makes recommendations on what may need to be changed and advises on how to proceed. The current GN Northern Allowance attempts to meet two objectives: o to address the difference in the cost of living between Nunavut communities and designated southern communities o to equalize the compensation of GN employees across Nunavut who may face different economic conditions in different communities It attempts to meet these objectives through two types of formulae – the first determines higher costs of living in Nunavut communities versus southern communities for various commodities (i.e. food, fuel, utilities). The second recognizes additional costs that result from living in remote locations (i.e. air/ground freight, airfare, access to services). The cost of living formulae include a variable (an “allowance”) and a calculation to determine the difference in the value of that variable in a Nunavut community versus a southern community. For example, the fuel allowance is 1,200 litres per year, the utilities allowance is 8,400 kilowatts per year, and the food allowance is based on a survey by INAC of the costs of a “basket of food” for a family of four for a week. 22 Final Report Nunavut Northern Allowance The remote location formulae attempt to determine additional costs not borne by southern residents – sealift, air freight, airfare and access to services. These amounts also use an allowance and the cost of that service in a specific community. For example, the air freight allowance is 100 kilograms of freight per year times the GN’s standing offer freight rate for a given community. The access to services formula is slightly different in that it measures no specific costs but assumes a smaller community will have less access to services and therefore higher costs for services than employees in communities with a larger population. Maintain Current Framework The original version of the northern allowance was based on the Federal Government’s Isolated Post Allowance. The IPA was intended to allow Federal employees working on a national pay grid to have their total compensation adjusted as an incentive for staff to work in remote locations or to ensure they were not penalized with a reduction in disposable income. The Nunavut Northern Allowance includes a set of formulas and variables to calculate what each employee will be paid based on the community in which they live. The intent of the formula was to meet the objectives of helping employees meet the higher costs of living in Nunavut. However, when the formula is updated it becomes apparent that the NNA in the current Collective Agreement is lower for most communities than that which results from updating the variables and applying the formula. This has led to the NNA becoming dissociated from its original purpose and the perception that it is not achieving its stated objectives. Updating the value of the current variables can be verified by all parties. From a collective bargaining perspective, the issue then becomes agreeing on the allowances (why 1,200 litres per year, what is in a food basket, why four airfares) which variables should be included (why not climate, shelter costs, why population) and the application of the benefits (rates for employees with dependants, casual employees, excluded employees, employees receiving additional retention or recruitment bonuses, temporary employees, southern hires, northern hires, etc). Once both parties have agreed on the allowances, the variables can be updated automatically on a regular basis. This would reduce potential conflicts during the bargaining process. 23 Final Report Nunavut Northern Allowance An advantage of maintaining the current framework is that it has been developed over time and is understood by the bargaining parties. While it does not provide the same level of compensation as the IPGHD, the GN does not have the same resources as the Federal Government and is constrained by legislation and the principles of fiscal responsibility to ensure it does not exceed those resources to the detriment of other priorities and programs. A weakness of the current formula is that single employees are given the same allowance as employees with dependants. The GN has consistently stated that it wants to support families and communities. This has two potential side-effects; many of the employees in Nunavut with families are Inuit and there may therefore be a proportionately larger effect as a result of the current structure, and; skilled individuals with families living outside of Nunavut may be less willing to move – reducing the potential labour pool from which to fill vacant positions. Modify Current Framework Modifying the current framework could include adding new variables, adjusting allowances or removing variables. How applicable are the current variables? While every GN employee receives the allowance (some are pro-rated), what percentage of employees actually pay for electricity? Should the Allowance reflect the fact that employees with dependants have a higher cost of living than sin- gle employees? Should travel costs be completely removed and dealt with separately? Should shel- ter costs be included in the current allowance? 24 Final Report Nunavut Northern Allowance Create New Framework Are the objectives for the current NNA still relevant to Nunavut’s goals and needs? Do the objectives reflect the reality of the NNA as it is currently calculated? There needs to be complete clarity as to the objectives of the NNA. Achieving equity between all GN employees across Nunavut is an objective that may be achieved with one methodology, while reducing vacancy rates by ensuring competitiveness in the labour market may require a very different approach. By establishing the objectives of the NNA, even more so if there is a goal of designing it with an "attractiveness" objective, the GN may need to have a more holistic view of how the NNA fits into their total compensation philosophy and framework. There are some interdependencies between the NNA and other compensation elements and there is a need for all of these elements to be in synch if the desired objectives are to be attained. A typical candidate will look at this from a holistic perspective and not at discrete compensation elements when making a decision to accept a job offer. Joint Committee Direction After reviewing the preliminary report, the Joint Committee met with the project team and directed them to proceed with a combination of options 1 and 2: maintain the current framework with some slight modifications. The project team was asked to do the following: • Review whether current variables are reasonable (i.e. does using the INAC Food Basket Survey provide a reasonable means of addressing food costs in Nunavut?). • Remove the “access to services” allowance • Update the variables with current costs • Calculate the current formula and extrapolate the results • Examine scenarios and provide options for how to proceed. 25 Final Report Nunavut Northern Allowance 5. The Current Situation This section of the report will analyze the NNA methodology currently used by the GN. This research, in combination with preceding sections of the report, will form the basis for our discussion of various scenarios and options in the following sections. The Current Variables Cost of Food The GN references a survey conducted by Indian and Northern Affairs Canada (INAC) in order to determine the difference in the cost of food between Nunavut communities and southern Canadian cities. The survey is regularly updated by INAC and references a basket of food that a family of four can reasonably be expected to consume in one week. The Northern Food Basket used to conduct the survey takes into consideration certain health criteria in addition to food preferences of the population. We believe that this survey is an appropriate tool to use to estimate the difference in the cost of food between Nunavut and the south. However, because the survey represents consumption of a family of four, the amount may be inflated for employees without dependants. Cost of Transportation of Goods – Air Freight Rates The current formula provides employees with an allowance to compensate for the cost of shipping 100 kilograms of goods per year to their community by air. The GN’s standing offer for air freight rates is used to estimate the cost of shipping these goods (in cases where a community is served by more than one airline, the lowest rate is used). We were unable to find a source to validate reasonableness of the allowance of 100 kilograms and are therefore not able to provide our comments regarding this allotment. The GN however, may wish to consider whether or not one standard allowance is suitable for employees with and without dependants. Cost of Transportation of Goods – Sealift Rates The current formula provides employees with an allowance to compensate for the cost of shipping 1,500 kilograms of goods per year to their community by ground or sealift. The GN’s standing offer for cargo rates is used, when applicable, to estimate the cost of shipping these goods (in cases where 26 Final Report Nunavut Northern Allowance a community is served by more than one shipping company, the lowest rate is used). We were unable to find a source to validate the reasonableness of the allowance of 1,500 kilograms and are therefore not able to provide our comments regarding this allotment. Once again, the GN may wish to consider whether or not one standard allowance is suitable for employees with and without dependants. Fuel and Utilities The NNA references a survey conducted by MJ Ervin and Associates Inc. in order to determine the difference in the cost of fuel between Nunavut and southern Canadian cities. The survey is regularly updated by MJ Ervin and Associates Inc. and quotes the price per litre of gasoline in various southern cities. The GN’s Petroleum Products Division determines the cost of fuel in each Nunavut community with the exception of Iqaluit. We believe that this survey is an appropriate tool to use to estimate the difference in the cost of fuel between Nunavut and the south. This annual allotment of this allowance is 1,200 litres of gasoline. We completed the following calculations in order to determine how far 1,200 litres of gas will take you: Table 3: Fuel Efficiency Fuel Efficiency Vehicle Data Calculations Results If the sled uses 12.8L to drive Bombardier Sled¹ 12.8L/100km 100km then it would use 1,200L 1,200 L = 9,375 km to drive approximately 9,375 km. If the truck uses 14.3L to drive 14.3L/100 km Ford F150 pick-up truck² 100 km, then it would use 1,200L 1,200 L = 8,390 km (city driving) to drive approximately 8,390 km. ¹ http://www.ski-doo.com/NR/rdonlyres/3F0BFF93-C4CA-4AA3-9DB2-5F947973CB26/%200%20/SkidooBrochure_ENCA.pdf ² http://www.ford.ca/app/trucks/f150.do?modelYear=B90 In order to determine if the allotment of 1,200 litres is reasonable, we must understand the objective of this part of the NNA. If the objective is to compensate the employee for all of their gasoline usage, we would have to first determine how many kilometres per year the average employee drives. If the objective is to compensate the employee for part of their gasoline consumption then we would need to know how many kilometres per year the average employee drives in addition to the portion of this the GN wishes to provide compensation for. Without this information, we are unable to comment as to whether or not the allotment of 1,200 litres is reasonable. 27 Final Report Nunavut Northern Allowance The NNA also includes an allowance to compensate for the cost associated with the usage of 8,400 kWh of electricity per year; the allowance is calculated based on the difference between the costs of consumer electricity rates in Nunavut versus the rates in the south. We completed the following calculations in order to determine the reasonableness of the allotment of 8,400 kWh. Please note that this calculation serves only as an approximate measure of electricity consumption and is not intended to be used as the sole source of data in determining the kWh allotment as part of the NNA formula. Table 4: Electricity Consumption Based on this calculation, we believe that an allotment of 8,400 kWh per year is conservative, especially for a family of four. Electricity Consumption (1yr) Appliances Family of Four Single 40 Gallon hot water tank (14.6 kWh/day) 5,329 5,329 Warm Water Wash (2.59 kWh/use) 1 269 135 Normal Cycle dryer (2.39 kWh/use) 1 249 124 Shower (2.4 kWh/use) 2 3,504 876 1 60Watt bulb (88kWh/yr) 3 880 440 Freezer (1,035 kWh/yr) 1,035 1,035 Fridge (1,060 kWh/yr) 1,060 1,060 Range (548 kWh/yr) 548 548 Oven (374 kWh/yr) 374 374 Vacuum (42 kWh/yr) 42 42 Kettle (110 kWh/yr) 110 110 Toaster (21 kWh/yr) 21 21 VCR (9 kWh/yr) 9 9 Color TV (385 kWh/yr) 385 385 Engine block heater (221 kWh/yr) 221 221 TOTAL: 14,036 10,709 1 Assumes that a family of four does 2 loads of laundry per week (wash and dry) and a single person does 1 load of laundry per week (wash and dry). 2 Assumes that each person takes 1 shower per day (therefore, a family of four takes 4 showers per day). 3 Assumes that a family of four uses 10 light bulbs and a single person uses 5 light bulbs. Source: http://www.hydroquebec.com/residential/energywise/calcul_ consom.html 28 Final Report Nunavut Northern Allowance The NNA provides one half of the value of the difference of the cost of fuel and of the cost of electricity consumption, as described above. Due to subsidized electricity rates in Nunavut this may be appropriate when calculating the value of the allowance to compensate for electricity usage. The Joint Committee may, however, wish to consider the reasons and justification for providing one half of the value to compensate for the higher cost of gasoline in Nunavut. Travel Costs The NNA allows four return airline tickets to the closest designated southern city. Based on the results of our survey, we believe that it is important to provide some form of compensation for travel to southern cities. However, the current allotment of four return tickets to all employees results in a higher benefit for single employees than for employees with dependants. For example, a single employee could travel to the south four times per year whereas an employee with three dependants could travel with the entire family once per year. We believe the travel component of the NNA should be reviewed by the Joint Committee in order to ensure equitable treatment for all employees. Access to Services / Special Location The Joint Committee has indicated that this variable will be excluded from the NNA in the future so we did not analyze this component. The Current Formula We removed the access to services allowance and updated the remaining variables in the current formula. Please note that the calculations shown are approximate and a number of assumptions were applied in order to arrive at a value for each community (please refer to Appendix E for a full discussion of these assumptions). We used the GN’s NNA values as of April 2008 in order to be consistent with the values in previous sections of this report but have also included some discussion using the April 2009 figures below in order to be as current and accurate as possible. The results are presented in the following table. 29 Table 5: Results of the Current Formula Based on current variables updated Difference Cost to update # ees per F o od A i r F r e ig h t Sealift Fuel Utilities Tr ave l Allowance (updated vs Cost to update variables (excluding Community community F1 AF GS F2 U TC Total as of April 08 current allowance) variables negative amounts) Arctic Bay 43 8,337 1,054 597 161 2,100 25,748 37,997 23,045 14,952 642,949 642,949 Arviat 163 8,857 578 573 166 2,004 6,636 18,813 19,150 -337 -54,877 -- Baker Lake 130 10,417 578 573 160 1,713 8,467 21,907 22,114 -207 -26,904 -- Cambridge Bay 170 8,493 442 763 229 1,814 8,443 20,183 17,883 2,300 391,014 391,014 Cape Dorset 98 8,129 909 526 155 1,464 9,141 20,323 19,029 1,294 126,833 126,833 Chesterﬁeld Inlet 25 10,937 757 573 166 2,611 7,207 22,251 20,995 1,256 31,398 31,398 Clyde River 45 10,677 1,308 597 143 1,780 14,701 29,207 20,842 8,365 376,418 376,418 Coral Harbour 45 11,405 757 573 176 2,516 7,190 22,617 21,126 1,491 67,113 67,113 Gjoa Haven 69 11,405 690 763 229 2,255 11,845 27,187 23,896 3,291 227,074 227,074 Grise Fiord 14 8,753 1,501 597 143 2,239 32,228 45,461 31,251 14,210 198,935 198,935 Hall Beach 37 10,469 963 573 143 2,138 14,878 29,164 21,371 7,793 288,337 288,337 Igloolik 110 9,793 963 573 143 1,287 14,861 27,620 20,480 7,140 785,373 785,373 Iqaluit 1106 7,505 434 440 231 1,190 8,183 17,983 13,563 4,420 4,888,415 4,888,415 Kimmirut 29 8,129 701 526 155 2,623 9,477 21,611 17,345 4,266 123,724 123,724 Kugaaruk 33 10,053 812 597 229 3,071 14,869 29,631 24,162 5,469 180,492 180,492 Kugluktuk 115 10,781 533 763 229 2,383 8,326 23,014 19,993 3,021 347,444 347,444 Pangnirtung 109 10,677 817 526 161 1,369 10,165 23,716 17,276 6,440 701,926 701,926 Pond Inlet 118 7,401 1,459 597 155 2,168 15,827 27,608 21,963 5,645 666,082 666,082 Qikiqtarjuaq 37 9,845 988 597 185 1,771 11,425 24,812 20,533 4,279 158,333 158,333 Rankin Inlet 295 9,377 386 404 136 1,446 6,636 18,385 16,795 1,590 468,971 468,971 Repulse Bay 32 9,013 757 573 142 2,200 7,190 19,875 19,858 17 529 529 Resolute 20 9,585 1,054 597 107 2,545 27,770 41,658 25,829 15,829 316,590 316,590 Sanikiluaq 40 9,117 413 573 195 1,914 7,221 19,433 18,406 1,027 41,096 41,096 Taloyoak 36 10,885 755 763 218 2,549 13,206 28,377 27,596 781 28,099 28,099 Whale Cove 25 8,597 757 404 166 2,376 5,662 17,962 19,559 -1,597 -39,934 -- TOTAL 238,645 20,364 14,638 4,317 51,527 307,305 636,795 10,935,430 11,057,145 % of total 37% 3% 2% 1% 8% 48% 100% Notes: Source is latest Public Service Annual Report from GN HR website Final Report Nunavut Northern Allowance The ‘Difference (updated vs current allowance)’ column of the table confirms that the amounts currently being paid are, in many cases, less than the amounts that would be paid using the existing formula. Please note that we did not include the value for the ‘access to services’ variable in our calculation. If this variable was included, the difference would increase, which would also increase the gap between the amount currently paid and the amount that would be paid. The financial impact to the GN by applying the existing formula and paying the amounts shown in the table above is approximately $11 million. We used the northern allowance values at April 2008 to calculate this impact but if the April 2009 rates are used, the cost reduces to approximately $8.3 million. There are, however, some communities that are currently receiving a superior northern allowance than what the formula intends to pay. If we remove these communities from the costing and apply the April 2009 values, the overall impact to the GN is approximately $8.9 million (this assumes that the GN will not reduce the northern allowance in any community). If the current formula was applied, the average of the northern allowance paid by the GN would increase from $20,962 to $25,472. This average value would lead the market average both in terms of employees with and without dependents (average of participating organizations is $21,001 and $17,143 respectively, as quoted on page 16 of this report). Once again, however, the GN values include the travel component but the market values do not. The table shows that the travel and food variables are the two largest variables (representing 48% and 37% of the total cost respectively). Making changes to either one of these variables will therefore result in the largest financial impact on the value of the northern allowance. Our Comments Overall, we believe that the current NNA formula is comprehensive and can be administered through the use of reliable quantitative data. We do caution the GN against relying too heavily on external sources of data without having a contingency plan in the event the data is no longer published; the GN may wish to identify alternate sources of quantitative data that could replace either of the external surveys referenced in the current formula to alleviate this risk. As we described in the survey results section of this report, many organizations do not have an in-depth methodology to apply but rather they follow the methodology of other larger organizations or they make management decisions based on what the organization can reasonably afford to pay. 31 Final Report Nunavut Northern Allowance Other Considerations The parties may wish to consider changes to the allowances for utilities and fuel. As is mentioned in the “Key Issues” of Section 6, the rationale and allowance for utilities is unclear. If the intent is to address higher costs of shelter for all employees, this section of the NNA should be revisited and consideration given to a full Shelter Cost Differential similar to the IPGHD. However, since the GN currently provides support to employees in staff housing through their Staff Housing and Rental Assistance Policies, consideration could be given to providing support only to employees who are homeowners or paying for accommodations in the private market. Alternatively that support could be provided through a separate program at the Nunavut Housing Corporation and those allowances be removed from the NNA altogether. Furthermore, if the intent of the “utilities” component of the NNA is to address the higher cost of shelter in Nunavut, the amount provided for electricity appears to be substantively less than required to actually operate a house and the reason for providing the allowance remains unclear. The GN Staff Housing Policy and the Rental Assistance Policy are both administered by the Nunavut Housing Corporation. The Staff Housing policy describes when an employee is eligible for staff housing and what costs they will pay – including the fact that each tenant is responsible to pay their own utility costs to encourage conservation. The Rental Assistance Policy is a program that ensures no employee will pay more than 30% of their income towards shelter costs. Therefore, for employees in staff housing, the allowance may be contradicting or duplicating other measures – the rates for electricity are subsidized by the Qulliq Energy Corporation, employees in staff housing are expected to pay their utilities in order to conserve, and if an employee is suffering economic hardship, they can apply to the Rental Assistance Program. If the intent is to assist employees living in private accommodations, then the provision of this allowance to all employees would appear to be inequitable. Finally, if the rationale for the utilities allowance is to support employees with the higher costs of maintaining a house in Nunavut then it is unclear why electricity is included in the allowance and heating fuel is not. The next section presents some options for possible modifications/improvements. 32 Final Report Nunavut Northern Allowance 6. Scenarios Table 5 showed that the impact of removing the access to services allowance and updating the remainder of the variables would cost the GN approximately $10 and $11 million dollars more than the April 1, 2008 amounts in the collective agreement. The impact declines to between $8 and $9 million using the April 1, 2009 allowances. The financial limitations of the GN make it unlikely that this is a practical or achievable amount to be immediately added to the payroll costs of the government without major impacts on other programs and services. The following scenarios, using the April 2009 NNA values as the point of reference, attempt to model adjustments to the formula based on our review of “reasonableness” and the stated objectives of the NNA in a manner that would ameliorate these impacts while still being practical, achievable and equitable. Our analysis has shown that the ‘highest impact’ variables within the GN’s current formula are food and travel (due to the high cost of these variables in proportion to the other variables) so the following scenarios present options regarding the calculation of the value of these variables. Our research and analysis also confirmed that the treatment of employees with versus those without dependants is an important issue surrounding the northern allowance so the following scenarios also present options for managing this. Key Issues • Travel – this allowance accounts for 48% of the total NNA when the variables for each community are updated. The amount is included in the overall allowance while most other employers treat it separately. Providing a travel allowance is reasonable and common practice among northern employers. Capping the allowance for a family of four is also reasonable given the average Nunavut family size of 3.7 provided by Statistics Canada2. 2 Statistics Canada (Aug 2009). 2006 Community Profiles. Retrieved from http://www12.statcan.ca/census-recensement/2006/dp- pd/prof/92- 591/details/Page.cfm?Lang=E&Geo1=PR&Code1=62&Geo2=PR&Code2=01&Data=Count&SearchText=Nunavut&SearchType=Begins&Se archPR=01&B1=All&GeoLevel=&GeoCode=62 33 Final Report Nunavut Northern Allowance • Food Allowance – the food allowance accounts for 37% of the updated NNA. The mechanism for determining the “basket” for a family of four is reasonable and one that can be verified easily by all parties. • Dependants – the NNA provides the same amount of money to a single employee as it does to an employee with dependants. The two major components of the NNA are the travel and food allowances – both of which are calculated using four as their base as- sumption (four round trip tickets, food for a week for a family of four). The Federal Government and some other employers differentiate between employees with and without dependants. The GN was not able to provide information on which employees have dependants or how many dependants those employees may have. In addition, there was no information available as to how many couples or families have more than one person employed by the GN. Therefore, in order to estimate the impacts of scenarios that address dependants a number of assumptions had to be made. The Nunavut Bureau of Statistics, based on StatsCan data, provides the following household characteristics for Nunavut in their 2006 Census Data. 34 Final Report Nunavut Northern Allowance Table 6: Household Characteristics in Nunavut Selected household characteristics Total % of Total Total private households 7,855 100 Households containing a couple 3,300 42 (married or common-law) with children Households containing a couple 855 11 (married or common-law) without children One-person households 1,440 18 Other household types 2,265 29 Average household size 3.7 The definition of “Other Household Types” includes multiple-family households, lone-parent family households and non-family households other than one-person households. For Scenarios 2, 3 and 4 the following assumptions have been used. • 71% of employees have four or more dependants (A couple with children and “other households”) • 11% of employees have only 1 dependant (couple without children) • 18% of employees have no dependants (one-person households) Scenario 1 – Update the Variables in the Current Formula The first scenario is presented in Table 5 on page 30 and involves maintaining the formula as it exists today, with the exception of removing the access to services variable, but updating all variables in order to accurately apply the formula. As previously mentioned, the estimated cost of this option to the GN is $8 - $9 million. 35 Scenario 2 – Adjust NNA (Food and Travel) to Address Dependants Using assumptions based on Table 6, 82% of employees would have dependants and 18% would not. The current allowance calculates food for a family of four and four round trips for travel. By simply updating the variables to current costs and dividing the travel and food variables by four for those without dependants, we can model the impact on allowances. In this scenario an employee in Arctic Bay with dependants would be eligible for an increase of $13,748 while an employee without dependants would have their allowance reduced by $11,816. Table 7: Scenario 2 Current variables updated and Food, Travel divided by four for employees without dependants Current Difference Difference Full Update # ees per Food A i r F r e i gh t Sealift Fuel Utilities Travel Total With Total Without Allowance With Without 2009/2010 Total 4 Scenario 2 Community community F1 AF GS F2 U TC Dependents Dependents Apr-09 Dependents Dependents Total (Scenario 1) Total 5 Arctic Bay 43 8,337 1,054 597 161 2,100 25,748 37,997 12,433 24,249 13,748 -11,816 1,042,707 1,633,884 1,436,019 Arviat 163 8,857 578 573 166 2,004 6,636 18,813 7,193 20,108 -1,295 -12,915 3,277,604 3,066,573 2,725,642 Baker Lake 130 10,417 578 573 160 1,713 8,467 21,907 7,744 23,220 -1,313 -15,476 3,018,600 2,847,916 2,516,493 Cambridge Bay 170 8,493 442 763 229 1,814 8,443 20,183 7,481 18,777 1,406 -11,296 3,192,090 3,431,124 3,042,426 Cape Dorset 98 8,129 909 526 155 1,464 9,141 20,323 7,371 19,981 342 -12,610 1,958,138 1,991,675 1,763,194 Chesterﬁeld Inlet 25 10,937 757 573 166 2,611 7,207 22,251 8,643 22,045 206 -13,402 551,125 556,273 495,035 Clyde River 45 10,677 1,308 597 143 1,780 14,701 29,207 10,173 21,884 7,323 -11,711 984,780 1,314,308 1,160,132 Coral Harbour 45 11,405 757 573 176 2,516 7,190 22,617 8,671 22,182 435 -13,511 998,190 1,017,783 904,814 Gjoa Haven 69 11,405 690 763 229 2,255 11,845 27,187 9,749 25,090 2,097 -15,341 1,731,210 1,875,898 1,659,317 Grise Fiord 14 8,753 1,501 597 143 2,239 32,228 45,461 14,725 32,814 12,647 -18,089 459,396 636,449 558,995 Hall Beach 37 10,469 963 573 143 2,138 14,878 29,164 10,154 22,439 6,725 -12,285 830,243 1,079,064 952,455 Igloolik 110 9,793 963 573 143 1,287 14,861 27,620 9,129 21,504 6,116 -12,375 2,365,440 3,038,173 2,672,056 Iqaluit 1,106 7,505 434 440 231 1,190 8,183 17,983 6,217 14,289 3,694 -8,072 15,803,634 19,889,093 17,546,668 Kimmirut 29 8,129 701 526 155 2,623 9,477 21,611 8,407 18,212 3,399 -9,805 528,148 626,729 557,801 Kugaaruk 33 10,053 812 597 229 3,071 14,869 29,631 10,939 25,371 4,260 -14,432 837,243 977,838 866,808 Kugluktuk 115 10,781 533 763 229 2,383 8,326 23,014 8,684 20,992 2,022 -12,308 2,414,080 2,646,639 2,350,001 Pangnirtung 109 10,677 817 526 161 1,369 10,165 23,716 8,084 18,177 5,539 -10,093 1,981,293 2,585,010 2,278,309 Pond Inlet 118 7,401 1,459 597 155 2,168 15,827 27,608 10,187 23,061 4,547 -12,874 2,721,198 3,257,716 2,887,689 Qikiqtarjuaq 37 9,845 988 597 185 1,771 11,425 24,812 8,859 21,560 3,252 -12,701 797,720 918,054 811,807 Rankin Inlet 295 9,377 386 404 136 1,446 6,636 18,385 6,375 17,635 750 -11,260 5,202,325 5,423,496 4,785,765 Repulse Bay 32 9,013 757 573 142 2,200 7,190 19,875 7,722 20,851 -976 -13,129 667,232 635,985 565,985 Resolute 20 9,585 1,054 597 107 2,545 27,770 41,658 13,642 27,121 14,537 -13,479 542,420 833,170 732,309 Sanikiluaq 40 9,117 413 573 195 1,914 7,221 19,433 7,179 19,327 106 -12,148 773,080 777,336 689,108 Taloyoak 36 10,885 755 763 218 2,549 13,206 28,377 10,308 28,975 -598 -18,667 1,043,100 1,021,555 904,470 Whale Cove 25 8,597 757 404 166 2,376 5,662 17,962 7,267 20,537 -2,575 -13,270 513,425 449,041 400,917 TOTAL 238,645 20,364 14,638 4,317 51,527 307,305 636,795 227,333 54,234,421 62,530,782 55,264,214 %of total 37% 3% 2% 1% 8% 48% 100% ADDITIONAL COST: -- 8,296,361 1,029,793 Notes: 22,016 3,456 -12,923 Assumes that food consumption is linear (i.e. the cost to feed one person is exactly 25% of the cost to feed a family of four) Source is latest Public Service Annual Report from GN HR website 3 Represents the cost of the NNA to the GN as per the current collective agreement (i.e. what the GN will pay if no changes to the formula or variables are made). 4 R epresents the results of updating all the variables and leaving the formula untouched, with the exception of removing the access to services allowance (scenario 1). 5 Represents the results of our assumptions based on dividing the food and travel allowances by four for an employee without dependents. Scenario 3 – Adjust NNA (per IPGHD differential) to Address Dependants The IPGHD provides employees without dependants approximately 60% of the allowance for employees with dependants. Using the assumption that 82% of employees would have dependants and 18% would not, updating the variables and providing employees without dependants 60% of the updated NNA returns the following results: Table 8: Scenario 3 Current variables updated, Employees without dependants at 60% Current Difference Difference Full Update # ees per Food Air Freight Sealift Fuel Utilities T r a v el Total With Total Without Allowance With Without 2009/2010 T ot a l Scenario 3 Community community F1 AF GS F2 U TC Dependents Dependents Apr-09 Dependents Dependents T ot a l (Scenario 1) T ot a l 4 Arctic Bay 43 8,337 1,054 597 161 2,100 25,748 37,997 22,798 24,249 13,748 -1,451 1,042,707 1,633,884 1,516,244 Arviat 163 8,857 578 573 166 2,004 6,636 18,813 11,288 20,108 -1,295 -8,820 3,277,604 3,066,573 2,845,779 Baker Lake 130 10,417 578 573 160 1,713 8,467 21,907 13,144 23,220 -1,313 -10,076 3,018,600 2,847,916 2,642,866 Cambridge Bay 170 8,493 442 763 229 1,814 8,443 20,183 12,110 18,777 1,406 -6,667 3,192,090 3,431,124 3,184,083 Cape Dorset 98 8,129 909 526 155 1,464 9,141 20,323 12,194 19,981 342 -7,787 1,958,138 1,991,675 1,848,274 Chesterﬁeld Inlet 25 10,937 757 573 166 2,611 7,207 22,251 13,351 22,045 206 -8,694 551,125 556,273 516,222 Clyde River 45 10,677 1,308 597 143 1,780 14,701 29,207 17,524 21,884 7,323 -4,360 984,780 1,314,308 1,219,677 Coral Harbour 45 11,405 757 573 176 2,516 7,190 22,617 13,570 22,182 435 -8,612 998,190 1,017,783 944,503 Gjoa Haven 69 11,405 690 763 229 2,255 11,845 27,187 16,312 25,090 2,097 -8,778 1,731,210 1,875,898 1,740,833 Grise Fiord 14 8,753 1,501 597 143 2,239 32,228 45,461 27,276 32,814 12,647 -5,538 459,396 636,449 590,625 Hall Beach 37 10,469 963 573 143 2,138 14,878 29,164 17,498 22,439 6,725 -4,941 830,243 1,079,064 1,001,371 Igloolik 110 9,793 963 573 143 1,287 14,861 27,620 16,572 21,504 6,116 -4,932 2,365,440 3,038,173 2,819,424 Iqaluit 1,106 7,505 434 440 231 1,190 8,183 17,983 10,790 14,289 3,694 -3,499 15,803,634 19,889,093 18,457,079 Kimmirut 29 8,129 701 526 155 2,623 9,477 21,611 12,967 18,212 3,399 -5,245 528,148 626,729 581,604 Kugaaruk 33 10,053 812 597 229 3,071 14,869 29,631 17,779 25,371 4,260 -7,592 837,243 977,838 907,434 Kugluktuk 115 10,781 533 763 229 2,383 8,326 23,014 13,809 20,992 2,022 -7,183 2,414,080 2,646,639 2,456,081 Pangnirtung 109 10,677 817 526 161 1,369 10,165 23,716 14,229 18,177 5,539 -3,948 1,981,293 2,585,010 2,398,889 Pond Inlet 118 7,401 1,459 597 155 2,168 15,827 27,608 16,565 23,061 4,547 -6,496 2,721,198 3,257,716 3,023,161 Qikiqtarjuaq 37 9,845 988 597 185 1,771 11,425 24,812 14,887 21,560 3,252 -6,673 797,720 918,054 851,954 Rankin Inlet 295 9,377 386 404 136 1,446 6,636 18,385 11,031 17,635 750 -6,604 5,202,325 5,423,496 5,033,005 Repulse Bay 32 9,013 757 573 142 2,200 7,190 19,875 11,925 20,851 -976 -8,926 667,232 635,985 590,194 Resolute 20 9,585 1,054 597 107 2,545 27,770 41,658 24,995 27,121 14,537 -2,126 542,420 833,170 773,181 Sanikiluaq 40 9,117 413 573 195 1,914 7,221 19,433 11,660 19,327 106 -7,667 773,080 777,336 721,368 Taloyoak 36 10,885 755 763 218 2,549 13,206 28,377 17,026 28,975 -598 -11,949 1,043,100 1,021,555 948,003 Whale Cove 25 8,597 757 404 166 2,376 5,662 17,962 10,777 20,537 -2,575 -9,760 513,425 449,041 416,710 TOTAL 238,645 20,364 14,638 4,317 51,527 307,305 636,795 382,077 54,234,421 62,530,782 58,028,565 % of total 37% 3% 2% 1% 8% 48% 100% ADDITIONAL COST: -- 8,296,361 3,794,144 Notes: #DIV/0! #DIV/0! Source is latest Public Service Annual Report from GN HR website Represents the cost of the NNA to the GN as per the current collective agreement (i.e. what the GN will pay if no changes to the formula or variables are made). Represents the results of updating all the variables and leaving the formula untouched, with the exception of removing the access to services allowance (scenario 1). 4 Represents the results of our assumptions based on paying an employee without dependents 60% of the value of an employee with dependents. $3,456 Final Report Nunavut Northern Allowance In this scenario an employee in Arctic Bay with dependants would still receive an increase of $13,748 while an employee without dependants would have their allowance reduced by $1,451. While this is still a reduction it is far less than the reduction of almost $12,000 in Scenario 2. Scenario 4 – Remove Travel from NNA, Provide 1 Trip Per Person, Capped at Four When all the variables are updated to current costs, the travel allowance accounts for 48% of the revised amounts. Vacation Travel Assistance has consistently been an issue for a number of years. This scenario models the potential impact of removing that allowance from the NNA and providing one round trip per employee and their dependants capped at a maximum of four. For the purposes of this exercise we have used Table 6 to make the following assumptions: • 71% of employees would receive the maximum of four round trips (A couple with children and other households) • 11% of employees would receive two round trips (couple without children) • 18% of employees would receive one round trip (one-person households) Again, we must stress that there are many variables that we have not taken into account, but the results of these assumptions are: 38 Table 9: Scenario 4 Current variables updated and travel dealt with on an application basis - one round trip capped at four people Current Full Update # ees per F o od Air Freight Sealift Fuel Utilities T ot a l Travel With Travel Without Allowance 2009/2010 Total Scenario 4 Community community F1 AF GS F2 U Allowance Dependents Dependents Apr-09 Total (Scenario 1) Total Arctic Bay 43 8,337 1,054 597 161 2,100 12,249 846,980 30,447 24,249 1,042,707 1,633,884 1,404,148 Arviat 163 8,857 578 573 166 2,004 12,177 827,476 29,746 20,108 3,277,604 3,066,573 2,842,126 Baker Lake 130 10,417 578 573 160 1,713 13,440 842,063 30,270 23,220 3,018,600 2,847,916 2,619,514 Cambridge Bay 170 8,493 442 763 229 1,814 11,740 1,098,064 39,473 18,777 3,192,090 3,431,124 3,133,283 Cape Dorset 98 8,129 909 526 155 1,464 11,183 685,271 24,634 19,981 1,958,138 1,991,675 1,805,801 Chesterﬁeld Inlet 25 10,937 757 573 166 2,611 15,044 137,838 4,955 22,045 551,125 556,273 518,886 Clyde River 45 10,677 1,308 597 143 1,780 14,505 506,096 18,193 21,884 984,780 1,314,308 1,177,033 Coral Harbour 45 11,405 757 573 176 2,516 15,427 247,530 8,898 22,182 998,190 1,017,783 950,643 Gjoa Haven 69 11,405 690 763 229 2,255 15,342 625,259 22,477 25,090 1,731,210 1,875,898 1,706,301 Grise Fiord 14 8,753 1,501 597 143 2,239 13,233 345,162 12,408 32,814 459,396 636,449 542,827 Hall Beach 37 10,469 963 573 143 2,138 14,286 421,116 15,138 22,439 830,243 1,079,064 964,840 Igloolik 110 9,793 963 573 143 1,287 12,759 1,250,553 44,955 21,504 2,365,440 3,038,173 2,698,970 Iqaluit 1,106 7,505 434 440 231 1,190 9,800 6,923,554 248,886 14,289 15,803,634 19,889,093 18,011,136 Kimmirut 29 8,129 701 526 155 2,623 12,135 210,238 7,558 18,212 528,148 626,729 569,703 Kugaaruk 33 10,053 812 597 229 3,071 14,762 375,378 13,494 25,371 837,243 977,838 876,020 Kugluktuk 115 10,781 533 763 229 2,383 14,688 732,462 26,330 20,992 2,414,080 2,646,639 2,447,965 Pangnirtung 109 10,677 817 526 161 1,369 13,550 847,642 30,471 18,177 1,981,293 2,585,010 2,355,094 Pond Inlet 118 7,401 1,459 597 155 2,168 11,781 1,428,703 51,359 23,061 2,721,198 3,257,716 2,870,192 Qikiqtarjuaq 37 9,845 988 597 185 1,771 13,387 323,396 11,625 21,560 797,720 918,054 830,335 Rankin Inlet 295 9,377 386 404 136 1,446 11,749 1,497,579 53,835 17,635 5,202,325 5,423,496 5,017,290 Repulse Bay 32 9,013 757 573 142 2,200 12,684 176,021 6,328 20,851 667,232 635,985 588,241 Resolute 20 9,585 1,054 597 107 2,545 13,888 424,887 15,274 27,121 542,420 833,170 717,923 Sanikiluaq 40 9,117 413 573 195 1,914 12,212 268,629 31,773 19,327 773,080 777,336 788,890 Taloyoak 36 10,885 755 763 218 2,549 15,170 363,699 13,074 28,975 1,043,100 1,021,555 922,905 Whale Cove 25 8,597 757 404 166 2,376 12,300 108,278 3,892 20,537 513,425 449,041 419,671 TOTAL 238,645 20,364 14,638 4,317 51,527 329,491 21,513,876 795,491 54,234,421 62,530,782 56,779,736 % of total 72% 6% 4% 1% 16% 100% ADDITIONAL COST: -- 8,296,361 2,545,315 Notes: $13,180 $22,016 Represents the cost of the NNA to the GN as per the current collective agreement (i.e. what the GN will pay if no changes to the formula or variables are made). R epresents the results of updating all the variables and leaving the formula untouched, with the exception of removing the access to services allowance (scenario 1). Represents the results of our assumptions based on removing the travel allowance from the NNA and providing up to a maximum of four round trip tickets based on the number of dependants an employee may have (71% receive 4 round trips 11% receive 2 round trips and 18% receive one round trip) Under this scenario, the GN’s average NNA value across all communities would be $13,180. The market provides, on average, one or two round trips as a travel benefit. By providing one round trip the GN will be close to the market average in terms of the travel benefit but will trail it in terms of the NNA amount. NOTE: Removing the travel portion does not allow for complete accuracy of comparison with the Treasury Board allowance as the TSB includes a full shelter cost differential. Final Report Nunavut Northern Allowance 7. Options 1. Update Variables and Apply Formula. Based on our assumptions, the removal of the access to services allowance and available data, our research suggested that updating the variables would cost the GN an additional $8 to $9 million in 2009/2010. The advantages of this option are: • The formula is understood by both parties and, for the most part, accepted; • It is a relatively straightforward exercise to update the variables in whatever time frame is agreed upon; • While some communities would see a reduction in their total allowance per employee, these exceptions are the minority and can be fairly easily addressed by grandfathering employees in those situations at their current levels. The disadvantages are: • It is unlikely that the GN would be able to afford such a dramatic increase in payroll costs without major impacts on other services and programs; - The GN could consider options to help address the increase in cost including: A) Phase in the increase to the NNA over a number of years. For example, the GN could phase in the increase over the period of the next collective agreement (20% over each of the five years) or over another pre-determined period of time. B) Complete an analysis of employee demographics to provide for potential savings. For example, in cases where both spouses work for the GN, consideration could be given to only one spouse receiving the NNA. - The formula does not address inequities between employees with dependants and employees without dependants. 40 Final Report Nunavut Northern Allowance 2. Update Variables and Adjust For Dependants. Two scenarios attempted to model this op- tion. In Scenario 2 the food and travel allowances were divided by four to determine what the allowance would be for an employee with no dependants. In Scenario 3 an employee with no dependants would receive 60% of the allowance of those with dependants. In both cases a simple “yes/no” would be used to determine which amount would be appropriate – no attempt was made to prorate the amounts based on the number of dependants. The advantages of this option are: • In addition to the advantages in Option 1, this option is more equitable for employees with dependants. Currently those with and without dependants are receiving the same allowance, despite the fact that the two key variables are calculated for a family of four. • This may be more affordable and realistic for the GN given its fiscal limitations. The disadvantages are: • These options produce substantial decreases in the allowances paid to employees without dependants. While Scenario 3 reduces the impact, it is still substantial. Similar to option 1, this can be addressed by grandfathering employees in these situations. 3. Update Variables, Remove Travel Allowance and Adjust for Dependants. Scenario 4 attempts to project the impact of this option. The travel allowance would be removed from the NNA and each employee would apply for up to one round trip for themselves and dependants. The maximum trips would be capped at four which would appear reasonable given the average Nunavut family size of 3.7. The advantages of this option are: • As per the previous two options, the formula is understandable and objectively measurable. • Providing one round trip for each employee and each dependant, capped at a maximum of four, is more equitable for those employees with dependants and is more representative of the actual travel costs once the variables are updated. • Increases in the other allowances (food, fuel, utilities, etc) could possibly be partially offset by pro-rating travel to the actual number of people travelling – thus more affordable and potentially achievable. 41 Final Report Nunavut Northern Allowance The disadvantages are: • Implementation of these changes would have to be very carefully planned. While the balance of the NNA to be payable to each employee is fairly easy to determine, removing the travel portion until such time as an application could be made, verified and approved, could mean a substantial reduction in employees’ bi-weekly paycheques; • The transition to this new NNA methodology may be difficult but once it is complete, overall administration of the new program should be straightforward. A strong change management plan, including communications, would be required to ensure a smooth transition; • Ultimately, while this option does not have quite the same impact on employees without dependants, it could still represent a substantial decrease in their current benefits. Once again, this could be immediately addressed by grandfathering employees in this situation. 42 Final Report Nunavut Northern Allowance 8. Conclusions The objectives of the NNA, the direction of the Joint Committee based on MOU # 9 and the results of the research, employer survey and analysis lead to a number of conclusions. The most important of these conclusions are: 1. The NNA is intended to meet two objectives: • to address the difference in the cost of living between Nunavut communities and designated southern communities • to equalize the compensation of GN employees across Nunavut who may face different economic conditions in different communities While these are the stated objectives, there must be complete clarity of understanding between employer and employees. If there is agreement between employer and employee as to the stated and achieved objectives of the NNA there will be less confusion. This will result in higher acceptance and support by all parties. 2. In the past the amount of the allowance to be paid to employees was reduced from the amount that resulted from the application of the formula. The effect of this change was to make the amount of the allowance a function of negotiation as opposed to a process of updating variables and applying them. This also led to the allowance becoming a point of contention during negotiations and requiring an inordinate amount of effort between the two parties attempting to reach an agreement. The other effect of this change was to dissociate the allowance from its intended objectives and reduce its perceived effectiveness in addressing the different costs of living between north and south and between northern communities. 3. There is no best practice. Each organization must, therefore, establish a methodology to determine the value of a northern allowance that is appropriate, given the specific objectives and the total reward framework of the organization. The use of information that is widely available is recommended when determining the values noted above. In conducting our research through the survey, the most formal reason for declining to participate was lack of 43 Final Report Nunavut Northern Allowance resources. If the data that is used in determining the value is not widely available and easily accessible, this could factor into maintaining current data. The survey results also note that only a few participating organizations have an in-depth methodology and most use the values of other larger organizations. The NNA formula is a reasonable methodology for attempting to meet the objectives and is comparable to other northern employers’ methodologies. It provides an objective means of agreeing to adjustments during bargaining. While the overall methodology is reasonable, we were unable to validate some of the individual variables such as air cargo and sealift freight. 4. The key differences between comparable programs are how vacation travel allowances and employees with/without dependants are addressed. Comparison of other organizations shows that the majority provide a separate vacation travel allowance. All five of the participating organizations shown in the analysis on page 16 pay a travel allowance separate from the northern allowance. The removal of the vacation travel allowance as a separate component and incorporating it into the NNA has contributed to the NNA becoming dissociated from its original objective of equalizing the cost of living in the north and south. Different amounts for employees with dependants and employees without dependants are used in the majority of participating organizations. Consideration should be given to this approach for the NNA. Components like the cost of food and travel are better suited to equalizing the cost of living in the north and south if they are also linked to family size. The travel and food variables are the largest components of the current NNA, representing 48% and 37% respectively. Changes to these two components will have a more significant effect than changes to any of the other components. 44 Final Report Nunavut Northern Allowance Appendix A: Survey of Household Spending3 N.W.T. Y.T. Nvt. Average Households Average Households Average Households expenditure reporting expenditure reporting expenditure reporting per household expenditures per household expenditures per household expenditures Total Expenditures 89,075 100.0 76,997 100.0 73,747 100.0 Total current consumption 63,369 100.0 53,929 100.0 54,400 100.0 Food 9,096 100.0 7,078 100.0 14,057 100.0 Shelter 18,249 98.1 14,058 99.1 11,547 99.1 Household Operation 4,110 97.5 3,831 100.0 3,445 99.8 Household furnishings & 2,466 90.7 2,707 97.4 2,082 91.0 equipment Clothing 3,844 98.1 2,915 100.0 3,345 98.8 Transportation 11,439 96.3 10,775 98.0 5,456 81.0 Health Care 1,306 92.8 1,603 98.6 874 82.1 Personal Care 1,351 96.9 1,193 99.8 1,123 97.8 Recreation 6,132 97.6 4,860 99.8 6,855 95.0 Reading materials & other 312 78.0 415 84.4 201 48.0 printed matter Education 503 29.6 739 31.6 No data No data available available Tobacco products & 2,792 90.4 2,236 83.9 3,506 92.9 alcoholic beverages Games of chance (net 653 54.4 308 48.5 465 40.8 amount) Miscellaneous 1,116 84.8 1,212 96.3 1,144 78.1 Personal income taxes 17,751 97.7 16,437 93.8 13,312 93.6 Personal insurance 6,228 88.2 4,961 90.8 4,742 89.7 payments & pension contributions Gifts of money & 1,727 70.0 1,670 75.1 1,293 63.7 contributions 3 Source: Statistics Canada (Dec 2008). Average household expenditures, by province and territory in 2007. Retrieved from http://www40.stat- can.gc.ca/l01/cst01/famil16g-eng.htm on April 23, 2009. 45 Final Report Nunavut Northern Allowance Appendix B: All Solicited Organizations Participating Organizations Non-Participating Organizations Canadian North Inc City of Iqaluit Federal Government of Canada Government of Newfoundland and (Treasury Board of Canada Secre- Labrador tariat) First Air Kitikmeot Inuit Association Government of the Northwest Ter- Qikiqtani Inuit Association ritories Government of Yukon Qulliq Energy Corporation Inuvialuit Regional Corporation Kativik Regional Government Kivalliq Inuit Association Nunatsiavut Government Nunavut Tunngavik Incorporated Public Service Alliance of Canada Royal Canadian Mounted Police 46 Final Report Nunavut Northern Allowance Appendix C: Questionnaire 2009 Review of Northern Allowance Methodology Introduction Hay Group is pleased to present this questionnaire as part of a review we are conducting for the Government of Nunavut regarding their Northern Allowance Methodology. Thank you for taking the time to accurately respond to all questions in each of the 4 sections of this questionnaire. Section 1 collects your contact information so that we may send you a copy of the participant report and so that we may contact you to clarify any information provided in your responses, if necessary. Section 2 collects information about your organization and its operations. Sections 3 and 4 collect detailed information regarding your organization's Northern Allowance and the associated methodology. Please do not hesitate to contact us with any questions or concerns you may have. Our contact information is listed in Part 1 of the questionnaire. 47 2009 Review of Northern Allowance Methodology Part 1: Contact Information Organization Name: Completed By: Name: Title: Address: Telephone: Fax: Email: Send Report findings to: Name: Title: Email: Please send your completed questionnaire no later than April 3, 2009 to: Kristin Korim Hay Group Limited 81 Metcalfe Street, Suite 1200 Ottawa, Ontario K1P 6K7 Telephone: (613) 238-4785 ext 241 Fax:(613) 238-3405 E-Mail: firstname.lastname@example.org 2009 Review of Northern Allowance Methodology Part 2: Organization Information Organization Name: Please provide the following information for your organization: Operating Budget ($ Millions): Sector/Industry of Operations: If other, please specify: Head Office Location: Please list the total number of employees working in each community (Full Time Equivalent): Location Number of Employees 2009 Review of Northern Allowance Methodology 2009 Review of Northern Allowance Methodology Part 3: General Plan Information Organization Name: Please provide a list of the current value of the Northern Allowance being paid to employees in each community. Please also provide any policy and/or procedure documents you may have regarding your organization's Northern Allowance Methodology. Please provide the following information for your organization: Does your organization provide a Northern Allowance payment to its employees? Yes No If yes, what is the purpose/objective of the payment? How frequently is the payment made to employees (i.e. annual lump sum, bi-weekly, etc)? Who is eligible to receive the payment? Is the Northern Allowance pro-rated for part-time employees or for employees who do not complete a full year of work for the organization? Please explain. Are employees who are assigned to short-term work assignments in the North entitled to receive the Northern Allowance? Does your organization provide any allowances or special provisions to employees temporarily relocated to the North for short-term work assignments? Does your organization provide any other type of benefits, including non-monetary benefits, to compensate employees working and living in remote locations (for example, extra vacation days, additional travel allowance, isolated location 2009 Review of Northern Allowance Methodology premium, additional/different health benefits, etc)? Please explain. Does your organization have employees based in both northern and southern Canadian cities? Yes No If yes, are there any differences in compensation policies for northern and southern based employees? Please explain. How long has your organization been using its current Northern Allowance Methodology? 2009 Review of Northern Allowance Methodology Part 4: Northern Allowance Methodology Organization Name: Please provide the following information for your organization: Is the Northern Allowance calculated for each individual community where employees are located? Yes No If no, how are the communities grouped into zones? Please describe the main elements included in the calculation of the Northern Allowance. What are the sub-elements, if any, of each main element (for example, what are the items contained in the basket of food)? How are both the main and sub- elements of the Northern Allowance determined? How is the value of each main and sub- element determined (for example, how to price each item in the basket of food and then how to determine the overall value of the cost of food in the Northern Allowance formula)? 2009 Review of Northern Allowance Methodology What is the weight of each element in the overall calculation of the Northern Allowance? How is the weight of each element determined? Does your organization compare the cost of living in northern Canadian cities to that in southern Canadian cities? Yes No If yes, what is the base city in the North and which southern city (or cities) is (are) this base city compared against? How does your organization determine the cost of living in each northern and southern city? How often is the Northern Allowance calculated? How often does your organization modify the amount of the Allowance paid to employees? How does your organization react, in terms of the Northern Allowance, to changes in the cost of living? (for example, the recent increase and decrease in the cost of fuel) 2009 Review of Northern Allowance Methodology Please provide the formula that is used to calculate the Northern Allowance. Final Report Nunavut Northern Allowance Appendix D: Federal Departments/Organizations Following IPGHD 57 Appendix E: Assumptions to Calculate Allowance by Community Table 5: Results of the Current Formula Based on current variables updated Difference Cost to update # ees per Food Air Freight Sealift Fuel Utilities Tr ave l Allowance (updated vs Cost to update variables (excluding Community community F1 AF GS F2 U TC Total as of April 08 current allowance) variables negative amounts) Arctic Bay 43 8,337 1,054 597 161 2,100 25,748 37,997 23,045 14,952 642,949 642,949 Arviat 163 8,857 578 573 166 2,004 6,636 18,813 19,150 -337 -54,877 -- Baker Lake 130 10,417 578 573 160 1,713 8,467 21,907 22,114 -207 -26,904 -- Cambridge Bay 170 8,493 442 763 229 1,814 8,443 20,183 17,883 2,300 391,014 391,014 Cape Dorset 98 8,129 909 526 155 1,464 9,141 20,323 19,029 1,294 126,833 126,833 Chesterﬁeld Inlet 25 10,937 757 573 166 2,611 7,207 22,251 20,995 1,256 31,398 31,398 Clyde River 45 10,677 1,308 597 143 1,780 14,701 29,207 20,842 8,365 376,418 376,418 Coral Harbour 45 11,405 757 573 176 2,516 7,190 22,617 21,126 1,491 67,113 67,113 Gjoa Haven 69 11,405 690 763 229 2,255 11,845 27,187 23,896 3,291 227,074 227,074 Grise Fiord 14 8,753 1,501 597 143 2,239 32,228 45,461 31,251 14,210 198,935 198,935 Hall Beach 37 10,469 963 573 143 2,138 14,878 29,164 21,371 7,793 288,337 288,337 Igloolik 110 9,793 963 573 143 1,287 14,861 27,620 20,480 7,140 785,373 785,373 Iqaluit 1106 7,505 434 440 231 1,190 8,183 17,983 13,563 4,420 4,888,415 4,888,415 Kimmirut 29 8,129 701 526 155 2,623 9,477 21,611 17,345 4,266 123,724 123,724 Kugaaruk 33 10,053 812 597 229 3,071 14,869 29,631 24,162 5,469 180,492 180,492 Kugluktuk 115 10,781 533 763 229 2,383 8,326 23,014 19,993 3,021 347,444 347,444 Pangnirtung 109 10,677 817 526 161 1,369 10,165 23,716 17,276 6,440 701,926 701,926 Pond Inlet 118 7,401 1,459 597 155 2,168 15,827 27,608 21,963 5,645 666,082 666,082 Qikiqtarjuaq 37 9,845 988 597 185 1,771 11,425 24,812 20,533 4,279 158,333 158,333 Rankin Inlet 295 9,377 386 404 136 1,446 6,636 18,385 16,795 1,590 468,971 468,971 Repulse Bay 32 9,013 757 573 142 2,200 7,190 19,875 19,858 17 529 529 Resolute 20 9,585 1,054 597 107 2,545 27,770 41,658 25,829 15,829 316,590 316,590 Sanikiluaq 40 9,117 413 573 195 1,914 7,221 19,433 18,406 1,027 41,096 41,096 Taloyoak 36 10,885 755 763 218 2,549 13,206 28,377 27,596 781 28,099 28,099 Whale Cove 25 8,597 757 404 166 2,376 5,662 17,962 19,559 -1,597 -39,934 -- TOTAL 238,645 20,364 14,638 4,317 51,527 307,305 636,795 10,935,430 11,057,145 % of total 37% 3% 2% 1% 8% 48% 100% Notes: Source is latest Public Service Annual Report from GN HR website Final Report Nunavut Northern Allowance Appendix E: Assumptions to Calculate Allowance by Community The following table (table 5) was presented earlier in the report. As previously mentioned, we had to make some assumptions in order to calculate the amount that should be paid in order to apply the current formula and each of the variables. These assumptions are discussed below. Food Allowance We were unable to obtain data pertaining to the cost of the food basket in Cape Dorset so we assumed the value would be the same as in Kimmirut. All other values reflect the most recent value posted on the INAC website. Air Freight We used the average of rates available from First Air, Calm Air, Air Inuit and Kenn Borek Air (as applicable from each community) as the rate an employee would pay per kilogram. Sealift/Ground Freight We used the rates available from Arctic Sealift as the rate an employee would pay per kilogram. In cases where there is no GN negotiated rate, the NSSI private rate was used. Fuel We used the rates from the GN’s Petroleum Products Division as the rate an employee would pay for a litre of gas in each community. We used the rate quoted as of June 16, 2009 from the MJ Ervin and Associates Inc website for the southern cities. 59 Final Report Nunavut Northern Allowance Utilities Nunavut: we used the rates as stated on the Qulliq Energy website. Ottawa: we used the residential, non-government rate for consumption above 600 kWh per month, as stated on the Hydro Ottawa website. The rate we used includes fees for transmission, Hydro Ottawa delivery, low voltage services charge, regulatory and debt retirement. Winnipeg: we used the non-residential, utility-owned transformation rate for consumption non exceeding 200 kV.A, as stated on the Manitoba Hydro website. The rate used is for the consumption of the first 11,000 kWh. Edmonton: we used the average of the residential rates for customers in the city of Edmonton during the months January – June. Travel We used rates from First Air, Calm Air, Air Inuit and Kenn Borek, as applicable. In cases where rates are quoted from First Air, we used the ‘Excursion’ rate. The rates we used include tax and reflect the cost of four return airline tickets. For Grise Fiord we used the rate from Resolute and added the cost of the rate from Resolute to Grise Fiord to arrive at the total cost. 60 Final Report Nunavut Northern Allowance Notes
"Nunavut Northern Allowance Nunavut Employees Union"