FAS-007 - Wage Escalation Policy_2019
Title: Wage Escalation Policy
Subject: Wage increases Category: Finance and Administrative Services
Policy No.: FAS-007 M&C Report No.: 2019-245
Effective Date: 2019-09-23 Next Review Date:
Area(s) this policy applies to: Cross Corporate Office Responsible for review of this Policy:
Finance and Administrative Services
Related Instruments: Policy Sponsors:
FAS-001 Asset Management Policy Commissioner of Finance and Administrative Services
FAS-002 Investment Management Policy
FAS-003 Reserves Policy
FAS-004 Operating Budget Policy
FAS-005 Capital Budget Policy
FAS-006 Debt Management Policy
Document Pages:
This document consists of 5 pages.
Revision History:
Common Clerk's Annotation for Official Record
Date of Passage of Current Framework: September 23, 2019
I certify that this Policy was adopted by Common Council as indicated
above.
September 24, 2019
Common Clerk Date
Date Created: Common Council Approval Date: Contact:
September 19, 2019 September 23, 2019 Finance and Administrative Services
City of Saint John
Wage Escalation Policy
TABLE OF CONTENTS
1. PURPOSE AND CONTEXT…………………………………………………………………………………………….3
2. POLICY STATEMENT.................................................................................................. . 3
2. DEFINITIONS............................................................................................................... 3
3. PRINCIPLES AND APPLICATION .................................................................................. 3
4. ROLES AND RESPONSIBILITIES .................................................................................... 4
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City of Saint John
Wage Escalation Policy
1. PURPOSE AND CONTEXT
1.1. For the first time, the City is developing a long-term financial plan that will put the
City on a sustainable path going forward. To be sustainable, the City must find
ways to control costs that have been escalating faster than its revenue growth.
1.2. In 2019, wages and benefits account for 57% of the total Operating Budget. To be
sustainable, wage increases align with tax base growth.
1.3. From 2014 to 2019, wages & benefits have increased $8.9 million while tax
revenue has increased only $5.9 million.
1.4. Wage escalation policy provides direction to staff and ensures that ability to pay is
a consideration in future labor contract negotiations.
2. POLICY STATEMENT
2.1. The Wage Escalation Policy is established to ensure that the City is on a sustainable
path by aligning expenditure growth with tax base growth.
2.2. The Wage Escalation policy objectives are as follows:
The City spends within its means;
Wage escalation does not cause a tax rate increase in order to balance the
General Operating Budget;
Wage escalation does not cause a reduction in service levels in order to
balance the General Operating Budget;
Wage escalation does not exceed the City’s assessment base growth;
All employee groups are treated equitably.
3. DEFINITIONS
Municipal Assessment Base for Tax Purposes – means the total amount of
property values for property tax purposes.
Assessment Base Growth – means the percentage increase in the
Municipal Assessment Base for Tax Purposes on an annual basis.
4. PRINCIPLES AND APPLICATION
4.1 Principles:
4.1.1 Wage increases must be affordable;
4.1.2 Wage increases must not exceed the assessment base growth;
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2017201820193-Year Rolling Average
0.59%0.39%1.86%0.95%
City of Saint John
Wage Escalation Policy
4.1.3 Notwithstanding clause 4.1.2, wage increases cannot exceed CPI plus 1%
unless it is supported by a business case and approved by Common Council;
4.1.4 Bargaining or non-bargaining employees are treated equitably.
4.2 Application:
4.2.1 The City Manager shall recommend increases to wages and benefits budget
in accordance with the Wage Escalation Policy;
4.2.2 Recommendations for increase in the wage and benefit budget shall be
based on the previous three year rolling average of Assessment Base
Growth;
4.2.3 Utilizing a Three Year Rolling Average is a recommended approach due to
the following factors:
The fluctuation in the assessed value of properties for tax purposes
will be smoothed out by the rolling average;
Historical trend can help predict future growth;
The Three Year Rolling Average is a reliable source of information
that can be validated;
A compensation model based on the Three Year Rolling Average is
predictable, affordable and equitable.
Example of a 3-year rolling average of assessment base growth from 2017-
2019:
4.2.4 In any case, the increase in the wage and benefit budget shall not exceed
CPI plus 1% unless it is supported by a business case and approved by
Common Council.
4.2.5 Any wage increases for employee groups that are beyond the City
Manager’s recommendation may result in a corresponding reduction in the
workforce of those particular groups.
5. ROLES AND RESPONSIBILTIES
5.1 Council shall:
5.1.1 Approve the Wage Escalation Policy;
5.1.2 Direct staff to use the three-year rolling average of the assessment base
growth in future contract negotiations.
5.2 Finance Committee shall:
5.2.1 Recommend the Wage Escalation Policy to Common Council for approval;
5.2.2 Review any changes to the Wage Escalation Policy in the future.
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City of Saint John
Wage Escalation Policy
5.3 The Finance Commissioner shall:
5.3.1 Review annually to ensure that wage and benefit increases are in
compliance with the Wage Escalation Policy;
5.3.2 Update the three-year rolling average of the assessment base growth on an
annual basis and make the information available to Human Resources and
all employee groups.
5.3.3 Recommend any changes to the Wage Escalation policy in the future.
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