In an effort to replace people with machines, the federal government recently unveiled the Phoenix pay system to pay civil servants. It was first conceived in 2009 and intended to save an estimated $70 million each year. The problem is it doesn’t work.
Now thousands of federal employees aren’t being paid properly. Estimates are pegged at over 25% of the government’s 300,000 employees, in fact. Most of the problems relate to shortfalls on supplementary pay like overtime work, but many new employees and students aren’t getting paid at all.
What a great lesson to summer students working their first job! Despite what they thought, it doesn’t pay to work for the government.
Given that BMO’s most recent Annual Rainy Day Survey found that less than half of Canadians have more than $10,000 saved in an emergency fund, this situation serves as a stark reminder to the rest of us how important it is to have a contingency plan. I mean, if the federal government can get behind on payroll, what about the rest of us who work for small, medium and large private employers?
I personally struggle with the thought of Canadians sitting on cash earning next to nothing versus investing or paying down debt, but ideally one should strive to have some combination of cash, near cash or low-interest rate credit (like a secured line of credit) available in the event of the unforeseen. How much? Some federal employees haven’t been paid for months.
For more advice on saving for emergencies, see:
The flawed Phoenix system was introduced to replace the work of compensation advisors who, up until earlier this year, processed government employee pay deposits manually. Now the government is trying to hire back some of the people who were fired when they were replaced by Phoenix in order to help with the backlog of affected employees.
At the same time, a Phoenix flaw inadvertently disclosed personnel records including social insurance numbers for federal employees. Reportedly, senior government employees were made aware of this defect prior to the system launch, but chose to unveil it regardless.
We’ve seen issues with other government technology initiatives like the Province of Ontario’s digitized health record eHealth project, which has been marred by delays and integration challenges. While technological advancement makes sense in theory, it can be very difficult in practice.
And despite the potential puns about overpaid government employees, everyone is entitled to be paid their agreed-upon wage. It seems like a fairly simple function to automate, but it just goes to show you how difficult it can be in practice to use computers in lieu of people on a large-scale.
Now, it could be months before the system is fixed and costs are pegged at $15-20 million. And while sometimes you need to spend money to save money, the big cost in the interim is to government and taxpayer confidence in such large-scale automation projects. You can’t use out-dated computer systems forever, but it isn’t easy to deliver technology solutions on time and on budget. It might take some time yet before we’re all replaced by robots.
Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto, Ontario. He does not sell any financial products whatsoever.