Cash-strapped Toronto to announce worker buyouts

Participating employees to receive payout worth six months' salary
By Trish Nixon
|hrreporter.com|Last Updated: 07/14/2011

(Reuters)

Toronto is set to announce an ambitious employee-buyout plan as part of an effort by Canada's biggest city to trim expenses and narrow its $774 million 2012 budget gap.

Jackie DeSouza, director of strategic communications for the city, said on Tuesday, July 12, that city manager Joe Pannachetti was scheduled to release details on the plan by the end of the day.

The Globe and Mail reported that the offer will be floated to almost all of Toronto's 50,000 municipal workers, who would have until Sept. 9 to apply.

The newspaper, which obtained an internal memo from the office of the city manager, said employees who choose to participate will receive a payout worth up to six months of their salary if they agree to quit.

The plan follows Toronto Mayor Rob Ford's release of the first phase of a services review on Monday, July 11. The report from KPMG consultants identified areas where the cash-strapped city could cut spending.

Ford came to power last year on a promise to "stop the gravy train" and curb spending at city hall without cutting services.

At the time, he said he would eliminate the city's $503 million 2011 budget deficit and create a $1.7 billion surplus within four years. The 2012 budget deficit is now estimated at $774 million.

However, the report did not reveal much room for cuts. It said that 96 per cent of public works services are "core municipal services, either mandatory as a result of provincial legislative requirements or essential to the continued operation of the city."

Details of the worker-buyout program could reveal the extent to which it will contribute toward the goal of reducing the deficit.

Employee salaries and benefits were expected to make up about 47.5 per cent of Toronto's operating budget in 2011, according to documents from city council's budget committee.

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