Living Cost Differential

The employee grieved the calculation process for determining the living cost differential (LCD) and the subsequent reduction in LCD from level "G" to level "H" at his Isolated Post. The grievor requested immediate reinstatement of level "G" Living Cost Differential with full back pay to April 1, 1998 and fair procedure implemented for future calculation.

On November 21, 1997, the Treasury Board Secretariat informed Departments of changes to the Isolated Posts Allowance. Effective October 1, 1997, the Living Cost Differential levels of some sites decreased. At the grievor's post, the rates diminished to $2,159 per annum from $3,958 per annum (married rate). Reduced rates were implemented by the Department pursuant to Section 5.12 of the Directive.

When the grievor was officially notified by the Pay and Benefits section of the reduction in the LCD on December 16, 1997, he requested information from them as to the nature of the decrease. On December 18, 1997, the grievor received notification of the location of the Isolated Posts Directive on the Internet.

On March 17, 1998, the grievor contacted Statistics Canada to get a copy of consumer price indexes for Canadian cities, which he received. On March 24, the grievor once again contacted Statistics Canada to obtain the IPA data for the Living Cost Differential. He was informed by the Survey Officer that the information he had was only available in five-point estimates. The grievor was then referred to the Treasury Board Secretariat and Environment Canada's pay office, for more detailed information. That day the grievor spoke with a representative from the Treasury Board who indicated to him that the only information available was the grievor's post, relative to its base city, was between 120.0 and 124.9 and no other detailed information on what parts of the LCD had decreased.

The grievor then contacted the Head of the Isolated Posts Unit, Statistics Canada. The unit head indicated that the information could be provided at a cost of $50 dollars per hour and it would take two to three hours to compile. On April 20, 1998, Statistics Canada provided a letter dated April 16 and a table including all of the LCD data as requested.

The Bargaining Agent representative stated the Treasury Board has been negligent in providing information to employees regarding the LCD. According to the "General Section" of the Isolated Posts Directive, the deputy head shall submit, by the first of July of each year, a consolidated Departmental report on each isolated post covering the previous fiscal year. The representative indicated that repeated attempts to acquire this information were denied until the grievor contacted Statistics Canada directly.

The representative also stated that how the LCD is calculated is not clearly explained in the Directive which can lead to uncertainty of the statistic. The calculation of the statistic is unclear and is prejudicial by being heavily biased. The Bargaining Agent representative maintained the statistic from the LCD is biased because of a completely inadequate sampling for credible representation of costs of goods and services and that the statistic could be a totally erroneous representation of true prices of goods and services due to any number of economic factors such as price wars, unusual commodity availability or seasonal factors. It is only sampled once during the three-year period compared to monthly data from the Consumer Price Index. The Bargaining Agent representative contended that without knowing even the most basic and immediate underlying economic factors causing the observed changes in price over time, the validity of the LCD is dubious at best.

The representative added that according to the CPI data, the rate of inflation at the Isolated Post in question has only differed by 1.2% in comparison to its base city. The CPI reflects a change of only 1.2% difference, yet the LCD shows a change of at least 10.1%, and maybe as much as 19.9%, which indicates that one of the two sources of data must be questionable. The representative contended that since the LCD data is collected once every three years and the CPI data is collected every month, it is obvious which data is likely erroneous. She also added that according to figures provided, the cost of living at the grievor's post has risen 35.1% since 1986.

The Bargaining Agent representative concluded that the foregoing arguments demonstrate that the current situation violates the intent of the IP Directive, in particular where it states that the system should be easily understood. She added that it should also reflect differences in relative unattractiveness of isolated posts locations and provide additional compensation at certain special locations to help offset abnormal cost differentials between isolated posts and non-isolated locations. The LCD should be re-adjusted to previous levels until it can be proven that costs of living on the items for this index are lower than in the past compared to the base city.

The Departmental representative believed that this issue is beyond its purview and should be addressed by the Treasury Board. The representative also asked the Committee to consider the issue of "timeliness" with respect to this grievance.

The Departmental representative stated that a review of the facts in this case confirms that there is no misapplication, nor is there any misinterpretation, by the Department of the IPA Directive. In fact, the substance of the grievance does not allege that the Department has misapplied or misinterpreted the Isolated Posts Directive. Rather, the grievance disputes the calculation process that resulted in the reductions to the rate of allowances. He closed by stating that both the unions and the employer adopted a methodology for establishing the rates of allowances.

The Executive Committee considered and agreed with the Isolated Posts and Government Housing Committee which concluded that the grievor was treated within the intent of the Directive given that the LCD is calculated according to methodologies that are agreed to by both the Bargaining Agent and Employer sides of the National Joint Council's Isolated Post and Government Housing Committee. The LCD levels for the grievor's isolated post were determined in accordance with the accepted methodology. However, the Executive Committee also agreed that the issues raised in this grievance would be taken into consideration during the on-going Triennial Review of the Isolated Posts Directive.

The grievance was denied.