The Work Reorganization Program

Report to the Senior Advisory Stakeholder Committee

December 1, 1998

Wave Two Findings

Civilian Labour Adjustment in National Defence Research Project

Executive Summary

This document presents the second report of findings of the longitudinal Civilian Labour Adjustment in National Defence (CLAND) study. It follows the initial report to the project’s Senior Advisory Committee, issued December 1, 1997.

The objective of the CLAND study is to investigate the impacts, over time, of the downsizing in the Department of National Defence on affected employees. Civilian workers offered the Department’s special departure incentive are being tracked over a four-year period to examine their socio-economic and labour market experiences.

The impacts and experiences to be tracked focus on several theme areas. In the first issue, special emphasis was given to individuals’ experience with the Civilian Reduction Program (CRP) and internal workforce adjustment processes used to administer the downsizing. In this installment, the focus of attention shifts more towards the external labour market and socio-economic experiences of affected employees as well as the many factors influencing those outcomes.

The research methodology adopted in the study incorporates a longitudinal design featuring multiple waves of data collection consisting of an initial baseline interview and regular contacts over the subsequent three and a half years. The study population includes all individuals who have received letters of offer between September 1994 and August 1996, regardless of departure decision. By tracking the experiences of both departing employees and those who remain, it is possible to compare the outcomes and experiences of the two groups.

Two cohorts have been distinguished on the basis of the date which employees received their letter-of-offer from the Department. The first cohort consists of individuals affected prior to the July 15, 1995 amendments to the Workforce Adjustment (WFA) Directive, whereas the second cohort involves those employees offered a departure incentive after July 15^th. The extension of the data collection period for the second cohort beyond the March 1996 termination date of the Civilian Reduction Program led to the inclusion of a small proportion of individuals who were offered buyouts under Treasury Board’s ERI/EDI program.

A further division is created within Cohort 1. The June 1995 launch date of the CLAND project prevented the researchers from obtaining three-month data for a large proportion of the Cohort 1 population. Rather than exclude this segment of affected employees completely, it was decided that individuals receiving letters of offer prior to March 1995 would be first contacted at nine months from time of offer. With the exception of Cohort 1a which skipped the three-month interview, all participants will be contacted a total of five times over a 45-month period.

The Wave Two survey consisted of respondents re-interviewed from Wave One, (three-month survey) as well as Cohort 1a respondents who were first contacted at nine-months. The sample size for the Wave Two survey totaled 1906 cases, including 1002 for whom three-month data was also available.

The response to the study continues to be encouraging. Among those individuals who completed the Wave One survey and whom the interviewers were able to contact for a second interview at the nine month interval, the response rate was 92 percent. Less than ten percent of the employees or former employees contacted refused to participate in the study.

The results of the Wave Two survey closely resemble many of the Wave One findings, due to the relatively brief interval (6 months) between data collections. The nine-month data is, however, significantly enriched by the increased volume of individuals who have exited National Defence and begun their post-departure journey.

Key Findings

A brief summary of the key findings from the first wave of data collection is presented below. More detailed information on these and other findings are contained in the main body of the report. For ease of review they are grouped by subject category.

CRP Decliners

As indicated in the Wave One report, 74.7 percent of respondents opted to accept the buyout offer, while the remainder declined either a group offer (18%) or a directed offer (7%).

At the time of the Wave Two interview, 38 percent of surplus employees were still awaiting their first reasonable job offer - the remaining 62 percent having received at least one.

The results also indicate progress in the placement of surplus employees (directed-offer decliners) into new, indeterminate positions; the extent of placement increased from 36 percent of surplus employees at three-months to 53 percent after nine months.

For both group- and directed-offer decliners, mobility within the federal public service is mostly confined to the Department of National Defence. Less than six percent of job changers found positions in a different branch of government.

Respondents continue to report a high degree of commitment to their work despite significantly lower levels of morale and substantial increases in workload. Approximately 57 percent of employees indicated an increase in their workload over the past year.

In general, employees’ impression of senior management was suspect on two key dimensions of leadership. Low levels of both trust and commitment towards the workforce were reported across the survivor subset.

Evaluation of the impacts that the reductions have had on the DND workplace also reflected a consistent response: over three-quarters of employees identified the cuts as having an overall negative impact.

CRP Takers

Utilization of the CRP training allowance increased over waves as more CRP takers exited the public service. Whereas only 51 people reported training activity at the initial 3-month contact, by the time of the nine-month interview 228 had undertaken some form of training.

Instruction in computers remained by far the most common training area, cited by over 41 percent of respondents at Wave Two.

The CRP recipients pursued a multitude of different techniques in searching for work. The most common method was responding to newspaper advertisements, cited by 67.6 percent of respondents.

Retirement stands as the largest single labour market outcome, with 37.7 percent of respondents who have left National Defence under the CRP identifying it as their current employment status.

Just 9.8 percent of respondents who left DND under the Civilian Reduction Program have secured full-time employment (including contract employment).

Post-departure employment outcomes were significantly associated with three socio-economic variables (occupation, income, education) and one demographic variable (gender).

Examination of current job information reveals that self-employment was the most common employment arrangement, cited by 37 percent of the roughly 350 respondents who were working at the time of the nine-month interview. The traditional employment situation was cited by 32 percent of respondents, with contract work accounting for the remaining 31 percent.

Approximately 80 percent of self-employment initiatives consist of small, home-based or mobile operations featuring the respondent as the sole employee.

Non-Labour Market Outcomes

As noted in the Wave One report, a clear gulf exists in the perceptions of economic circumstances between CRP recipients and decliners; CRP takers are significantly more likely to identify short-term economic improvements. They are also less likely to report having cut back on important expenditures.

Remaining DND employees are still roughly three times more likely to report a decline in economic circumstances than to identify an improvement in this area.

Remaining DND workers also carry a stronger expectation that job loss could be encountered in the relative near-term. Over 85 percent indicated a high likelihood of layoff in comparison to only 44 percent of employed CRP recipients.

Retired participants reported the lowest depression and anxiety scores while unemployed individuals had significantly higher depression levels than their employed or retired counterparts.

Introduction

The Wave Two findings represent the second complete report of the CLAND longitudinal research project. It provides a summary of the respondents’ adjustment experience at nine months from the receipt of a departure incentive offer issued under the Civilian Reduction Program. A previous submission to the Senior Advisory Committee (December 1997) reported on the baseline findings at the initial three-month interval.

In addition to supplying a time-specific snapshot of the adjustment experience, the emphasis of the Wave Two report is to document the early labour market outcomes enjoyed by respondents upon departure from their affected positions within National Defence. At the period of nine months from time of offer, most departing or surplus employees were expected to have officially vacated their public service positions.

Throughout the body of the Wave Two report, instances of significant longitudinal findings will also be identified.

Project Background

In February of 1994, as part of its annual budget release, the federal government announced drastic personnel reductions scheduled for the Department of National Defence (DND). The following year further cuts were identified. In total, the elimination of 13,500 DND civilian positions was specified in consecutive federal budgets.

To facilitate the reductions, the Department of National Defence introduced a special one-time departure incentive package for its indeterminate employees - the Civilian Reduction Program (CRP). The incentive packages featured a financial component consisting of four elements: a lump-sum payment equivalent to 12 months of regular pay; severance pay at the lay-off rate stipulated in the applicable collective agreement; a CRP supplement of up to six weeks of regular pay based upon a combination of age and years of service; a CRP departure allowance of one week of pay for each year of continuous service (to a maximum of 15 weeks) for employees entitled to an annuity under the federal government’s superannuation act. The combination of these elements could not exceed a ceiling equivalent to 104 weeks of regular pay. In addition, a training component provided for up to $7000 over four years for retraining towards employment outside the federal public service.

The CRP also distinguished between two principal types of departure offers. Type A, known as directed offers, were received by employees occupying positions specifically targeted for elimination through the discontinuance of a function or the closure of a unit. Type B, known as group offers, were delivered to a set of employees occupying similar positions in a particular unit and/or occupational category from which a fixed proportion of positions were to be eliminated.

The reductions prompted the Union of National Defence Employees to propose a research project that would track the individual-level outcomes of affected workers over a number of years and objectively assess the impacts of the buyout program. In July 1995, the union launched a multi-partite research project in collaboration with the Department of National Defence, Treasury Board Secretariat (TBS), Human Resources Development Canada (HRDC), and the Public Service Alliance of Canada (PSAC). The objective of the CLAND study would be to investigate the longitudinal impacts of the downsizing in the Department of National Defence upon affected civilian workers. It would examine the labour market and non-labour market outcomes of both departing employees and "survivors", those workers who remain in the employment of the federal government.

Methodology

Questionnaire Design

The longitudinal research design of the CLAND study called for the basic structure of the Wave One questionnaire to remain intact across successive waves of interviews. The substantive content of that instrument was formulated to advance the specified research objectives. The body of the questionnaire was organized around several theme areas:

Administration of CRP program: questions designed to capture individuals’ utilization and evaluation of adjustment services, factors influencing individual CRP decisions, and perceptions of prior DND employment.

Workforce adjustment: questions that examine continued public service employment, measure experiences under the WFA process, mobility within the federal government, and subjective aspects of their current work situation.

External labour market participation: questions directed at employees departing National Defence including: training, job search activities, and detailed employment characteristics for both first and current job.

Psychological & Attitudinal variables: questions related to individuals’ perceptions regarding available social support, economic deprivation, skill possession, well-being, as well as a comprehensive set of psychological encompassing measures on depression, anxiety, achievement and work orientation, locus of control, aspiration, and self-esteem.

Demographics: questions that provide background personal information on such items as marital status, labour force history, household size, income, education, and equity group affiliation.

For the second wave of data collection, several minor modifications were made to the instrument. Questions soliciting static demographic information (i.e., year of birth, previous military experience, equity status, etc.) were dropped. Also removed was a block of items dealing with the administration of the CRP program: respondents’ CRP decision, utilization of services and information during the decision-making phase. A number of items were added to the survey to augment certain areas; questions were inserted for "survivor" attitudes, social support, and job satisfaction.

A significant amount of effort was also required to modify the skip logic embedded in the Wave Two instrument to ensure the appropriate direction of questions. An already complex instrument, designed to accommodate several different types of respondents, was further complicated to adjust for the contingencies created by respondents’ Wave One information.

The effectiveness of the instrument was verified prior to field use through pretests performed in both official languages with a small number of Wave One respondents.

Research Design

The research methodology adopted in the CLAND study incorporates a longitudinal design featuring five waves of data collection. A process of continuous sampling allowed for the entry of respondents into the sample on a staggered basis, at a prescribed duration from the date they receive their CRP offer. Following the initial baseline interview at three months, participants are subsequently contacted at nine months, twenty-one months, thirty-three months, and forty-five months from date of offer.

Two distinct cohorts have been designated, based on the receipt date of their letter-of-offer. The first cohort consists of individuals affected prior to the July 15, 1995 amendments to the Workforce Adjustment Directive whereas the second cohort involves those employees receiving letters after the amendments came into force. The July 15^th cleavage is critical since it marks a fundamental change to the discretionary complexion of the CRP. The elimination of job guarantees contained in the WFA amendments severely limit employees’ alternatives to acceptance of the CRP.

A further division is created within Cohort 1. The June 1995 launch date of the CLAND project prevented the researchers from obtaining three-month data for a large proportion of the Cohort 1 population. Rather than exclude this segment of affected employees completely, it was decided that individuals receiving letters of offer prior to March 1995 would be first contacted at nine months from time of offer. Consequently, these respondents will only participate in four waves of data collection.

Sampling

The target population for the CLAND study was all civilian employees of DND who received a special departure incentive offer. An administrative database maintained by DND, the Civilian Reduction Program Information System (CRPIS), constituted the sampling universe for our purpose. Excluded from the sample at the outset were management category employees, individuals for whom there was insufficient contact information, individuals offered the CRP prior to September 1994, and individuals whose records lacked an open date (the date they received their letter-of-offer). The high level of attrition due to these exclusions necessitated a census approach to sampling in which attempts were made to contact all cases with sufficient tracking information.

The original research design called for 3000 interviews to be completed in the initial wave of data collection, divided into two equal-sized cohorts of 1,500 respondents. Unfortunately, the generation of an adequate sampling frame from which study participants could be recruited was made difficult by the incomplete nature of the CRPIS. A large proportion of individual records present in the database (almost half) were missing the necessary information to permit interviewers to establish contact. In addition to the absence of critical contact information, a sharp and unanticipated reduction in the volume of CRP offers occurred during the period of data collection for the second cohort.

The combined effect of poor contact information and the low volume of eligible cases rendered the project unable to fully complete the second cohort within a practical time-frame. As a result, a decision was taken in November 1996 to halt the initial formation of the second cohort at 810 cases. The Wave One targets for the other cohorts were met; their totals for the initial contact were as follows: cohort 1a (904 cases), cohort 1b (638 cases).

The sampling frame for the Wave Two survey consisted of all respondents to the Wave One, three-month survey. Cohort 1a respondents, who were first contacted at nine-months, were not included in the Wave Two sampling frame although their data is reported upon in this document, together with the nine-month information from the other cohorts.

Finally, approximately half of retirees from cohort two were exempted from the nine-month interview. In response to cost overruns being reported by the survey administrator, the project authority approved several cost-control measures. Among these was the exclusion from the nine-month data collection of respondents in cohort 2 who had left DND and reported being in a state of retirement at the time of the initial three-month interview. Subsequent adjustments to the project structure permitted the nine-month interview of cohort 2 retirees to be reinstated in January of 1997. The net effect of these adjustments was that 93 respondents in cohort 2 who reported being retired at the time of the three-month interview, and who had received a CRP letter-of-offer prior to March 1996, were excluded from the nine-month interview. Those retirees are to be re-contacted in Wave Three and at all subsequent intervals.

Table 1 illustrates the magnitude of the samples for the respective cohorts as well as the attrition rate observed across waves for cohorts 1b and 2. The attrition rate for cohort 2 is artificially inflated due to the purposeful exemption of retirees from Wave Two. In total 1906 interviews were conducted at the nine-month interval.

Table 1: Sample Size

The response to the study continues to be encouraging. Ninety-two percent of Wave One respondents completed a Wave Two interview at the nine month interval. Less than ten percent of the employees or former employees contacted refused to participate in the study. The remaining cases were lost to attrition for a variety of reasons (invalid telephone number, unable to contact, dropped after ten callbacks).

Sample Characteristics

Table 2 presents the characteristics of the study’s sample at both three- and nine-month intervals in comparison to the DND civilian workforce and the population from which the sample was drawn, namely the CRPIS.

Weighting formulas for occupation and region variables were later developed by the survey administrator (Ekos Research Associates), to ensure the data-set was representative of the CRPIS population.

Both the CRPIS and the CLAND sample diverge from the DND civilian workforce in their age composition. Younger workers (those below 44 years of age) are under-represented whereas employees over 55 years of age are significantly over-represented relative to their presence in the DND civilian workforce.

No significant variation across waves is noted in the composition of the sample. For this purpose Cohort 1a participants are included in the figures for both waves.

Table 2:  Comparison of Unweighted Samples to the CRP Population and the Total DND Civilian Workforce

ADD TABLE 2 HERE

¹complete CRPIS database for period ending August 1,1996

²as of March 31,1994

Survey Administration and Data Collection

All interviews were conducted by Ekos Research Associates under contract to the Union of National Defence Employees. The data collection techniques described fully in the Wave One report have been maintained.

The original research design called for the second wave of data collection to be completed over a period of approximately nine months. The difficulties initially encountered in generating an adequate sampling frame for Wave One, however, have resulted in sampling periods for both waves that are effectively double in length. The total period for the Wave Two data collection extended from January 1996 to June 1997.

Table 3 below illustrates the average duration between the date of offer and the first two waves of interviews for each cohort. The higher standard deviation noted for cohort two and the second wave of cohort 1B indicates the greater degree of variability resulting from the shift to a monthly "bundling" of interviews introduced in an effort to contain costs.

Table 3: Mean duration (in days): interview date from date of offer

Findings

CRP Decliners at Nine Months

The study’s population is civilian employees of National Defence who received a letter-of-offer between September 1994 and August 1996. The decision to sample on the basis of the receipt of a departure incentive offer allows the project to track the outcomes of two groups: employees who accepted the CRP (or its subsequent replacement ERI/EDI) as well as those employees who declined.

As indicated in the Wave One report, 74.7 per cent of respondents opted to accept the buyout offer, while the remainder declined either a group offer (18%) or a directed offer (7%). The distribution along CRP type is unchanged for respondents who completed the nine-month interview. Despite the acceptance of the departure incentive by a large majority of respondents, particularly in cohort two (94%), analysis of CRP decision type did reveal some interesting findings. Compared to CRP takers, individuals electing to remain departmental employees were more likely to be found in the mid-range of the age categories (between 35 and 54), located within technical occupational grouping, and resident in the Pacific region. Further examination of CRP decision type demonstrated a significant association with two psychological constructs: locus of control (c ²=35.10, df=8,1839, p<.000) and anxiety (c ²=20.45, df=8,1845, p<.009). Decliners were characterized by lower scores on a scale measuring locus of control and by higher levels of anxiety.

This section of the report provides an update of the circumstances of the "survivor" segment of our sample (those who declined the incentive offer) at nine months from the time of offer. The survivor subset includes 481 cases: 345 who declined group offer and 135 who rejected directed offers.

Workforce Adjustment Experience

The type of offer received creates fundamentally different alternatives for individuals choosing to decline those offers. Individuals declining group offers experience no subsequent change in their terms and conditions of employment as result of their decision whereas the rejection of a directed offer, in most circumstances, leads to an employee being declared surplus. The consequence of a surplus notice was made more severe as a result of the legislative changes to the WFA directive introduced in July 1995, eliminating the guarantee of a reasonable job offer to affected employees. Nonetheless, no significant difference in the administration of job offers is apparent across cohorts. Consistent with the Wave One findings, 38 percent of surplus employees were still awaiting their first reasonable job offer at the time of the Wave Two interview - the remaining 62 percent having received at least one.

Nine months following their receipt of a CRP offer, and approximately seven months after declining that invitation to leave the federal public service, slightly over two-thirds of employees (67.3) remained in their same position. As expected, most of the stability is attributed to employees who received group offers - less than a quarter of the directed-offer decliners were still found in their surplus positions. The results also indicate progress in the placement of surplus employees (directed-offer decliners) into new, indeterminate positions; at the three-month interval only 36 percent of surplus employees had received new indeterminate jobs whereas after nine months 53 percent had been placed.

While those who declined directed offers experienced the greatest mobility, it is also somewhat surprising to note the movement demonstrated by group-offer decliners over such a relatively short horizon; approximately 19 percent of group-offer decliners report moving to different positions within the public service. For both group- and directed-offer decliners, mobility within the federal public service is mostly confined to the Department of National Defence. Less than six percent of job changers found positions in a different branch of government.

The incidence of employees receiving subsequent departure incentive offers appears to be modest; approximately 50 individuals received second offers. Their rate of acceptance was relatively low - only 29 percent elected to accept the buyout when it was offered to them on a second occasion.

"Survivor" Issues

Another set of questions related to the quality of the work environment in the aftermath of organizational downsizing. Remaining employees were asked about their levels of morale, workload, and commitment to their work. Respondents continue to report a high degree of commitment to their work (=5.6, s.d.=1.5) despite significantly lower levels of morale (=4.3, s.d.=1.7) and substantial increases in workload. Approximately 57 percent of employees indicated an increase in their workload over the past year. Analysis of the three variables across the two waves of data collection reveal no significant changes.

Other findings on employee morale support the argument for more expeditious re-assignment of surplus employees. As Table 4 below indicates, individuals occupying new positions (either term or indeterminate) tended to reveal higher levels of morale than did counterparts remaining in their original positions.

Table 4: Employee Morale by Current Public Service Status

Three additional questions directed at "survivors" were inserted into the Wave Two instrument. Employees were asked about their trust in the senior management of National Defence, their perception of senior management’s commitment to its employees, and the overall impact of the reductions on the workplace environment in DND. In general, employees’ impression of senior management was suspect on two key dimensions of leadership. Low levels of both trust (=3.4, s.d.=1.6) and commitment towards the workforce (=3.7, s.d.=1.6) were reported across the workforce. Evaluation of the impacts that the reductions have had on the DND workplace also reflected a consistent response: over three-quarters of employees identified the cuts as having an overall negative impact.

CRP Recipients at Nine Months

The Civilian Reduction Program encouraged a large proportion of eligible National Defence employees to voluntarily separate from the federal public service. As mentioned earlier, amendments to the WFA Directive also severely compromised employees’ alternatives to departure by eliminating the guarantee of a reasonable job offer. This section of the report documents the circumstances of CRP recipients at nine months from the time they were initially offered the buyout package.

Individuals opting to accept the CRP enjoyed varying degrees of discretion in establishing their date of departure from the organization. In many instances, specific exit schedules could be negotiated between the employee and the appropriate manager. This allowed employees to expedite or delay their departure to accommodate their personal circumstances and requirements.

Examination of the cohorts for which both three- and nine-month data is available (cohorts 1b and 2), appears to indicate a pattern favouring expedited departure. Combined, these two cohorts account for 952 individuals who had accepted a departure incentive. An examination of departure periods among employees who have left the department indicates that 58 percent were gone within three months of receipt of offer, the remaining 42 percent had left by the time of the nine-month interview.

Only a small number of CRP takers (n=31) were still working at National Defence more than nine months following their acceptance of a departure incentive.

Training

The CRP included a training/education allowance which provided for a maximum of up to $7,000 over four years for retraining towards employment outside the federal public service. The training option has been liberally interpreted to apply towards a broad variety of training activities. To access the program, eligible individuals must submit a training plan to Departmental training authorities within one year from the date they accepted the CRP. Individuals could also apply a portion (up to 35%) of their training allowance towards the purchase of tools and equipment or to invest these funds in training provided as part of an employment arrangement with another organization. The EDI also carried a training allowance providing a maximum payment of $7,000 for costs incurred, however, it was more restrictive in its terms and application than the CRP equivalent.

The CLAND questionnaire contained ten questions dedicated to the utilization of the CRP training allowance, focusing on training receipt, type, duration, and progress. The survey results confirm the popularity of the training allowance among CRP recipients. The Wave One findings indicated that of those employees who have accepted the CRP and not withdrawn from the labour force, 64 percent (n=516) intended to apply for funds under this provision. As described in the initial report, interest in training declined with age and increased with educational attainment.

In terms of the actual receipt of CRP-funded training, an expected increase is noted at the nine-month point as more CRP takers actually exit the public service. Whereas in Wave One only 51 individuals reported receiving post-departure training, by Wave Two, 228 had undertaken some form of training activity. Instruction in computers remained by far the most common training area, cited by over 41 percent of respondents at Wave Two.

At the nine-month interval, two-thirds of respondents who received training indicated that their training was still in progress. The duration and intensity of the training programs tended to be highly variable as indicated by the high standard deviations associated with the means for both course length and hours per week. The average amount of time spent per week in training was 17.9 hours (s.d.=13.7) while the total course length averaged 22 weeks (s.d.=20.7). Training also largely appears to be a part-time pursuit: only 33 per cent of respondents were enrolled in training requiring more than twenty hours per week. Training recipients also reflected positively on the usefulness of their learning experiences. On a scale ranging from 1 "not at all useful" to 7 "extremely useful", a mean score of 5.9 (s.d.=1.3) was reported.

The proportion of respondents applying CRP training funds against the purchase of tools and equipment increased in the Wave Two data. Whereas such investments were reported at the three-month interval by 40 percent of those questioned, that total jumped to 53.9 percent six months later. Information from Departmental training officials indicate that computer equipment was the most popular type of purchase noted.

Job Search Activity

Job search behavior is one of many variables that the CLAND study tracks in order to gain understanding of the factors contributing to successful labour market outcomes. A series of questions examined four key facets of respondents’ job search experience including duration, technique, intensity, and barriers.

CRP recipients intending to remain in the labour force were asked about the length of their job search both prior to, and following, their departure from National Defence. While the Wave Two findings show little variation in the reported period of pre-departure job search, the period of post-departure search activity increased to a median of 10 weeks from a median of six weeks at Wave One The median total length of job search was 15 weeks. Employment status accounted for significant differences in the length of job search with employed respondents reporting much shorter periods of post-departure activity.

The intensity of job search, measured by hours per week invested in related activity (for example, reviewing job ads, completing resumes and applications, contacting employers), also increased slightly across waves of data. The median response of 10 hours is approximately two hours above the three-month median.

Individuals generally resort to a multitude of different techniques in searching for work. Our findings presented in Figure 1, suggest that the DND employees pursued a range of activities. The most common method was responding to newspaper advertisements, cited by 67.6 percent of respondents. The distribution presented in Figure 1, corresponds closely to the pattern exhibited in the Wave One data, although a slight increase is noted for most of the major items.

Figure 1:  Frequency of Job Search Techniques Used

Employment Status

To determine the labour market outcomes of employees departing National Defence, the CLAND study identifies and tracks detailed characteristics of individuals’ subsequent employment experience. Recognizing that displacement from stable employment in the 1990s often results in multiple jobs, sequential employers and, in general, increased economic insecurity, the questionnaire is designed to capture information from multiple jobs.

For both first job since departing DND and current job, employees were questioned about their date of hiring, source of information leading to hiring, type of work, industry, unionization, employment status, earnings, and job satisfaction. A series of questions were also asked of individuals declaring retirement, primarily focusing on the timing of their exit and the appearance of any subsequent labour force participation.

As a large proportion of CRP recipients had not yet departed the public service at the initial 3-month contact, Wave One findings provided only a cursory look at labour market activity. At nine months from time-of-offer, however, more information is available on the early experiences of CRP takers as they exit National Defence.

Most striking from an examination of the early labour market outcomes is the large percentage of civilian employees for whom departure from National Defence represents a shift into retirement. Retirement stands as the largest single disposition, with 37.7 percent of respondents who have left National Defence under the CRP identifying it as their current employment state.

This result is consistent with the age profile of the sample (roughly half were 50 years of age or older) and the extremely high CRP take-up rate (91.6%) among individuals in the over 55 age category.

Another striking finding is that just 9.8 percent of respondents who left DND under the Civilian Reduction Program have secured full-time employment (including contract employment). Smaller numbers have turned towards self employment (7.7%) and part-time work (6.4%).

Figure 2: Current Employment Status

Several factors were associated with employment outcomes. The employment status variable was regrouped into four categories (working, unemployed, retired, and other) and used to assess its relationship to selected demographic items. The "other" category consists primarily of students and homemakers.

Three variables related to individuals’ socio-economic status (occupation, income, and education) proved to be significantly associated with post-departure employment status. A linear relationship between respondents’ education and employment outcomes was noted; as education increased, the likelihood of being employed also increased. As well, retirees were disproportionately represented among those without a high school diploma. The high proportion of retirees among that educational grouping is principally a factor of age as older workers tend to have completed fewer years of education.

Survey respondents provided information about personal income for the 1994 calendar year. In most cases 1994 represents the last complete year of public service prior to departure. As the level of personal income increases, the likelihood of choosing retirement dramatically increases while the presence of unemployment drops significantly. The proportion of individuals finding employment, however, remains fairly consistent across income levels. Additional analyses (not shown) indicate that the large percentage of respondents classified as "other" in the lowest two income levels reflects the greater concentration of females at the bottom of the civilian workforce payroll.

Examination of the final SES variable, occupation, showed significantly higher incidence of retirement among two particular occupational categories: technical and administrative/foreign service. This finding is another artifact of the age distribution: approximately 45 percent of both occupational groups are over 55 years of age, significantly higher than the other occupational categories. It is also interesting that the highest-skilled employees, those in the scientific and professional category enjoy the lowest unemployment, while perhaps the lowest-skilled category, the administrative support group, suffers the greatest amount of unemployment.

Table 5: Employment Status by Gender, Occupation, Education, and 1994 Personal Income

Another factor strongly associated with early post-departure employment status is the impact of gender. Men are almost twice as likely to have shifted into retirement through the CRP than are women. Since women represent 60 percent of those in the "other" category, a minor part of the discrepancy can be attributed to a greater inclination on the part of females withdrawing from the labour force to identify themselves as homemakers. A better explanation is found in the age breakdown of the respective genders: 41 percent of men were 55 years of age or older versus 27 percent of women. It would therefore appear that whereas the CRP represented an early retirement opportunity for a large majority of men, the implications for women were different. Of particular concern is the greater difficulties that women appear to be experiencing in securing employment after the downsizing. At nine months from the time they were offered the buyout, 36.9 percent of women were unemployed compared to only 23.5 percent of males.

Skill portability also registered a significant association (c ²=31.13, df=6,1241, p<.001) with labour market outcomes. Approximately half of departing employees perceived themselves to possess a set of highly portable skills. That grouping also tended to have the highest proportion of employed respondents (28.2%) and the lowest proportion of retirees (34.2%). In contrast, only 13.6 percent of respondents who defined their skills as poor had found employment.

Current Job

Among those who were employed at the time of the nine-month interview, three principal employment arrangements were distinguished: contract work (cited by 36 percent), self-employment (reported by 31 percent), and the traditional employment situation (full- or part-time) which accounted for the remaining 33 percent.

The nature of self-employment enterprise was diverse. A broad "service industry" category was the most-reported type of business (19.8%); construction (11.5%) and retail (10.4%) were also among the more popular endeavours. Individuals engaged in paid employment, either full-time or part-time, were also broadly dispersed across a spectrum of industries with the "service" category capturing a full quarter of the group.

In their start-up phase most self-employment initiatives, approximately 80 percent, consist of small, home-based or mobile operations featuring the respondent as the sole employee. A closer examination of the self-employed workforce produced few significant findings. One variable that did demonstrate a statistical association (c ²=6.83, df=2,358, p<.033) was gender. Males revealed a moderately stronger inclination towards self-employment than did females.

Among those engaged in salaried or contract employment, personal contacts proved to be the most reliable means of landing a job. Almost half of working respondents secured positions through such means. Responding to newspapers ads accounted for a surprisingly high 20 percent of hirings followed by initiating direct contact with employers (19%). Only 6.1 percent identified the Canada Employment Centre as the source of information that led to their employment.

In the CLAND sample, employed individuals (including self-employed), reported a work week averaging 32.17 hours (s.d.=14.6). Slightly over half the respondents indicated a preference for their current allotment of hours, while 32 percent stated they would like more hours; only 14 percent expressed an interest in working fewer hours. This pattern was consistent for both self-employed, contract, and salary workers.

The average weekly earnings of these workers ($503) were low in comparison to the wages reported by their colleagues who had declined directed offers and chose to stay in DND ($687), although the DND employees worked, on average, an additional seven hours per week.

Another important feature of the departees labour force participation can be found in the loss of union affiliation. Whereas 95 percent of the sample was covered by a collective agreement in their public service positions, only 16 percent of wage/contract employees report being union members in their new job.

Measures of individuals’ assessment of their current job were derived from three questions related to job satisfaction. Respondents were asked to comment on their satisfaction with salary and non-salary benefits, as well as an overall rating. As the comparison in the table below demonstrates, CRP recipients who are now working tend to evaluate their new positions more favorably despite equal or poorer ratings on two specific components of job satisfaction. This would seem to suggest either a bias towards more favorable assessments of current situations to justify their decision to leave or an indication that characteristics other than salary and benefits (such as working conditions, organizational climate, and management styles) contribute more to an overall measure of job satisfaction.

Table 6: Comparison of Job Satisfaction in Current Job versus Former DND Job

Analysis of the satisfaction variables generated few significant associations. Satisfaction with salary compensation provided by the new positions tended to decline with age(c ²=14.52, df=6,261, p<.024); younger workers were more satisfied with their earnings. Skill portability, which was shown to be associated with age in other analyses of the CLAND data, was also positively associated with individuals’ satisfaction in the area of salary.

Retirees

As mentioned earlier, acceptance of the CRP represented a transition into retirement at Wave Two for 37.7 percent of respondents leaving National Defence. Examination of the employment status of CRP recipients at the nine-month interval (see Table 5) revealed several interesting features of the retired sub-group. There was a much higher rate of retirement among males than females (45 vs. 25 percent); individuals with less than high-school education were also much more likely to be found among the retired. Personal income also influenced the likelihood of retirement. Fifty-six percent of those earning beyond $55,000 had made the transition whereas less than 30 percent of those earning below $35,000 claimed to be retired.

The early retirement opportunity presented by the CRP initiative enticed a large number of employees into making the transition before their anticipated schedules. Fully 77.5 percent of retirees indicated that the reductions at DND encouraged them to retire earlier than they had originally wanted. This early retirement finding is further substantiated by comparing the mean age of retirees at the initial three-month interview (58 years) to the average age that retirees indicated as their planned retirement target (61 years).

Certain types of employees were most influenced by the opportunity to retire; individuals with higher levels of education (c ²=9.82, df=4,338, p<.044) were more likely to retire earlier than planned. The finding that employees with past military service were also more likely to leave early (c ²=3.76, df=1,337, p<.052) is not surprising given they are often already receiving a military pension benefit.

Despite the high numbers of employees moving into retirement ahead of their personal schedules, very few report any employment activity, part-time or otherwise, following their departure from National Defence. Less than five percent claim being engaged in paid employment or operating their own businesses. This figure falls below what may have been expected given the relative youth of the retirees. Attention will be devoted to this issue in future waves of data collection to discern whether this pattern is maintained.

Non-Labour Market Outcomes

Economic Condition

One of the central hypotheses guiding the CLAND research is that individuals accepting the CRP would experience economic decline over the long-term, notwithstanding the short-term benefits of the generous buyout terms. Although there is evidence that some workers experience earnings gains following involuntary departure (Ruhm,1991; Lauzon,1995), a greater body of literature supports the argument that displacement generally results in income decline extending over a considerable period of time (Jacobson et al, 1993,1993a; Hamermesh, 1989; Ontario Ministry of Labour,1993; Grayson,1985; Ruhm,1992).

The questionnaire contained a series of questions designed to track changing economic circumstances. In addition to a three-item scale of economic deprivation, individuals were asked about personal saving levels, any requirement to cut back on important expenditures, and the burden of basic housing expenses.

A key finding of the initial Wave One report was the clear gulf in perceptions of economic deprivation between CRP recipients and those who declined the offer. The CRP takers were significantly more likely to identify short-term economic improvements. The injection of capital associated with acceptance of the CRP buyout appeared to have created an economic honeymoon for those departing National Defence.

The nine-month data reflects the same basic pattern. The economic honeymoon enjoyed by CRP recipients continues to provide a stark contrast to the decline cited among the "survivor" group choosing to remain Departmental employees. The latter group is still almost three times as likely to report a decline in economic conditions than to have indicated an improvement in this area. Among CRP takers, 53 percent of employed respondents report improved economic circumstances followed by 39 percent of retirees and 32 percent of the unemployed.

Table 7: Perception of Economic Condition by CRP Decision

A new measure associated with individuals’ perception of their economic environment was added to the Wave Two questionnaire. This item gauged employed respondents’ sense of job security, asking about the likelihood of losing their job over the next few years. A mean score of 4.95 on a seven-point scale (where 7 represents a high likelihood of job loss, and 1 represents low likelihood) indicates that respondents carry a strong expectation that job loss could be encountered in the relative near-term.

Concern around future job loss was closely connected to the findings on economic deprivation (c ²=27.08, df=4,478, p<.001). A high likelihood of job loss was expressed by only 51 percent of individuals who reported being better off than one year ago, whereas such a likelihood was cited by 68 percent of those whose economic circumstances were unchanged and 75 percent of those for whom things have worsened. The decision to reject the CRP also appears to contribute greatly to respondents sense of impending layoff (c ²=92.92, df=6,454, p<.001). Over 85 percent of participants still working in National Defence indicated a high likelihood of layoff in comparison to only 44 percent of employed CRP recipients.

An individual’s psychological outlook can also influence their perception of certain external development. The psychological construct measuring locus of control, individuals’ sense of personal responsibility for their own fortunes, was also directly related (c ²=46.01, df=4,479, p<.001) to the perception of future job loss. As respondents’ locus of control increased, their likelihood of anticipating job loss decreased.

Psychological Measures

A significant body of research demonstrates that both unemployment and job loss are risk factors for poor mental health (Kessler et al., 1987; Liem & Liem 1988; Weissman et al., 1991). Two conditions common amongst the unemployed are depression and anxiety and the CLAND questionnaire included questions directly related to these problems. To gain needed information about possible changes in symptom levels over time, Wave One questions were re-asked at the second interview. At each wave, depression was measured using a twelve-item scale, drawn from the General Health Questionnaire (GHQ) and augmented with four additional questions. Anxiety was measured by a condensed seven-item version of Spielberger's 1979 State Trait Personality Inventory. In each measure, lower scores indicate reduced levels of depression or anxiety.

It is estimated that between five and ten percent of adult Canadians suffer from clinical depression at any given time. CLAND results for depression at Wave Two reflect the estimates for the Canadian population; approximately 6.3 percent of study participants reported experiencing high levels of depressive symptoms, placing them at risk of being clinically depressed.

Examination of mean levels over time show a consistency of results between Wave One and Two, with the latter reporting a mean of 2.0 (s.d.=.93). The level of anxiety, on average, also remained steady over time with Wave Two reporting a mean of 2.7 (s.d.=1.04). Further analysis, however, revealed interesting differences between selected groups. Married and widowed individuals reported lower levels of depression (F_4,1825=8.09, p<.001) and anxiety (F_4,1825=6.80, p<.001) than single respondents. As well, those who opted for the CRP departure incentive had lower depression (F_2,1829=15.60, p<.001) levels than did those who declined the offer.

Analyses of subgroups categorized according to employment status showed a number of interesting results. First, the lowest depression and anxiety scores were found amongst workers ages 55 or older (F_3,1823=19.47, p<.001 and F_3,1823=35.81, p<.001 respectively). Unemployed individuals had significantly higher depression levels than their employed or retired counterparts (F_3,1775=24.20, p<.001). Interestingly, anxiety levels amongst unemployed individuals did not differ greatly from employed respondents, but retirees reported significantly lower levels (F_3,1775= 31.23, p<.001).

A significant difference in depression (F_4,1827=2.90, p<.05) and anxiety (F_4,1827=3.26, p<.05) levels were also found across occupational groups with the Administrative Support and Operational categories showing higher levels. Depression and anxiety levels also varied by Cohort, with the second cohort reporting lower levels for both conditions (F_1,1830=6.09, p<.05 and F_3,1823=11.42, p<.01 respectively). Individuals with the lowest personal and household incomes reported the greatest depression (F_4,1634=7.10, p<.05 and F_5,1583= 8.73, p<.01 respectively) and anxiety levels (F_4,1634=10.80, p<.01 and F_5,1583=6.35, p<.05 respectively). Finally, women reported higher levels of depression (F_1,1830=9.83, p<.001) and anxiety (F_1,1830=22.66, p<.001) than their male counterparts.

Longitudinal analyses identified a small but statistically significant drop in depression (t₁₁₇₇=3.66, p<.001) and anxiety (t₁₁₇₆ =5.33, p<.001) scores over the course of the two interview periods. In keeping with this trend, depression levels were found to vary over time for age (F_3,1170=2.64, p<.05) and sex (F_1,1176=5.67, p<.05). In the case of age, depression levels declined for everyone over time, but more so for those under 45 years of age. While both men and women's level of depression decreased from the first to the second interview, the decline was greater for women.

In addition to the mental health measures, the CLAND questionnaire included several psychological constructs thought to influence departure decisions and adjustment outcomes. As with depression and anxiety, these measures were asked at the first and second interview. At each wave, Likert type scales were constructed to measure the level of respondent's happiness, self-esteem, locus of control and work aspirations.

Wave Two results indicate that, on a seven point scale, study participants report being very happy (=5.7, s.d.=1.2). Furthermore, married respondents were happier than singletons (F_4,1825=9.80, p<.05) and older workers were happier than younger ones (F_3,1823=9.67, p<.05). In addition, the Wave Two analyses revealed that those who accepted the CRP departure incentive were happier than decliners (F_2,1829=12.50, p<.05), while retirees reported being happier than employed or unemployed individuals (F_3,1795=21.58, p<.01). Study participants with the lowest personal and household incomes were the least happy (F_4,1634=3.37, p<.05 and F_5,1583=7.77, p<.01 respectively).

Longitudinal comparison of mean happiness scores indicate a small increase in levels of happiness over the six month interval. The increase, while slight, achieves statistical significance when examined using paired t-tests (t₁₁₇₅=2.29, p<.05).

Locus of control refers to the degree to which individuals internalize responsibility for events or outcomes. High scores on the locus of control scale reflect a belief that one has command over events, while a low score suggests a belief that circumstances are generally outside of one's control. Comparing the means across selected subgroups, the emerging patterns parallel those seen in Wave 1. For example, married respondents had a greater sense of control than did singles (F_4,1825=2.87, p<.05). University graduates reported feeling more control than those lacking a university degree (F_4,1825=14.30, p<.01), and workers under 35 years of age recorded a higher degree of control than older workers (F_3,1823=6.31, p<.05). When examined longitudinally, no statistically significant changes were found in overall locus of control scores between the two interview periods (=4.54, s.d.=1.2).

The Wave Two results also showed that locus of control was significantly higher for those employed outside DND than respondents employed at DND, unemployed or retired individuals (F_3,1795=12.28, p<.01). Data also indicated that CRP takers felt greater control than decliners (F_2,1829=11.42, p<.01) and that individuals from the Administrative/Foreign Service category had higher locus of control scores than any other DND occupational group (F_4,1827=9.83, p<.01). Individuals with higher personal and household income felt greater locus of control (F_4,1634=5.58, p<.05 and F_5,1583=12.12, p<.01 respectively)

In terms of self-esteem, study participants reported high levels at the second interview (=6.36, s.d.=0.69). Moreover, those employed outside DND reported higher levels of self-esteem than individuals employed at DND, unemployed or retired (F_3,1775=3.87, p<.01). Respondents living in Quebec recorded higher self-esteem than study participants in other regions of Canada (F_4,1827=3.29, p<.01). Consistent with Wave One results, the most recent data revealed no significant differences of self-esteem across categories of age, gender, education, marital status, or CRP type. However, a statistically significant decline in overall self-esteem scale scores were noted from wave one to wave two (t₁₁₇₇=2.77, p<.01).

Work aspirations involve the extent to which one receives personal fulfillment and challenge through their daily work activities. The work aspiration measure used here is a seven-point scale designed to tap this notion of personal fulfillment. Consistent with the previous results, re-interview responses demonstrate that participants derive a significant level of satisfaction from their work (=6.41, s.d.=0.61). Detailed analysis of Wave 2 indicated that aspirations vary by education (F_4,1825=2.84, p<.05) and occupation (F_4,1827=2.49, p<.05), with a tendency for those with higher education and occupational status to have higher aspiration scale scores. Individuals who were employed outside DND reported higher levels than those working at DND, unemployed or retired (F_3,1775=2.99, p<.05). Furthermore, the most recent data show that women reported slightly higher levels of aspiration than did men (F_1,1830= 4.08, p<.05). This is a pattern previously seen with Wave One data.

Despite these encouraging cross-sectional results, a slight decline on the aspiration scale was detected over the six month interval (t₁₁₇₆=4.18, p<.01). Repeated measures analysis of variances also showed differences in aspiration levels across region over time (F_4,1172=2.68, p<.05), with a larger decrease in scale scores for the Atlantic region than for Quebec, Ontario or the West. British Columbia remained unchanged over the six-month interval. Special attention will be paid to this trend in subsequent waves.

Health Status

The impact of unemployment on the health and well being of individuals has been extensively documented. For example, Brenner's well known aggregate studies linked unemployment to increased morbidity and mortality rates (Brenner, 1973; 1979; 1983). Studies at the individual level of analysis corroborate these aggregate level findings (Hepworth, 1980; D'arcy & Siddique, 1985) and longitudinal research has charted the long-term health consequences of displaced workers (Cobb & Kasl, 1979; Grayson, 1985, Liem & Rayman, 1982). Collectively, this research leaves little doubt that unemployment is directly related to increased health problems.

Given the association between unemployment and illness, the CLAND study incorporated a series of questions to assess respondent's own health, as well as the health of their spouse and dependents. Study participants were asked about the frequency of visits to physicians and mental health workers, and their use of prescription drugs. To track possible changes in respondent health over time, these questions were asked at Wave One and then again at Wave Two.

At the second interview, respondent ratings of their own health remained positive, averaging 5.6 on a seven-point scale. Perceptions of spousal health were comparable (=5.7, s.d.=1.27), while dependents' health was rated as being somewhat better (=6.4, s.d.=1.0). Although the majority of respondents (63.2%) reported no prescription drug use, variation across selected subgroups was found for those who did take medication. Of prescription drug users, those who reported the lowest frequency were males (c ²=9.70, df=1,1839, p<.01), individuals living in Quebec (c ²=23.82, df=4,1839, p<.01), and CRP decliners (c ²=21.56, df=2,1839, p<.01). Medication use also tended to decrease with increasing levels of education (c ²=32.00, df=4,1838, p<.01), and locus of control (c ²=14.19, df=2,1832, p<.01). In contrast, prescription drug use was highest amongst Administrative Support workers (c ²=12.71, df=4,1839, p<.01), those earning less than $45,000.00 per year (c ²=17.16, df=5,1593, p<.01), older respondents (c ²=146.15, df=3,1835, p<.01), and retired individuals (c ²=57.58, df=3,1785, p<.01).

Visits to health professionals serve as a dimensional indicator of health status. Frequent visits to a doctor often signal a problem in either mental or physical well being. Participants in the CLAND study reported an average of three visits to a health professional over the 6-month period. Contact occurrence was significantly lower for participants living in Quebec (c ²=41.18, df=16,1840, p<.01), those in the second cohort (c ²=10.98, df=4,1840, p<.05), males (c ²=14.68, df=4,1840, p<.01), individuals with higher personal income (c ²=37.82, df=16,1644, p<.01), greater locus of control (c ²=47.42, df=8,1832, p<.01), and higher spousal support (c ²=15.17, df=8,1456, p<.05).

The importance of gender and age in health behaviors was apparent for several demographic characteristics at Wave Two. In the case of prescription drug use, women in the first cohort (c ²=6.75, df=1,648, p<.01) and women with lower household incomes used medication most often (c ²=18.57, df=5,535, p<.01). Regional differences were found for age, with respondents from Atlantic Canada who were under 35 year of age reporting high prescription use (c ²=12.87, df=4,178, p<.05), while participants 45-55 years of age, living in Quebec, reported the lowest prescription drug use (c ²=28.76, df=4,574, p<.001). Among older participants (55 years and over) those who were employed outside DND had lower medication use than their contemporaries who were retired, unemployed, or still working at DND (c ²=9.29, df=3,662, p<.05). Married respondents and those who were satisfied with their CRP decision reported the lowest use of medications, but only in the 35-44 age category.

Table 8: Prescription Drug Use and Contact with Health Professionals by Gender

^a= Wave 1 Males versus Wave 1 Females, p<.05.