Bank of Canada staff received $26.7 million in bonuses and raises in 2022

Bank of Canada staff received $26.7 million in bonuses and raises in 2022.

According to documents released through access to information requests and published by the Canadian Taxpayers Federation, employees at Canada's central bank received $20.2 million in bonuses and $6.5 million in raises in 2022, a 13 per cent increase over 2021. More than 80 per cent of staff received a bonus or raise in 2022 at a time when the Bank of Canada sought to discourage consumer spending through interest rate hikes.

"Central bankers shouldn’t get bonuses when Canadians can’t afford groceries, gasoline or homes," Canadian Taxpayers Federation director Franco Terrazzano told CTVNews.ca. "With inflation reaching a 40-year high, central bankers didn't deserve bonuses."

The Bank of Canada bonuses work out to an average of over $11,000 per person, and an average raise of over $3,400 each.

Records obtained by the Canadian Taxpayers Federation also show that the number of Bank of Canada employees making over $100,000 per year more than doubled between 2015 and 2022. In 2022, 1,095 out of 2,250 Bank of Canada employees earned six-figure salaries, a nearly 13 per cent increase over 2021.

With the aim of combating inflation, the bank began raising interest rates in March 2022, from a pandemic low of 0.25 per cent to 4.25 per cent by the end of the year. Over the course of 2022, consumer and business bankruptcies increased while the consumer price index – a key inflation indicator – rose by 6.8 per cent, a 40-year high.

On July 12, the Bank of Canada policy interest rate reached five per cent, a 22-year high. The consumer price index was 3.4 per cent in May, according to Statistics Canada. The Bank of Canada has a mandate to keep inflation near two per cent.

"The Bank of Canada failed to do its job of keeping inflation low and around two per cent," Terrazzano said. "Most organizations don’t shower employees with bonuses when they have their worst year in four decades."

In an email to CTVNews.ca, a Bank of Canada spokesperson confirmed the authenticity of the documents provided by Terrazzano's organization.

"Our independent Board of Directors oversees the management and administration of the Bank, including our human resources policies," Bank of Canada spokesperson Paul Badertscher told CTVNews.ca. "Like many employers in the financial sector, we hire and retain within a highly competitive environment."

The bonuses, Badertscher explained, include "at-risk pay" for meeting work expectations and "performance pay" for exceeding expectations.

"The vast majority of employees met expectations and therefore received their at-risk pay, while about one-quarter of employees received performance pay," Badertscher said.

The Canadian Taxpayers Federation is a non-profit taxpayer advocacy group. As Canada's central bank, the Bank of Canada's responsibilities include conducting monetary policy and issuing banknotes.

David Macdonald is the senior economist at the Canadian Centre for Policy Alternatives, a progressive think-tank that focuses on social, economic and environmental justice. Macdonald isn't a fan of bonuses in general, but says the Bank of Canada payouts are nothing like the millions of dollars dolled out at private financial institutions.

"The bonuses are actually quite small compared to what you'd see in the private sector," Macdonald told CTVNews.ca. "Generally these bonuses at the Bank of Canada or the big banks are paid out irrespective of whether times are good or bad."

University of Guelph finance professor Nikola Gradojevic says that recent Bank of Canada decisions, like increasing money supply and hiking interest rates, have hurt many Canadians.

"Salary increments and bonuses in the public sector are normal and expected," Gradojevic said. "Given the Bank of Canada’s past and current actions, on ethical grounds, it could be argued that their employees should not receive excessive bonuses, but only normal salary increments that other public sector employees receive."

Macdonald said bonuses and raises at the Bank of Canada likely fell short of the rate of inflation.

"So employees likely took a pay cut once you include inflation, just like a lot of workers in 2022," Macdonald said. "The whole point of rate increases is to make life more unaffordable so people have less money to spend in the economy."