Below-market salaries are impeding Canada's central bank from fielding a world-class research team, according to a recently published report by an authoritative panel of U.S.-based economists commissioned by the Bank of Canada itself.
The panel found "a substantial inconsistency" between pay scales and the bank's official objective of operating a "second-to-none" research department. "The Bank faces a difficult choice: either abandon the objective, or increase the amount of resources for economist salaries," the 25-page report says.
Among other recommendations, it calls for boosting starting pay for entry-level Ph.D. economists by 16 - 22 percent, raising senior economists' pay, and giving a greater role to merit increases and "variable performance pay" that would reward research publications, conference presentations and similar professional activities that signify a researcher's visibility and impact in the field.
The report says current Bank of Canada salaries for entry-level Ph.D. economists, at C$90,000 (US$85,714 at Monday's exchange rate), fall near the median for second-tier Canadian universities, and far below comparable positions in U.S. universities or global policy institutions such as the International Monetary Fund. "This salary structure seems like a clear recipe for mediocrity rather than excellence," it pointedly notes. "Indeed, in its interviews with some recently-hired staff economists, the Committee heard several comments like, 'I didn't receive any other job offers, so I accepted the position at the Bank of Canada.'"
However, the report does note the bank's success in attracting and retaining talented M.A. economists, a number of whom have risen to occupy relatively senior management positions.
The panel was chaired by Laurence H. Meyer, a former U.S. Federal Reserve Governor and one of the world's most influential experts on central bank policy. Of its other four members, two are current Federal Reserve staffers and two are economics professors at Northwestern and NYU.
Although the report bears a date of Feb. 1, it wasn't posted on the Bank of Canada Web site until this month. Publication was delayed to give the bank time to formulate and translate a response that appears alongside the report, a spokesman told the Globe and Mail.