The living cost differential allowance has been eliminated in Whitehorse, impacting the paycheques of approximately 800 workers.

The benefit is given to workers in the federal government and agencies, Parks Canada and the RCMP.

'This reduction is unfair and represents at least $3 million being removed from the local economy,' Jean-Francois Des Lauriers, regional executive vice-president for the Public Service Alliance of Canada (PSAC), said in an interview today.

The allowance provides extra pay, above an annual income, to northern federal workers in isolated areas, to compensate for the higher cost of living and travel.

The rate of the allowance is determined using an equation that compares northern areas to the cost of living in another Canadian city. Whitehorse's comparison is made with Vancouver.

There has been no change in the economic activity and living standards in Whitehorse that would warrant such a dramatic move as the elimination of the payments, said Des Lauriers.

'I don't think anything has changed quite that dramatically,' he said, adding, 'It looks very strange.'

The allowance's elimination is a result of a study conducted by Statistics Canada, which looked at 21 posts in the Yukon and northern British Columbia during September through October 2004.

The study concluded that there have been significant changes in the retail market in Whitehorse, Michelle Laliberte, a media spokesperson for the Treasury Board of Canada Secretariat, said today.

The opening of larger chains

and box stores, such as Wal-Mart and the Real Canadian Superstore, have created increased competition in the area. As a result, there have significant reductions in prices,

said Laliberte, meaning the allowance no longer applies to Whitehorse.

The benefit will remain available to workers at posts in other areas of the Yukon and the North.

Most of the workers who will be affected by the cut have an annual income of approximately $30,000, said Des Lauriers.

Individuals will now will have approximately $5,000 less to put toward their cost of living each year, he said.

Workers were given very little warning, he added. Most received a letter notifying them of the elimination of the payment on Aug. 1.

'They're extremely upset. They're in shock,' said Des Lauriers. 'There was no forewarning or phasing.'

The allowance won't actually be phased out until Dec. 1, said Laliberte, giving the workers four months' notice of the change.

She added that there will also be an investigation. It will include the government and the union and will look at ways of making the transition easier for those who will be affected.

It won't be surprising if some of the workers decide to leave the territory, said Des Lauriers.

'They are going to have to take a hard look at the sustainability of staying up here,' he said, adding that he thinks there will people asking to be transferred.

The union will appeal the decision and look at options to determine if the elimination can be reversed.

But Laliberte said the review of the allowance is done on a yearly basis and as such is not part of the collective bargaining agreement. The union is aware of the possibility of reduction, she added, and has been informed of its application in this case.

PSAC will host a meeting next week to look further into the matter.