Public sector earning 12 per cent more than private sector

Also doing better with pensions, retirement, job security: Report
|hrreporter.com|Last Updated: 04/04/2013

Public sector workers at the federal, provincial and municipal level across Canada earned wages 12 per cent higher, on average, than their private sector counterparts in 2011, according to a report from think-tank the Fraser Institute.

"At a time when Canadian governments are drowning in debt and deficits, it's important to look at the compensation packages that government workers have long enjoyed," said Jason Clemens, Fraser Institute executive vice-president.

"The reality is that government employees across Canada receive a hefty wage premium compared to equivalent private sector workers. A system that pays a premium to government workers is not only economically unsustainable but also unfair to taxpayers."

Comparing Public and Private Sector Compensation in Canada examines wage and non-wage benefits for government employees and private sector workers, calculating the wage premium for public sector workers using Statistics Canada's Labour Force Survey from April 2011 — after adjusting for personal characteristics such as gender, age, marital status, education, tenure, size of establishment, type of job and industry.

When unionization is included in the analysis, the national public sector wage premium (the degree to which public sector wages exceed private sector wages) declines to nine per cent from 12 per cent.

Government workers also enjoy more generous non-wage benefits than those in the private sector, including:

Pensions: 88.2 per cent of government workers were covered by a registered pension plan in 2011 compared to 26.4 per cent of private sector employees.

•Early retirement: Government employees retired 2.5 years earlier, on average, than private sector workers between 2007 and 2011.

•Job security: In 2011, 0.6 per cent of government employees lost their jobs compared to 3.8 per cent in the private sector.

To ensure public sector compensation is fair to both taxpayers and government workers, better data collection is needed, according to the Fraser Institute, and Statistics Canada should gather data on wages and non-wage benefits more regularly and systemically than it does now.

In addition, comparisons between the public and private sectors should focus on total compensation, not just wages or specific benefits such as pensions.

"Public sector wages and benefits are largely determined by political factors, while in the private sector the process is guided by competition between firms. These differences are amplified by the monopoly environment of government compared to the competitive world of private enterprise," said Clemens.

"Governments should implement formal processes to calculate total compensation for civil servants based on the wages and benefits of comparable private sector workers."

For more information, visit Comparing Public and Private Sector Compensation in Canada.

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