If governments want to better control spending to rein in deficits and debt, one option is to ensure compensation paid to government employees broadly reflects private-sector compensation for similar positions

Government employees in Canada paid 9.7% more than comparable employees in private-sector

By Jason Clemens, Charles Lammam—— Bio and Archives--June 4, 2015

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TORONTO—Government employees in Canada receive higher wages and likely more generous non-wage benefits than their private-sector counterparts, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.


“As governments across Canada struggle with persistent deficits and growing debt in the face of ongoing negotiations with public-sector unions, now is an opportune time to scrutinize the compensation of government employees nationwide,” said Jason Clemens, executive vice-president of the Fraser Institute and co-author of Comparing Government and Private Sector Compensation in Canada.

Using Statistics Canada’s Labour Force Survey data from January to December 2013, the study calculates that government employees in Canada (federal, provincial and local governments) receive 9.7 per cent higher wages, on average, than comparable employees in the private sector.

This wage premium accounts for differences among individual employees such as age, gender, marital status, education, tenure, type of work, size of establishment, industry, and occupation. When unionization is accounted for, the government-sector wage premium drops to 6.2 per cent.

But wages are only part of an employee’s total compensation, which also includes non-wage benefits such as pensions, early retirement and job security. And according to several strong indicators, the government sector as a whole enjoys superior non-wage benefits.

Specific non-wage benefits examined in the study include:

  • Pensions: In 2013, 87.8 per cent of government employees in Canada were covered by a registered pension plan compared to only 23.9 per cent in the private sector. Of those covered, 94.2 per cent of government employees enjoyed defined-benefit pensions (which guarantee a certain level of benefits in retirement) compared to 47.5 per cent of private-sector employees.
  • Early retirement: Between 2009 and 2013, government employees retired 2.4 years earlier, on average, than Canada’s private-sector employees.
  • Job security: In 2013, 3.6 per cent of private-sector employees experienced job loss in Canada, compared to only 0.7 per cent of government employees.
  • Absence rates: Full-time employees in Canada’s private sector were absent due to personal reasons for an average 8.1 days in 2013 while the average government employee was absent 12.1 days.

“Of course, governments must provide competitive compensation to attract qualified employees, but wages and benefits in Canada’s government sector are out of step with the private sector,” said Charles Lammam, study co-author and director of fiscal studies at the Fraser Institute.

“If governments want to better control spending to rein in deficits and debt, one option is to ensure compensation paid to government employees broadly reflects private-sector compensation for similar positions,” Clemens said.
A short video spotlighting the differences between government and private-sector compensation is also available on the Fraser Institute’s YouTube channel.



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Fraser Institute Jason Clemens, Charles Lammam -- Bio and Archives | Comments

The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 86 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute’s independence, it does not accept grants from governments or contracts for research. Visit fraserinstitute.org.

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