Public workers earn more, retire earlier than private sector: study

Canada’s government employees enjoy better wages and benefits than their private sector counterparts, according to a new study by an economic think tank.

Source: Wikimedia Commons

Canada’s government employees enjoy better wages and benefits than their private sector counterparts, according to a new study by an economic think tank. From better job security to earlier retirement, public sector workers fared better.

The Fraser Institute gathered data on individual workers from January to December 2024 to estimate “the wage differential between the government and private sectors in Canada” and to evaluate “four non-wage benefits offered by the two sectors.”

Across all levels of government, public workers enjoyed an average 4.8-per-cent wage premium over their private sector counterparts last year after adjusting for age, gender, education, tenure, type of work, industry, and occupation.

When considering the wage difference between unionized and non-unionized employees, the wage premium for the government sector declined to 3 per cent.

The study, Comparing Government and Private Sector Compensation in Canada, used the latest data available from Statistics Canada’s Labour Force Survey.

“At a time when governments across Canada are facing immense fiscal pressures, bringing government sector compensation in line with the private sector would help reduce costs without necessarily disrupting services,” said the institute’s director of fiscal studies and co-author Jake Fuss.

Last year, more than 4.5 million Canadian workers, or 21.5 per cent of total employment, were public sector employees.

The study found that federal, provincial and municipal workers were paid 26.1 per cent higher wages than those doing the same work in the private sector.

The four non-wage benefits evaluated were pension, early retirement, personal leave and job security, all of which paid better to be employed by the government rather than a private company.

“In 2024, 86.7 per cent of public-sector workers were covered by a registered pension plan compared to only 21.8 per cent in the private sector,” reads the study. “Of those covered, almost all government workers (91.5 per cent) enjoyed defined-benefit pensions, which offer a guaranteed level of income and benefits in retirement, compared to 40.7 per cent among private sector workers.”

On average, public workers also retired 2.2 years earlier than private sector workers.

“The size of the gap ranges across Canada, from a low of 0.9 years in Alberta to a high of 4.2 years in Prince Edward Island,” reads the study.

When it comes to personal leave, government workers were absent from their jobs more often than private sector workers, taking 15.7 days on average last year, compared to 9.3 days taken by those in the private sector.

Additionally, public-sector employees were approximately “five times less likely to experience job loss than private sector workers,” with a rate of only 0.6 per cent, compared to 3.2 per cent.

“All levels of government in Canada—municipal, provincial and federal—must find ways to reduce costs as spending and borrowing have continued to ramp up across the country,” said Fuss.

“Closing the compensation gap between the government and private sectors would reduce costs and help governments move towards balancing their budgets.”