Comparing Government and Private Sector Compensation in Ontario, 2023 Edition

Main Conclusions

• Using data on individual workers from January to December 2021, this report estimates the wage differential between the government and private sectors in Ontario. It also evaluates four non-wage benefits for which data are available to quantify compensation differences between the two sectors.
• After controlling for factors like gender, age, marital status, education, tenure, size of firm, job permanence, immigrant status, industry, occupation, and full- or part-time status, the authors found that workers in Ontario’s government sector (federal, provincial, and local) enjoyed a 10.9% wage premium, on average, over their private-sector counterparts in 2021. When unionization status is factored into the analysis, the wage premium for the government sector declines to 8.8%.
• The available data on non-wage benefits suggest that the government sector enjoys an advantage over the private sector. For example, 83.9% of government workers in Ontario are covered by a registered pension plan, compared to 25.1% of private-sector workers. Of those covered by a registered pension plan, 94.5% of government workers enjoyed a defined benefit pension compared to 36.9% of private-sector workers.
• In addition, government workers retire earlier than their private-sector counterparts— about 2.5 years on average—and are much less likely to lose their jobs (5.5% annual job loss rate in the private sector compared to 1.3% in the public sector).
• Moreover, full-time workers in the government sector lost more work time in 2021 for personal reasons (14.0 days on average) than their private-sector counterparts (8.8 days).