Comparing Government and Private Sector Compensation in Canada

With heightened interest in how wages and non-wage benefits in the government sector compare with those in the private sector, this study estimates wage differentials between the government and private sector in Canada. It also evaluates four available non-wage benefits in an attempt to quantify compensation differences between the two sectors.

While a lack of non-wage benefits data mean that there is insufficient information to make a definitive comparison of total compensation, the available data indicate that the government sector enjoys a clear wage premium. After controlling for such factors as gender, age, marital status, education, tenure, size of firm, type of job, industry, and occupation, government workers in Canada (from the federal, provincial, and local governments) enjoyed a 9.7% wage premium, on average, over their private sector counterparts in 2013. When unionization status is factored into the analysis, the wage premium for the government sector declines to 6.2%.

There are also strong indications that the government sector has more generous non-wage benefits than the private sector. The available aggregated data suggest—similarly to the wage comparison—that government workers fare better than those in the private sector: 87.8% of government sector workers in Canada were covered by a registered pension plan, compared to 23.9% of private sector workers. Among those covered, 94.2% of government workers enjoyed the gold standard of pensions—a defined-benefit pension, which guarantees a certain level of benefits in retirement—compared to just 47.5% of private sector workers.

In addition, government workers in Canada retire earlier than their private sector counterparts—almost two and half years earlier, on average—and are less likely to lose their jobs (3.6% in the private sector versus 0.7% in the government sector). Government workers in Canada also lost more time to absenteeism in 2013 for personal reasons (12.1 days on average) than their private sector counterparts (8.1 days).