Government Jobs Compensate More, Offer Earlier Retirement, Says Canadian Study

A Canada Post employee delivers mail to a community mailbox in Dartmouth, N.S., on June 30, 2016. (Andrew Vaughan/The Canadian Press)

Government employees get paid more for similar work, get more personal days per year, retire earlier, and are more likely to have a pension that guarantees income in retirement than those in the private sector, according to a new study by the Fraser Institute.

In a report released April 18, the independent think tank said government workers on average receive 8.5 percent higher wages than a comparable employee in the private sector, even after adjustments for age, gender, education, tenure, type of work, and other factors.

The report suggests government jobs provide more generous benefits and higher wages that could be reduced in a recession to reduce costs.

“At a time when governments across Canada are facing serious fiscal pressures as a result of the recession, bringing government sector compensation in line with the private sector would help reduce costs without necessarily affecting services,” said Ben Eisen, a senior fellow with the Fraser Institute.

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

The report, “Comparing Government and Private Sector Compensation in Canada, 2023 Edition,” finds that government employees across Canada—including federal, provincial, and municipal workers—were paid 31.3 percent higher wages, on average, than workers in the private sector in 2021.

The study used the most recent data available from Statistics Canada’s Labour Force Survey to conclude that the average government worker retires 2.4 years earlier, and is able to miss work for personal reasons five days more per year than comparable non-government workers.

A government job also equates to almost five times less job loss and almost nine times more chance of having a pension providing guaranteed income and benefits in retirement, said the study.

Most government workers (90.6 percent) received such a pension, according to the Fraser Institute, but only 39.9 percent of private sector workers could retire under those same conditions.

“In 2021, 86.6 per cent of public-sector workers were covered by a registered pension plan compared to only 22.9 per cent in the private sector,” it said.

Added Benefits

Government workers were absent from their jobs for personal reasons more often than private sector workers as well—14.9 days compared to 9.8 days.

The report notes wages are only one aspect of compensation. Government jobs also provide various non-wage benefits such as pensions, health and dental insurance, vacation time, and life and disability insurance, said the report.

In Canada in 2021, there were almost 4.1 million public sector employees, representing 21.6 percent of the country’s total employment. This includes the federal, provincial, and local governments, as well as government agencies, crown corporations, and government-funded establishments such as schools (including universities) and hospitals, indicated the report.

Private sector workers accounted for 64.2 percent of total employment, using 2022 Statistics Canada numbers. The remaining 14.1 percent, approximately 2.7 million Canadians, were self-employed, the report said.

The study also found that men, on average, earned 8.7 percent more than women, and high school graduates earned 5.8 percent more than those with an elementary education or less. An individual who graduated from university earned 15.9 percent more than a Canadian with only elementary school level education, and those with graduate degrees could command 22.1 percent higher wages.