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Government workers across Ontario receive 10.9% higher wages, on average
Fraser Institute

Government workers across Ontario receive 10.9% higher wages, on average

than comparable private-sector workers

THUNDER BAY, ONTARIO  ~~~~  January 24, 2023  (LSNews) — Government workers in Ontario enjoy a wage premium and more generous benefits compared to comparable private sector workers, finds a new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“At a time when governments are facing serious fiscal pressures, 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.

The study, Comparing Government and Private Sector Compensation in Ontario, 2023 Edition, finds that the wages of government employees in Ontario are 34.4 per cent higher, on average, than wages in the private sector in 2021, the most recent year of available comparable data from Statistics Canada’s Labour Force Survey.

After adjusting for differences such as age, gender, education, tenure, type of work, industry, and occupation, government employees are still paid 10.9 per cent higher wages (8.8 per cent when unionization is taken into account).

But wages are only part of overall compensation. Government workers across Ontario enjoy more generous non-wage benefits, too.
• Pensions: 83.9 per cent of government workers in Ontario are covered by a registered pension plan, compared to 25.1 per cent of private-sector workers. Of those covered by a registered pension plan, 94.5 per cent of government workers enjoyed a defined-benefit pension compared to 36.9 per cent of private-sector workers.
• Early retirement: Government workers in Ontario retire earlier than their private-sector counterparts— about 2.5 years on average.
• Personal leave: In 2021, full-time workers in the government sector were absent from their jobs for personal reasons more on average (14.0 days) than private sector workers (8.8 days).
• Job security: In 2021, 5.5 per cent of private sector employees experienced job loss in Ontario, compared to only 1.3 per cent of government workers.

“It’s important that all levels of government in Canada—municipal, provincial and federal—continuously review expenditures with an eye to producing better value-formoney to taxpayers,” Eisen said.

“Closing the compensation gap in Ontario between the government and private sectors would reduce costs and can help ensure the long-term sustainability of government finances.”

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).

Authors:

Milagros Palacios
Director, Addington Centre
for Measurement, Fraser Institute


Nathaniel Li
Economist, Fraser Institute
 
Ben Eisen
Senior Fellow, Fraser Institute

#LSN_Econ  #LSN_SSM  #LSN_Sudbury  #LSN_TBay #LSN_NorWest 

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    The Fraser Institute is an independent, non-partisan research and educational organization based in Canada. We have offices in Calgary, Montreal, Toronto, and Vancouver. Visit our Website 

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