The Fraser Institute

The Fraser Institute

February 18, 2015 06:25 ET

The Fraser Institute: News Release; Government Employees in Ontario Paid 11.5 Per Cent More Than Comparable Private-sector Workers

TORONTO, ONTARIO--(Marketwired - Feb. 18, 2015) - Government workers in Ontario receive higher wages and likely more generous non-wage benefits than their private sector counterparts, finds a new study by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

"As the Ontario government grapples with a $12.5 billion deficit, it has identified government-sector compensation as a way to restrain spending. Indeed, in light of ongoing collective bargaining negotiations, now is an opportune time to scrutinize the compensation of government employees, which consumes over half of program spending," said Niels Veldhuis, president of the Fraser Institute.

Using Statistics Canada's Labour Force Survey data from January to December 2013, Comparing Government and Private Sector Compensation in Ontario calculates that, on average, government workers in Ontario, including federal, provincial, and local government workers, receive 11.5 per cent higher wages than comparable workers in the private sector.

This wage premium accounts for differences in the personal characteristics of workers such as age, gender, marital status, education, tenure, type of work, size of establishment, industry, and occupation. When unionization is accounted for, the government-sector wage premium in Ontario declines to 8.5 per cent.

But wages are only part of an employee's total compensation. Non-wage benefits - including pensions, early retirement and job security - can represent an important portion of an overall compensation package. While individual data on these benefits are not readily available in Canada, there are strong indicators that the government sector as a whole also enjoys superior non-wage benefits.

Specific non-wage benefits examined in the study include:

  • Pensions: In 2013, 77.3 per cent of government workers in Ontario were covered by a registered pension plan compared to only 25.6 per cent in the private sector. Of those covered, 97.1 per cent of government workers enjoyed defined-benefit pensions (i.e., guaranteeing a certain level of benefits in retirement) compared to 46.9 per cent of private-sector workers.

  • Early retirement: Between 2009 and 2013, Ontario government workers retired 1.4 years earlier, on average, than the province's private-sector workers.

  • Job security: In 2013, 3.8 per cent of those employed in the private sector experienced job loss in Ontario, compared to only 0.8 per cent of those employed by government.

  • Absence rates: Full-time employees in the province's private sector were absent due to personal reasons for an average of 7.2 days in 2013; the average government worker was absent 10.4 days.

"Of course, governments need to provide competitive compensation to attract qualified employees but the fact is wages and benefits in all levels of government are out of step with the private sector," said Charles Lammam, Fraser Institute associate director of tax and fiscal policy and study co-author.

"If the provincial and municipal governments of Ontario want to better control their spending, one option is to ensure compensation paid to government workers broadly reflects private-sector compensation for similar positions."

Niels Veldhuis is in Toronto and available to media.

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.

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