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Feb 21, 2013

Ontario public sector earning 14 per cent more than private sector

Also retiring earlier, greater job security, better pensions: Report
    
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Public sector workers (federal, provincial and local) in Ontario earned wages 13.9 per cent higher, on average, than their private sector counterparts in 2011, according to a report from think-tank the Fraser Institute.

In looking at wage and non-wage benefits for government employees and private sector workers in Ontario, Comparing Public and Private Sector Compensation in Ontario calculated the wage premium for public sector workers using Statistics Canada’s Labour Force Survey from April 2011, after adjusting for personal characteristics such as gender, age, marital status, education, tenure, size of establishment, type of job and industry.

When unionization is included in the analysis, the public sector “wage premium” (the degree to which public sector wages exceed private sector wages) declined to 12.4 per cent from 13.9 per cent.

“As the Ontario government struggles with deficits and finding ways to constrain spending, public sector compensation is one area that should be closely scrutinized,” said Niels Veldhuis, Fraser Institute president.

There are also strong indications public sector workers enjoy more generous non-wage benefits than the private sector, said the report, including:

• Pensions: 76.5 per cent of Ontario’s public sector workers were covered by a registered pension plan in 2011 compared to 26 per cent of private sector workers. Of those covered by a registered pension plan, 97.3 per cent in the public sector enjoyed defined benefit pensions compared to 53.5 per cent of private sector workers.

• Early retirement: Ontario government employees retired 1.3 years earlier, on average, than private sector workers between 2007 and 2011.

• Job security: In 2011, 0.7 per cent of public sector workers lost their jobs — less than one-fifth of the job-loss rate in the private sector (3.9 per cent).

“Public sector wages and benefits are largely driven by political factors and the monopolistic nature of government, while in the private sector they are guided by market forces, competition and profit constraints,” said Amela Karabegović, Fraser Institute senior economist and study co-author.

The report can be found at Fraser Institute.
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