Ontario government workers paid 11 per cent more than private sector: Study

Pension, job security also to their advantage
By Anastasiya Jogal
|payroll-reporter.com|Last Updated: 02/18/2015

TORONTO 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.

The discrepancy accounts for worker characteristics such as age, gender, marital status, education, tenure, type of work, size of establishment, industry, and occupation, according to a study by the Fraser Institute based on Statistics Canada's Labour Force Survey from January to December 2013.

"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, a public policy think-tank.

When unionization is accounted for, the government-sector wage premium in Ontario declines to 8.5 per cent.

There is also a strong indication that benefits, including pensions, early retirement and job security are superior in the government sector verses the private sector.

Pensions: In 2013, 77.3 per cent of government workers in Ontario were covered by a registered pension plan compared to 25.6 per cent in the private sector. Of those covered, 97.1 per cent of government workers enjoyed defined-benefit pensions 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 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."

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