TORONTO, ONTARIO--(Marketwire - Feb. 20, 2013) - 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, finds a new report from the Fraser Institute, an independent, non-partisan Canadian think-tank.
"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.
"The fact is government workers in Ontario enjoy a wage premium over their private-sector counterparts."
Comparing Public and Private Sector Compensation in Ontario examines wage and non-wage benefits for government employees (federal, provincial, and local) and private-sector workers in Ontario. It 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" (i.e., the degree to which public-sector wages exceed private-sector wages) declines to 12.4 per cent from 13.9 per cent.
Aside from higher wages, the study also found strong indications that public-sector workers enjoy more generous non-wage benefits than the private sector, including:
- Pensions: 76.5 per cent of Ontario's public-sector workers were covered by a registered pension plan in 2011 compared to 26.0 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 (i.e., guaranteeing a certain level of benefits in retirement) 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 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.
"Overall, the public-sector workers in Ontario enjoy higher wages-and likely higher non-wage benefits-than comparable workers in the private sector."
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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 86 think-tanks. 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.