There’s unfairness in public/private sector pay

By MPP Toby Barrett

“I’d like a government job – nine to five, six weeks holiday, retire early with a nice pension,” is a refrain I hear often in my travels as an MPP.

People have the perception that generally speaking, public servants make more money than private sector workers do, work shorter hours, and have a myriad of other top-ups and perks not found in regular work.

By and large their perception is correct!

Over the years, significant differences have developed between wage, pension and other forms of compensation in the public sector as compared to similar work in the private sector.

I can understand people’s concern when they see their taxes are going to pay unaffordable government worker wages and pensions – especially when these people themselves don’t have a pension and don’t make that kind of money.

The question is why people being paid by taxpayers are getting a much better deal – pay, pensions, vacation time – than the people who are themselves paying the freight.

As well, my office and I hear of unacceptable pay inequalities between union and non-union government employees, in addition to differences between public and private sector workers. Negotiators that drive up the compensation of unionized public servants can come at the expense of comparable non-unionized and private sector workers. There’s only so much money to go around, and as a result, these workers accept reduced compensation or can lose their job as a consequence of this skewed allocation of resources.

Here’s some research.

The Canadian Federation of Independent Businesses (CFIB) used 2006 Census data and found it was not only wages that were higher in the public sector, but non-wage benefits, too. The CFIB found “that government and public sector employees are paid roughly 8 to 17 per cent more than similarly employed individuals in the private sector”. However, after “taking into account significantly higher paid [non-wage] benefits and shorter work weeks, the public sector total compensation advantage balloons past 30 per cent.”

Researchers calculate US federal workers enjoy premiums of over 60 per cent after non-wage benefits and job security were included.

Canada’s Fraser Institute has conducted significant examinations into
compensation differences between Ontario’s private and public sectors.

Research revealed the public sector enjoys more generous non-wage benefits than the private sector. Public sector workers in Ontario have higher rates of pension cover age, higher rates of defined benefit pensions, lower ages of retirement and lower rates of job loss than private sector workers in the province.

They report public sector workers in Ontario enjoy both higher wages and likely higher non-wage benefits than their private sector counterparts. For example, 76.5 percent of public sector workers in Ontario were covered by a pension compared to 26.0 per cent of private sector workers. Of those workers who have a registered pension plan, 97.3 percent of public sector workers were covered by a defined benefit pension compared to 53.5 per cent of private sector workers. In addition, on average, public sector workers in Ontario retire over a year earlier (1.3 years) than private sector workers. Finally, public sector workers face lower rates of job loss than private sector workers. In 2011, 3.9 per cent of private sector workers lost their jobs in Ontario compared to 0.7 per cent of public sector workers.

Does this seem fair to you? Contact me at: [email protected].