Jake Fuss and Grady Munro are fiscal policy analysts at the Fraser Institute. In its upcoming federal budget, in an attempt to offset some of the massive spending commitments it’s made in recent months, the Carney government may shrink the size of the federal public service. But it should also bring government-sector wages in Canada more in line with private-sector wages.Any talk of reducing wages — either in government or the private sector — will always generate controversy. And understandably so, as people’s jobs and wages are at stake. Therefore, it’s critical to examine the numbers so Canadians and policymakers can better understand the reality of the situation..EDITORIAL: Alberta takes charge: Time for a new pipeline to the West Coast.According to our new study, government-sector workers (local, provincial, and federal) across Canada enjoyed a 4.8% wage premium (on average) over comparable private-sector workers in 2024 (the latest year of available data). In other words, if you compare two workers with the same level of education, in the same occupation and industry, with the same tenure, the government worker will earn nearly 5% more (in wages) than the private-sector worker. However, wages aren’t the only part of compensation. For example, to offset a lower wage, employers might contribute to an employee’s registered pension plan (RPP), provide better job security, or make it easier for employees to take time off for personal reasons..In fact, in 2023 (the latest year of available data), 86.7% of government-sector employees in Canada were covered by a registered pension plan compared to 21.8% of private-sector workers.In 2024, 3.2% of private-sector workers lost their jobs compared to 0.6% of government workers, and government-sector workers took 6.4 more days off (on average) due to personal reasons than workers in the private sector. Government-sector workers also retire 2.2 years earlier (on average) than private-sector workers..OLDCORN: Don't hike Alberta’s minimum wage, it would make Alberta's cost of living crisis even worse.Again, this is all in addition to government-sector workers enjoying higher wages than those in the private sector. Governments across Canada must pay competitive wages to ensure Canadians receive high-quality public services. But taxpayers ultimately pay for these wages, and currently in Canada, governments pay their workers a premium relative to comparable private-sector workers. Clearly, if the Carney government wants to find savings, it should take a hard look — not only at the size of the public service — but also at the wages and compensation of federal employees. Jake Fuss and Grady Munro are fiscal policy analysts at the Fraser Institute.
