Ontario Public Sector Compensation Outpaces Private Sector by 7.9%: Fraser Institute Analysis
A comprehensive new study from the Fraser Institute has revealed a significant compensation disparity between public and private sector workers in Ontario. According to the fiscally conservative think-tank's report, government employees at federal, provincial, and municipal levels earned an average of 7.9% more than their private-sector counterparts in 2024.
Persistent Wage Gap Even After Adjustments
The analysis, which utilized the most recent comparable data from Statistics Canada's Labour Force Survey, found that the wage advantage persists even when accounting for unionization differences. After adjusting for union status—since government workers are more likely to be unionized—public sector employees still maintained a 6.5% compensation premium over private sector workers performing comparable roles.
Superior Benefits Package for Government Workers
Beyond base salaries, the Fraser Institute's report titled Comparing Government and Private Sector Compensation in Ontario identified substantial advantages in work-related benefits for public sector employees. The most striking difference appears in retirement planning, where 82.7% of public-sector workers had registered pension plans compared to only 23.6% in the private sector.
Furthermore, nearly all public sector workers with pension plans (94.8%) enjoyed defined-benefit pensions that guarantee specific retirement income levels, while only 37.8% of private sector workers with pensions had similar security.
Additional Workplace Advantages Documented
The study uncovered several other areas where public sector employment conditions exceed those in private industry:
- Public sector workers retire 2.2 years earlier on average than private sector employees
- Government employees take 14.4 personal absence days annually compared to 8.2 days in the private sector
- Public sector job security is dramatically higher, with government workers six times less likely to experience job loss (0.6% vs. 3.5%)
Workforce Composition and Fiscal Implications
Public sector workers constitute 19.9% of Ontario's total workforce, while private sector employment accounts for 66.6%, with the remaining 13.5% being self-employed individuals. Jake Fuss, the Fraser Institute's director of fiscal studies, emphasized the budgetary implications of these findings.
"Closing the compensation gap between the government and private sectors would reduce costs and help governments move towards balancing their budgets," Fuss stated. "All levels of government in Ontario—municipal, provincial and federal—must find ways to reduce costs as spending and borrowing have continued to ramp up."
The report arrives as governments at all levels face increasing fiscal pressures, with the compensation disparity highlighting potential areas for budgetary review and adjustment in public sector spending policies.
