Gov’t employees make more, retire sooner versus private sector

Government employees in Canada receive higher wages and likely more generous non-wage benefits than their private-sector counterparts, finds a study by the Fraser Institute.

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Using Statistics Canada’s Labour Force Survey data from January to December 2013, the study calculates that government employees in Canada (federal, provincial and local governments) receive 9.7% higher wages, on average, than comparable employees in the private sector.

This wage premium accounts for differences among individual employees such as age, gender, marital status, education, tenure, type of work, size of establishment, industry, and occupation.

When unionization is accounted for, the government-sector wage premium drops to 6.2%.

But wages are only part of an employee’s total compensation, which also includes non-wage benefits such as pensions, early retirement and job security. And according to several strong indicators, the government sector as a whole enjoys superior non-wage benefits.

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Specific non-wage benefits examined in the study include:

• Pensions: In 2013, 87.8% of government employees in Canada were covered by a registered pension plan compared to only 23.9% in the private sector. Of those covered, 94.2% of government employees enjoyed defined-benefit pensions (which guarantee a certain level of benefits in retirement) compared to 47.5% of private-sector employees.
• Early retirement: Between 2009 and 2013, government employees retired 2.4 years earlier, on average, than Canada’s private-sector employees.
• Job security: In 2013, 3.6% of private-sector employees experienced job loss in Canada, compared to only 0.7% of government employees.
• Absence rates: Full-time employees in Canada’s private sector were absent due to personal reasons for an average 8.1 days in 2013 while the average government employee was absent 12.1 days.

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The staff of Advisor.ca have been covering news for financial advisors since 1998.