Those in public service retire 2.2 years earlier than those in private work, finds report
Canadian government-sector employees continue to earn higher wages and enjoy more generous benefits than their private-sector counterparts, according to the Fraser Institute.
After controlling for factors such as gender, age, education, tenure, firm size, job permanence, immigrant status, industry, occupation, province, and city, the report found that government-sector workers at the federal, provincial, and local levels earned, on average, a 4.8% wage premium over private-sector employees in 2024.
When unionization is factored in, the wage premium narrows to 3.0%.
The public sector keeps wage growth high in Canada, according to a previous report from Desjardins. And the Canadian Prime Minister and Members of Parliament saw an increase far greater than the average Canadian, according to a previous report.
Effective April 1, sessional allowances and additional salaries officially took effect, giving 338 MPs a pay raise to $209,800. That translates to an additional $6,700 for each MP this year, according to the Daily Hive.
Source: The Frasier Institute
Better benefits for public service workers
Public workers’ advantage over private employees extends far beyond just pay, according to the Fraser Institute report.
For one, 86.7% of public service workers are covered by a registered pension plan, and 91.5% of those covered are with a defined-benefit plan. Among private employees, the comparable numbers are 21.8% and 40.7%.
“It is apparent that public-sector workers in Canada are much more likely to be in a registered pension plan and are much more likely to receive a defined-benefit pension than their private-sector counterparts,” said Fraser Institute directors Milagros Palacios and Jake Fuss, senior economist Nathaniel Li and policy analyst Grady Munro in their report titled Comparing Government and Private Sector Compensation in Canada, 2025 Edition.
Also, public-sector workers retire, on average, 2.2 years earlier than private-sector employees. The average retirement age for those in public service is 62.7, while it is 65 for those in private service.
Full-time public-sector employees lost an average of 15.7 days for personal reasons in 2024, compared to 9.3 days for private-sector employees.
“While there is insufficient data to calculate or make a definitive statement about the differences in non-wage benefits of the public and private sectors in Canada, the available data suggest that those working in the public sector enjoy more generous non-wage benefits than do workers in the private sector. These benefits include higher rates of pension coverage, higher rates of defined-benefit pensions, earlier ages of retirement, lower job loss rates, and more days lost due to personal reasons,” say the authors of the Fraser Institute report.
Earlier this year, Public Services and Procurement Canada (PSPC) updated the Compensation Sector Pay of the Pay Centre, automating benefits enrollment for new hires.
