‘Not only do government workers in Quebec enjoy higher wages than their private‑sector counterparts, they also enjoy more generous non‑wage benefits’
The Quebec government should focus on restraining public‑sector wages and benefits as it prepares its next budget amid mounting deficits and rising debt, according to a new report from the Fraser Institute.
The study, co‑authored by Jake Fuss, director of fiscal studies, and Grady Munro, senior policy analyst at the Fraser Institute, projects a $12.4‑billion deficit for 2025/26—exceeding the $10.8‑billion shortfall recorded in 2020/21 at the height of the pandemic.
Quebec has posted a series of large deficits in recent years: $6.1 billion in 2022/23, $8.0 billion in 2023/24 and $7.6 billion in 2024/25. The authors argue that this pattern leaves limited room for further spending growth, including on public‑sector compensation.
Debt outpacing economic growth
The Fraser Institute analysis says Quebec’s net debt—total debt minus financial assets—has increased from $208.8 billion in 2022/23 to a projected $254.5 billion in 2025/26. Over the same four‑year period, net debt as a share of the economy has risen from 37.5 per cent to a projected 39.7 per cent, indicating debt growth is outpacing economic growth.
Fuss and Munro warn that this trend carries immediate and long‑term costs. They note that debt‑servicing charges are expected to reach $10.2 billion this fiscal year, money they describe as “taxpayer money unavailable for programs and services such as health care and education.”
They also caution that “today’s debt accumulation may mean higher taxes in the future to pay for debt accumulated today.”
Compensation: key area for savings
To address the fiscal gap, the Fraser Institute argues the Quebec government must reduce spending and identifies compensation as a primary lever, according to Fuss and Munro. “To get its finances back in order, the government must rein in spending. But where to find savings? According to our recent study, the government should bring government wages more in line with private‑sector wages,” the report states.
The authors add that while all expenditures should be reviewed, “the government should start by looking at government employee compensation.”
Employee compensation in Canada rose by 1.1% in the third quarter of 2025, accelerating from a 0.3% increase in the second quarter, according to a previous Statistics Canada (StatCan) report.
Drawing on 2024 data, the Fraser Institute report finds that government‑sector workers in Quebec—covering local, provincial and federal levels—earned on average 2.0 per cent higher wages than comparable private‑sector workers.
The comparison controls for what the authors describe as “critical factors (e.g. education level of workers, type of occupation or industry, length of tenure on the job).” After these adjustments, they conclude that “government‑sector workers earn a higher wage than private‑sector workers.”
Wider gaps in pensions, security and time off
The Fraser Institute says non‑wage benefits significantly favour public‑sector workers. In 2023, 96.6 per cent of government‑sector workers in Quebec were covered by a registered pension plan, compared with 23.7 per cent of private‑sector workers.
Job security and leave provisions also differ. In 2024, 3.1 per cent of private‑sector workers lost their jobs, versus 0.4 per cent of government‑sector workers, according to the report. Government employees took an average of six more days off for personal reasons than private‑sector workers, and retired an average of 2.8 years earlier.
“Clearly, not only do government workers in Quebec enjoy higher wages than their private‑sector counterparts, they also enjoy more generous non‑wage benefits,” Fuss and Munro write.
The report concludes that “the Quebec government is drowning in red ink, with Quebecers paying the price,” and urges the Legault government to “take a hard look at the wages and compensation of its workers” in the upcoming budget.
Public sector wages in Canada
Public‑sector workers in other parts of Canada also out‑earn their private‑sector counterparts.
A previous report from the Fraser Institute noted 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.
Government workers in Ontario and British Columbia also earned significantly higher wages and enjoyed more generous benefits than comparable private‑sector employees in 2024, according to two previous studies from the Fraser Institute. In Ontario, government employees were paid 7.9% higher wages, on average, than private‑sector workers in 2024. In B.C., the wage gap was 4.4%.
This is happening as the number of public sector workers has soared. Specifically, the public sector in Canada added 950,000 jobs between 2015 and 2024. And the number of federal public servants earning more than $150,000 a year has surged over the past five years, according to figures from the Treasury Board of Canada Secretariat (TBS).
Meanwhile, David Macdonald, senior economist with the Canadian Centre for Policy Alternatives (CCPA), previously noted in an article posted on the organisation's website that “public sector employment is narrowing the gender wage gap in Canada” because women, racialised people and immigrants are more likely to work in government and face smaller gender and racial pay gaps there than in private firms.
“The public sector is better at narrowing the gender pay gap than the private sector,” he said. “The public sector does so by lifting lower‑wage earners and constraining pay for high‑wage earners. Although, without examining subgroups, there is actually little difference between adjusted average wages in the public and private sectors.”
