Should Canadian government workers be paid less?

With 35,000 workers at the Canada Revenue Agency on strike among 155,000 public sector employees, the subject of their wages is delicate.

But while striking workers are seeking double-digit increases in their wages, partly to compensate for inflation, a new report from the Fraser Institute suggests Ottawa should be bringing down government workers’ salaries.

The non-partisan think tank says that government employees earn 8.5% higher wages than comparable private sector workers and this could be a target for reducing costs to balance the federal finances.

“At a time when governments across Canada are facing serious fiscal pressures as a result of the recession, bringing government sector compensation in line with the private sector would help reduce costs without necessarily affecting services,” said Ben Eisen, a senior fellow with the Fraser Institute.

Using data from Statistics Canada’s Labour Force Survey, the Fraser Institute’s study Comparing Government and Private Sector Compensation in Canada, 2023 Edition, claims that government employees across Canada—including federal, provincial and municipal workers—were paid 31.3% higher wages, on average, than workers in the private sector in 2021.

Pension plans

The study also states that a larger share of public workers have a registered pension plan (86.6% vs. 22.9% in the public sector) and retire 2.4 years earlier than private sector peers on average.

They typically enjoy greater job security.

“All levels of government in Canada—municipal, provincial and federal—must find ways to reduce costs following the unprecedented spending and borrowing we’ve seen recently,” Eisen said. “Closing the compensation gap between the government and private sectors would reduce costs and help governments move towards balancing their budgets.”