Huge wage gaps favour public sector over private sector: CFIB

Federal employees get 17.3% more; provincial 7.9% more

December 2, 2008 – Toronto – Results from a new study by the Canadian Federation of Independent Business (CFIB), reveal wages paid by the federal government to its employees are on average 17.3 per cent higher than what is earned in the private sector by those in equivalent occupations. The wage differential was derived from Census data representing more than 3.7 million full-time employees in 199 occupations, earning an average $60,924 annually in the federal government compared to $51,947 in the private sector.

The research also shows there is an overall wage gap of 7.9 per cent between comparable provincial government and private sector occupations across Canada. On average the annual pay of these provincial employees is $52,863 while that of equivalent private sector workers is $49,002.

Ontario has the highest wage differential of all provincial governments with a $7,000 spread between its public sector’s average salary of $60,656 versus a comparable private sector wage of $53,682 — a difference of 13.0 per cent. CFIB sees this wage gap widening due to upcoming collective bargaining talks with Ontario public sector employees. “We are concerned costs will only continue to be passed on to taxpayers and make it increasingly more difficult for smaller businesses to compete with the public sector in finding qualified staff,” said CFIB president Catherine Swift.

These estimates only reflect salary levels and do not take into account the pension, insurance and other forms of benefits that are considerably richer in the public sector. When pensions and other benefits are included, the gap widens to 41.7 per cent in the federal public sector and 24.9 per cent at the provincial level. “The time is long overdue for the federal and provincial governments to stop dipping into taxpayers’ pockets to finance their payrolls,” said Swift. “With the federal government facing the real prospect of a deficit going forward, and Ontario facing a projected $500 million deficit what’s needed is a reality check by our political leaders to shrink the wage disparity between the public and private sectors. It is especially urgent to do so when the economy is so fragile and the private sector is facing layoffs and business closings.”

Swift also added that in order to address this inequity, government must become more transparent, allow for public debate and be accountable. She also pointed out those measures must be taken to minimize the negative impacts of wage differentials that will distort local employment markets, reduce productivity and increase tax levels.

The results of CFIB’s study, Wage Watch: A Comparison of Public-sector and Private-sector Wages, reveals that not only is there a significant wage difference in terms of the federal and provincial public sectors but also in several other government areas as well, such as: Canada Post � 16.9 per cent; urban transit � 12.9 per cent; municipal government � 11.2 per cent; education institutions � 10.8 per cent and healthcare institutions � 8.5 per cent.

To view CFIB key recommendations, please see the full report at:

CFIB is Canada’s largest association of small and medium-sized businesses, representing more than 105,000 business owners who employ 1.25 million Canadians and account for $75 billion in GDP.