A look at the difference in wages, benefits between the private and public sectors

VANCOUVER (NEWS1130) – It’s no secret that people who work in the public sector often make more money and enjoy more benefits than people in the private sector. But just how large is the gap?

A new report from the right-wing Fraser Institute finds there is a financial upside to jobs in the public sector. It says the average difference in wages for people working in BC is 6.7 per cent.

But benefits and job security are also part of this.

“About nine out of every 10 government workers in BC have a registered pension plan. You compare that with the private sector, it’s about two in 10,” says Charles Lammam one of the study’s authors.

He adds government workers tend to retire about 2.8 years earlier and take more days off every year for personal reasons.

Lammam says now is a critical time to be looking at this.

“The BC government, for instance, is struggling with growing debt. It has ongoing collective bargaining negotiations, and of course, governments at the local level are also struggling to find money for infrastructure and other spending. So now’s a key time to look at one of the big-ticket items in any government budget, which is the compensation packages — the wages and benefits for employees.”

“So, of course governments should be providing competitive compensation to attract qualified employees,” he adds. “The issue, though, is that now the wages and the benefits in the government sector are just out of step with the private sector.”

“So it is key, both in terms of fairness to taxpayers that are paying the bills for these generous compensation packages to make the government sector more aligned with the private sector to ensure that we’re getting reasonable compensation packages in government, and that they’re not so far out of whack with what’s happening in the private sector.”

Lammam argues the government sector is largely shielded from competition, that compensation packages are determined based on political calculations, whereas in the private sector they’re based on economic calculations.

“So that difference — the increased discipline in the private sector, the competitive disciplines — are a better reflection of what workers should be paid. So I would argue that if there’s going to be a matching of compensation, it should be the government looking to the more competitive private sector to see when in fact there are comparable positions in the private sector, packages should be aligned more closely to reflect the more realistic competitive environment vis a vis the government sector.”

The report was put together using data from Statistics Canada from January to December 2013.