Analysis reveals public employees earn more and enjoy richer benefits vs private counterparts
A new report reveals a meaningful compensation advantage for public-sector workers in Canada, shedding light on a persistent cost challenge for governments.
The Fraser Institute study shows that government employees across federal, provincial, and municipal levels on average receive wages 4.8% higher than equivalent private-sector workers, after controlling for factors such as education, age, job type and location.
The report comes as Canadian organizations are tightening their compensation plans heading into 2026, meaning pay hikes may be less likely for some workers.
The Fraser Institute report shows that the raw average wage differential is even greater than the headline gap, with public employees paid 26.1% than their private-sector peers in 2024 before adjustments.
For non-wage benefits government workers enjoy far broader pension coverage (86.7 % versus 21.8 %), and among those covered, nearly all public-sector plans are defined-benefit (91.5 % vs. 40.7 % in the private sector).
These public employees also retire, on average, 2.2 years earlier and face far lower risk of job loss (0.6 % versus 3.2 %). In addition, they averaged 15.7 personal-leave days in 2024 versus 9.3 for private employees.
“At a time when governments across Canada are facing immense fiscal pressures, bringing government sector compensation in line with the private sector would help reduce costs without necessarily disrupting services,” says Jake Fuss, director of fiscal studies at the Fraser Institute. "All levels of government in Canada - municipal, provincial and federal -must find ways to reduce costs as spending and borrowing have continued to ramp up across the country. Closing the compensation gap between the government and private sectors would reduce costs and help governments move towards balancing their budgets."
READ: Canada's labour market shows gains in wages but job losses persist
The study, Comparing Government and Private Sector Compensation in Canada, 2025 Edition, is available on the Fraser Institute website.
