Fraser Forum

The Great Employee Pay Divide in British Columbia

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As Premier John Horgan’s government negotiates nearly 200 new contracts for British Columbia’s government-sector employees, it’s important to understand the significant wage and benefit gap between government and private-sector workers. Compensation restraint is both needed and warranted as the research consistently shows wages and benefits of government employees tend to eclipse those of comparable private-sector workers.

A new Fraser Institute study provides the latest estimates of the government wage premium in B.C. Using Statistics Canada data, the study finds that government employees (federal, provincial and local) receive, on average, 7.5 per cent higher wages than comparable workers in the private sector in the province. (The wage gap accounts for differences between workers in the two sectors such as age, gender, education, tenure and type of work.)

But wages are only part of overall compensation. Government workers in B.C. enjoy much more generous benefits, too.

• Pensions: Nearly nine of 10 government workers in B.C. (86.3 per cent) have a defined benefit pension plan—which offers a guaranteed level of benefits in retirement—compared to less than one of 10 workers in the private sector (7.9 per cent).

• Early retirement: Government workers in B.C. retire 1.9 years earlier, on average, than private-sector workers.

• Personal leave: Government workers in B.C. are absent from their jobs for personal reasons 49 per cent more often than private-sector workers—13.7 days compared to 9.2 days.

• Job security: Government workers enjoy more job security, and were nearly six times less likely to experience job loss than private-sector workers—0.4 per cent compared to 2.3 per cent.

Of course, governments in B.C. should provide competitive compensation to attract qualified employees, but clearly wages and benefits in the government sector are out of step with the private sector

Bringing government-sector compensation in line with the private sector would not only help governments in B.C. control spending without reducing services—Premier Horgan did promise to balance the budget—it would also maintain fairness for the other 80 per cent of B.C. taxpayers (who don’t work in government) who foot the bill.


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