Public and Private Sector Pay Differences

The Canadian Union of Public Employees has released an extensive analysis of public-sector and private-sector wages entitled, Battle of the Wages: Who gets paid more, public or private sector workers?  The report joins several other recent studies critical of the Canadian Federation of Independent Business’ own analysis of census data purporting to show large positive pay differentials in the public sector.

Using detailed occupational data compiled from Statistics Canada’s 2006 census, CUPE's study finds that average salaries for comparable occupations in the private and public sector are similar on the whole, with a small overall public-sector pay premium of 0.5% entirely due to a smaller pay gap for women in the public sector.  Women working public-sector jobs on average earn 4.5% more than their private-sector equivalents, while men are paid on average 5.3% less in the public-sector than in similar occupations in the private sector. 

Women belonging to similar age groups and working identical jobs as men tend to be paid less, but the pay gap with men is significantly smaller in the public sector than in the private sector. 

On the whole, lower-paid occupations, many of which are female-dominated, tend to be better paid in the public sector than the private; for higher-paid occupations, in which men are over-represented, pay tends to be higher in the private sector.  The study notes that forcing public sector wages to follow private-sector norms would increase inequality between men and women, and between high and low-income earners, with very little overall savings for government.

CUPE's report also touches on pension and benefit cost differentials, and contains an annotated bibliography of studies of public and private-sector pay differences in Canada, the United States and western European countries.