Address the Disparity in Private Sector - Public Sector Wages, Pensions and Benefits

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    Open Government, Government of Canada. (2018, February 28). Address the Disparity in Private Sector - Public Sector Wages, Pensions and Benefits. Retrieved from http://open.canada.ca/en/idea/address-disparity-private-sector-public-sector-wages-pensions-and-benefits
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    “Address the Disparity in Private Sector - Public Sector Wages, Pensions and Benefits.” Open Government, Government of Canada, 28 February 2018, http://open.canada.ca/en/idea/address-disparity-private-sector-public-sector-wages-pensions-and-benefits
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Votes: 207

Open Government needs to create serious venues for addressing really tough and "NOT POLITICALLY CORRECT TO TALK ABOUT"  issues facing Canadians. We need to bring these issues out into the open from their "neat little hiding places", where they've been swept under the rug so to speak. For example: There is a very large Compensation/Benefit Gap  issue in Canada between Public and Private Sector workers. This tends to create a two-class system. Why is this issue not being addressed or openly discussed.

Study after study shows that public sector worker pay is 10% - 20% higher than private sector worker pay for the same type job. And the total compensation gap does not stop there. Public Sector workers all have defined benefit pension plans whereas the average private sector worker does not even have a pension. When we add in dental plans, prescription drug plans, number of sick days taken per year, vacation days available per year, the disparity becomes embarrassing. Public sector workers in Canada are retiring younger and younger on full pensions adjusted to inflation with benefits while private sector workers in Canada are working longer and longer past 65 with no pension and no benefits. This is insidiousness. Private sector worker tax dollars are taken to enable public sector workers to retire earlier and earlier while they (private sector workers) in turn have to work longer and longer. Something is very wrong with this picture.  For there to be any kind of  success with the "Open Government" initiative, the these kinds of tough issues and topics MUST be tabled and openly discussed in a moderated environment - objectively, factually and peacefully.

Milestones
1. Set up independent study group (not all from pubic sector and academia but rather selected on basis of population - i.e. ~35% of workers in Public Sector and ~65% in Private Sector so this is split of study group selection. The ~65% from private sector can't all be from near-government institutions  like banks etc. Their selection must represent Canadian industry employment demographics).
2. Make available stats can information and assistant to this group

Deliverables 
1. Group submit finding and submit recommendations/report after 18 months with monthly progress updates to Sponsor
2. Publish findings and set of remedial action recommendations for Canadians to review on website
3. Legislative action plan to eliminate Public Sector - Private Sector wage, pension and benefit gap for jobs of similar types / values

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Comments

Submitted by Debora E on January 11, 2023 - 8:45 PM

People seem to forget that once upon a time private companies used to have great benefits and pension plans and wages. Don’t blame public sector employees for the difference today, private employers are the ones that have slowly gotten rid of pension plans, great benefits and wages. Private companies are just too greedy these days. They need to go back to the way things were, take care of their employees!! It’s not the taxpayers responsibility to take care of private sector employees!!!

Submitted by Mario Panacci on April 15, 2022 - 5:55 PM

To net out what my original thoughts I believe this is an issue that all Canadian employers public or private will need to address in the next decade. As workers in the middle wage/pension scale we all share a need to be taken care of in our retirement years. Our employers made us a promise when they hired us. They promised to provide us with a fair and respectable workplace and compensation. That promise doesn't end when we retire. Some of us will retire on just CPP and OAS, others will include private RRSP income and some will have public pensions and the other incomes. It is critical that employers in Canada in all sectors work with our elected leaders to put in place programs where the delta between retired employees isn't too great between sectors. Failing to do so will create social community unrest affecting every Canadian. This is not an issue workers with average income can address. This is a critical issue executives and elected leaders in both public and private sectors need to address. If Canada fails to treat works fairly in retirement years their children and their children will lose trust in all employers and this will negatively affect all Canadians and employers. The employee employer trust will be broken so it won't matter if some of us are well off because we'll all suffer if some of us live in poverty. I think balance and ensuring gaps are small in compensation this the only path forward and this task sits with our employer executives and elected because they are the only people that can make the changes needed. Thanks for considering my views - respectfully Mario Panacci - a proud working class Canadian!

Submitted by Amused User on December 22, 2021 - 9:44 AM

While I think it is interesting that government pays more than private on average, the bigger question is where has the bar been set over the years.
In olden times the average corporate C-Suite was paid 50X the employees average salary, now its closer to 200-250X the employee salary.
This is without much change to the standard workload just a different incentive program to reduce benefits in order to hit a performance bonus, and the shift to remote or digital in Covid times.
At the same time as corporate makes large profits in Covid these profits aren't relayed to the workers, we can look at Kelloggs union fight in the US for a 3% increase in wages while they are making record breaking profit.
If the marginal return of an employee wasn't there they wouldn't hire an employee length of service matters less in the private sector, each employee is there to cover the wage of their labor and excessive profit is channeled to a shareholders.
The problem lies in that this becomes a systematic application applied across the private sector which to me explains the gap we see in wages.
If the government salaries historically were lower with better benefits to make it up, then corporatism results in cuts to the cost of the base laborer for the sake of the shareholder and C-Suites this shows in the gap we see.
That leaves two choices for the laborer to stay in the private sector or to work in the public sector and get treated better.
It's a sad truth that the corporate ladder is broken its easier to jump through rungs by switching jobs in private than to negotiate a raise, there are good youtubers who explain that well like Joshua Fluke. This is especially true when new employees are paid more in some companies than older veteran employees due to inflation and simply not asking for a raise, which the employer may not give automatically it is only when they ask their new comrade their salary that they realize that.
I feel the governments compromise of a step system to wages and that security is the tradeoff to a risk averse person no need to settle or negotiate, if you want to take that risk of high rewards high stakes and the off chance of getting fired to be treated better, then the private sector is for you.
As long as you keep aware that an employer doesn't care for it's employee family and you work there to get paid you will be better off. The government on the other hand offers a trade off, they will get employee loyalty because they are stable. The net result over the years is that governments get loyal workers slow bureaucracy and stability.
The net result of corporatism and crony capitalism over the years is lower worker wages, higher productivity by quotas, higher shareholder returns at the cost of worker benefits, with high variance of income and return based on where you are on the ladder.
It makes you climb while the other helps you to climb. Picking your path simply comes down to what is more important to you a stable career to raise a family and going home at the end of the day with deployment options anywhere in Canada. Or cut throat competition for the best salary wages and living for your job with opportunity to jump the rungs to anywhere your talent is appreciated. The choice is up to Canadians to decide, which like Europe leads the type A's to corporate America for the highest salaries and wages at the C suite tier and leaves the employees and mid management behind. This is where we are in the Public vs Private salary debate

Submitted by karen kramer on June 13, 2021 - 1:17 AM

Why is it that Government employees benefit packages exist,and many private sector jobs have none? Everyone pays taxes,regardless of their income but government employees seem to benefit off the lower paid population... I really have a hard time understanding this.Everyone should be entitled to the same benefits of Government Employees,or no one should benefit from it.It is the tax dollar that makes this possible,right?

Submitted by Steve on February 22, 2021 - 11:49 PM

If the gross wage of a government worker is paid by the private tax payers then to arrive at a net wage it would make sense that the private sector taxes also pays government employees taxes and all other benefits gained from that government body employment.
If this is denied then the government body should extend this concept to all Canadians. This is a horrible structure.

Submitted by Greg Stephenso… on February 12, 2021 - 3:03 AM

Thank you for posting this.
Looking at gaps between public and private sector wage, pension, and benefits is important for our long-term success.
It also speaks to quality of life differences. It is telling when looking at retirement age, vacations, etc. Private sector citizens deserve equal opportunity for a positive quality of life.
This does not diminish the value of public sector workers,
But it is important to point out - what resources would we have with out the private sector also?

Submitted by Elizabeth Tayl… on April 22, 2020 - 11:50 AM

It does feel like this gap is widening and it seems unfair . The taxes we pay in the private sector allow people in the public sector to have a life style and benefits that we can not afford for ourselves. It is only getting worse. There needs to be accountability for our tax payer dollars. I value the work that the public sector does on our behalf but it should not break my back.

Submitted by Anonymous on April 05, 2020 - 6:42 PM

The defensive comments here from public sector workers /retirees is so typical of the denial one is confronted with in any attempt to have an open discussion on the subject of private/public sector pensions.
Now, as a 63 year old

Submitted by Alex Machida on June 22, 2019 - 5:51 AM

I'm not sure where these assumptions are coming from. I've seen the articles of fake news such as the Fraser Institute. Like many, I've worked in the public sector for a few years and before that in the private sector for nearly two decades and I can honestly say you can and do make a lot more in the private sector. Especially in any Professional career role. Also many large private corporations offer great benefit (dental / medical), and some do offer pension plans. Even without it though, the extra $10 - $20k / year I made in private was more then enough to make my own pension plan through investments. If anything, those in the public sector need major raises to match industry standards already in the private sector. A typical Construction Project Manager in a private construction firms makes way more then their counter part in Government. Likewise a typical Engineer or Director in a private utility provider makes more then their counter part in crown corporation. People don't come to Government for the money. They do so to make a difference in their community. I hope this helps. .

Submitted by Debora E on January 11, 2023 - 8:57 PM

Well said! Years ago I worked for private companies with great pay, benefits and a pension plan better than government jobs. The private companies are the ones that have slowly gotten rid of pension plans, good wages and benefits over the years. The private companies are the ones that no longer want to be fair and take care of their employees…has nothing to do with taxpayers dollars.

Submitted by Paul Kucera on April 09, 2021 - 5:56 AM

You are talking about professional positions, people with higher education. Yes, in private sector these positions may earn more than in public sector. However, these jobs are in minority compared to the huge number of general labor jobs in private sector. Laborers earn a lot less and often do not get the benefits like early retirements, indexed pensions, vacations and perks common in the public sector. Laborers pay the taxes to support such benefits. Don't forget that.

Submitted by Chris Jezovnik on May 16, 2020 - 2:31 AM

The examples chosen don't reflect the average Canadian worker. Most do not work for large private corporations. Most do not have titles like "Construction Project Manager", "Engineer" or "Director" in a private utility. Most do not have private pension plans.

Submitted by James Armstrong on April 20, 2019 - 12:20 PM

The majority of Canadians are in the private sector and most after having contributing the maximum permitted RRSP contributions throughout their working lives cannot afford to retire early. Benefits like hospital, dental, drugs, vision will cease immediately on retirement. Those fortunate enough to have a DCPP are completely at the mercy of the ups and downs of the market while the public sector worker collects a gauranteed index linked pension for life. I'm sure private sector employees would be more than happy to contribute to a similar plan that would provides similar benefits, but I doubt the contributions made would cover the costs, and that's the inequality.

Submitted by Anthony Sinn on May 18, 2019 - 2:10 PM

As a private sector non union worker, I would jump at the opportunity to contribute to a defined benefits pension. The CPP, while public is bare bones at best. We are at the mercy of the banks and financial industry and most are not equipped to be our own pension fund managers. I know many workers who don't even know what a TSFA or RRSP is. Let alone a dividend, mutual fund, or capital gains tax for example. Yes, it's easy to learn the terms but managing a portfolio or trusting a financial manger who is paid on commission to sell products is counter productive to retirement planning. Open up the public pension system to all citizens. I do understand that public sector workers do contribute a signifigant amount of their wages to their pensions.

Submitted by Thomas Kay on March 22, 2018 - 7:25 PM

On https://www.canada.ca/en/employment-social-development/services/collective-bargaining-data.html There are tools that search through collective agreement data around private and public sectors wages and benefits. This data could be opened in formats. It could show that when the private sectors have stronger collective bargaining representation, a private sector employee group does move into much stronger wage and benefits positions than public sector employee groups. It would also be interesting to see data about loss/gain in collective bargaining representation in private and public sectors. We could then see if losses in private/public sector bargaining power has had direct evidence based impacts on the wage/benefit gains and losses in same job parity groups over equal periods of time.

Submitted by Anonymous on October 16, 2018 - 5:04 PM

Interesting idea about opening summary data from the sample of collective agreements that the goverment collects to build data models, but what about sampling the GIG enconomy groups data as well inorder to extract the same data sets across time to export that data as well to support enabling of such trend analysis? Individuals doing GIGs have no main support group, so is Canada setting one up for for every Canadian contributing to GIG ecomony in Canada?

Submitted by Rae Dulmage on March 10, 2018 - 4:34 AM

This is a major issue in our country. I am aware of companies that do not have good benefits and have no pensions. Employees have not had raises in 6-10 years and the employer is in a globally competitive market that constrains his ability to address. The public service should switch to a defined contribution plan and needs to reduce its size and long term costs to reduce the burden on the economy.

Submitted by Michael Lucas on March 06, 2018 - 12:45 AM

I believe everyone has the right to a Pension of one sort or another. Public Service Pensions are a right for those who work for the Canadian Public. There should be something at the end of a career spent serving Canadians in such a vital sector as the Public Service Arena.

Submitted by Kevin A. Threader on March 03, 2018 - 2:17 PM

I am a big supporter having written about the need for many facets of government to be publicly addressed and / or voted-on online. After years developing systems including CBC I write about the need for taking an AI approach to this 'cool' insight into 'open government'. I will add this chapter to my site at 7thangel.ca

Submitted by Catherine Fisher on March 01, 2018 - 10:27 PM

Be sure to include ALL facts in your review. Over the decades, employees have paid into their 'government' pension plan at agreed-to contribution rates. The Supreme Court of Canada ruled the pension surplus that Ottawa withdrew over a decade ago to help reduce the deficit did not have to be returned to the plan. No private sector employer would have gotten away with removing $23B from an employee pension fund. Further if Ottawa had left this money in the plan, there would be no need to discuss, "how do we pay for increasing numbers of employees who are retiring during a time when Canada is reducing the hiring numbers". In good faith I paid into my pension plan, I did not get paid higher wages than private sector in similar work and part of the reason I stayed as a public servant was the value I placed on my pension. I was not alone. It is a sad day when the focus is on how to make a pension worth less than on how we can make everyone's pension worth more..

Submitted by Greg Stephenson on February 12, 2021 - 3:11 AM

Tell this sad story to my wife who spent 6 years in post-secondary school and is struggling in a few dollars more than a minimum-paid job with no pension. She is hoping for a raise but the challenges with COVID probably make this impossible.

There is a clear disconnect with reality between public sector workers and what they have to ‘pay’ to have their rich retirement pensions and the private sector who have so little options.

Let’s be clear - a ‘public sector’ job is a sweet deal and you should feel lucky to have the privilege to be paid at top dollar and have a pension that makes you many times richer than many in the private sector could ever hope for. Please, at least acknowledge how lucky you are vs the many who struggle in the private sector.

Sincerely,
Greg Stephenson
Barrie, ON

Submitted by Gordon Holmes on February 28, 2018 - 10:38 PM

Wen is the Government going to change to a "Benefit Contribution" plan. We cannot continue to continue to pay pensions to an increasing number of employees who do not and will not help contribute to there our welfare. This must stop and make more employees save for their own retirement.

Submitted by Debora E on January 11, 2023 - 9:13 PM

Do you really think a public sector pension is paid by taxpayers? I contributed approximately $500 every pay cheque towards my pension for 28 years. My pension is OMERS which is funded by extremely good investing…not taxpayers!! You should really get your facts straight.

Submitted by Anonymous on March 11, 2018 - 7:06 PM

Public service employees have considerable mandatory deductions made from every pay throughout their employment. There is no option to not contribute during difficult financial times and to contribute when things aren't so tight or less in the beginning and more later when you don't need to pay for kids sports or school. It doesn't matter if you are a single parent, disabled, have a parent or disabled child you are supporting....those deductions come off like clockwork. The surplus collected in the plan was used to pay down your federal debt, not returned to the plan. I believe that qualifies as a contribution to citizens welfare even aside from the years of committed public service. Did you know that an employee must remain polite, respectful and act in a citizens interests regardless of whether that person has acted unkindly, rudely or abusively toward them. I have seen front line workers be yelled at, spat upon, threatened with physical harm yet they continue to work in that persons interests to do the best they can under the conditions they are working within. The reason they are employed there....because they want to make a difference, and because they believe that they owe you, the citizen, a debt of service. They not only paid for their pensions, they earned them.

Submitted by To Anonymous on August 05, 2022 - 6:34 PM

Your perspectives are shared by the majority of public workers but the numbers don't add up. If one looks at the tax income (revenue) increases to public sector over the last three decades compared with service levels its clear most of the income is being used to pay public compensation packages. A quick look into the growth in numbers of public employees making over 100k plus in the last decade verses the services they've provided to the public confirms tax payers are paying more and getting less service. So where are those dollars going? Imagine a private company charging more for its service but offering less. How long would that company last? As tax payers we expect all public employees to want to serve us and improve our lives. Sadly over the past decades it appears public employees serve managers or elected and those leaders in return reward them with more benefits. If a public employee makes a pension that is many times more than a private employee they should have worked that many times more for it and if that were the case the public services today would be many times better than they were decades ago. I don't think any Canadian would say that is the case which is why we need better strategies otherwise it will be the public retired pensioners that suffer living in communities where they are seen as greedy by most of their peers that worked just as hard as they did but don't have the pension and benefits they have. We need better strategies so pensioners aren't so divisive in the future because that hurts everyone in the community and no one wants that future reality. Thanks for letting me share my views.