The latest ranking of “Canada’s top 100 employers” is interesting reading for job seekers.
Want perks such as quiet zen rooms, subsidized on-site daycare, a free health club, paid days to care for a sick parent or a defined-benefit pension? Go work for the government.
More that 20 per cent of the 2020 winners are in the public sector, according to the annual Top 100 list published by The Globe and Mail and Mediacorp Canada Inc. And these are a sampling of the kinds of benefits they offer.
Another 10 of the leading employers are either non-profits or companies operating in highly regulated industries. That means that nearly a third of employers leading the way in pay and benefits don’t operate in a truly competitive marketplace.
Unfortunately, that’s not the work world most of us inhabit.
The list is strictly voluntary. So it’s not a representative sample. Employers must apply and then meet certain criteria in eight areas, including health and financial benefits, work atmosphere, training, community involvement and the like.
But the competition does mirror reality. There is a persistent compensation gap between the public and private sector in Canada. Yes, it’s true: Government workers are paid more and they’re far more likely to have health coverage and workplace pensions – typically one that offers a predictable, or “defined,” income in retirement.
On average, workers in the public sector earn 5.9 per cent more than their private-sector peers, after controlling for various demographic and job-related variables, according to a new study by economist Richard Mueller for the University of Calgary’s school of public policy. The gap is widest at the lower end of the pay scale. At the top end, senior executives are generally paid better in the private sector, but of course there are a lot fewer of them. And the premium is larger for federal government workers than it is for provincial or local government employees.
The disparity in retirement benefits is even starker. In Ontario, only a quarter of private-sector workers are covered by a registered pension plan, compared with nearly 82 per cent in the public sector, who typically have a defined-benefit plan, according to a 2018 Fraser Institute study.
The gap is particularly acute between the public-sector workers and small businesses.
One way to level the playing field is to slash pay and benefits in the public sector so that it looks much more like the world the rest of us live in.
Indeed, Alberta is looking to do just that in continuing contract negotiations with tens of thousands of its public-sector workers. Finance Minister Travis Toews wants to cut their pay by between 2 per cent and 5 per cent, saying taxpayers can’t afford the pay gap when “far too many workers in the private sector have lost their jobs” or suffered pay cuts.
But that’s short-sighted. A sweeping pay cut for public-sector workers would likely dent economic growth, reduce tax revenue, dampen wage growth in the private sector and accelerate the migration of talent out of the province.
A better solution – for Alberta and the rest of the country – is for employers to do more to improve workplace conditions and help narrow the gap.
The business community knows it can do better. In its recent task-force report on Canada’s economic future, the Business Council of Canada committed its members to embrace greater workplace inclusion and diversity, adopt mental-health strategies and invest more in employee learning and development.
Likewise, the Business Roundtable, which speaks for the CEOs of many of the largest U.S. companies, recently abandoned its devotion to the primacy of shareholder returns, acknowledging that companies also have responsibilities to workers, customers and communities.
Of course, job creation, higher wages and more generous benefits can’t happen without economic growth.
It’s great that the House of Commons pays the full cost of tuition at outside institutions for its staff, and that new mothers working at the Canada Energy Regulator can get a full year of paid maternity leave.
But the burden of narrowing the compensation and benefits gap shouldn’t fall solely on governments, taxpayers and public-sector workers.
Companies also have an obligation to be better employers. For some, that may mean tempering profit goals to improve the lot of their workers.
We would all be better off if the private sector was setting the gold standard for pay and benefits.
After all, that’s where most of us work.
Special to The Globe and Mail