Public sector size, compensation in Alberta ‘does not stand out in any way’

On the eve of the United Conservative Party’s first provincial budget, a new report by the University of Alberta’s Parkland Institute challenges the contention that the size and compensation levels of Alberta’s public sector are higher than in other provinces and should be addressed through significant reductions.

In Scrutinizing Alberta’s Public Sector: How Its Size and Compensation Compare to Other Jurisdictions, University of Lethbridge economics professor Richard E. Mueller used two complementary data sets and a longer, inflation-corrected time frame to provide a more accurate picture of Alberta’s public sector than was offered in the report of the Blue Ribbon Panel on Alberta’s Finances and other recent research.

“Put simply, Alberta does not stand out in any way relative to the other three large provinces, both in terms of the size of its public sector size and its compensation,” Mueller says. “Alberta has actually tended to have a smaller public sector compared to other jurisdictions using certain measures. Similarly, the compensation levels of Alberta’s public employees does not stand out when compared to other provinces. In fact, Alberta’s public sector employees tend to earn relatively less than their counterparts in other jurisdictions, especially when the fact that Alberta is a high-wage province is considered.”

Mueller explains that much of the previous research that concludes Alberta’s public sector is larger and more highly paid than in other jurisdictions is less accurate due to not controlling for Alberta’s relatively high inflation rate, the use of a limited time frame for comparisons, and a failure to account for significant private sector employment in the categories used to measure public sector employment and compensation.

“Contrary to the narrative that Albertans have heard over and over again in the lead-up to tomorrow’s budget, Alberta’s public sector compensation levels are at best average when compared to other jurisdictions,” Mueller says. “Compared to the roughly 15% wage advantage Albertans enjoy relative to workers in the rest of Canada, if anything, public sector workers in the province find themselves at a wage disadvantage, so any reductions are likely to have unintended consequences.”

Parkland Institute is a non-partisan public policy research institute in the Faculty of Arts at the University of Alberta. Scrutinizing Alberta’s Public Sector: How Its Size and Compensation Compare to Other Jurisdictions is available for download on Parkland Institute's website.