Fairer pay in the public sector: Gender and new Canadian pay gaps in the public and private sectors, 2025
Posted on October 15, 2026 in Equality Delivery System
Source: PolicyAlternatives.ca — Authors: David Macdonald
PolicyAlternatives.ca/News-Research
October 14, 2026. By David Macdonald
While pay gaps persist, the public sector remains a fairer place for both women and new Canadians to work
Summary
While economic theory assumes wages reflect productivity, real-world data reveals persistent pay gaps based on gender and immigration status. To isolate these disparities, this study analyzes 2025 Labour Force Survey data and controls for 15 worker characteristics like education, tenure, age, and location to isolates the residual gaps and a clearer look at wage discrimination between the public and private sectors.
Pay gaps based on gender and immigration persist in Canada. The public sector remains a fairer place for both women and new Canadians to work—pay gaps persist here but they’re much smaller than in the private sector. In no part of the analysis are women actually paid more than equivalent men or immigrants paid more than equivalent Canadian born workers, but the pay is closer in the public sector.
The gender pay gap among public sector workers is smallest in the health care and social assistance industry. It is widest in the education industry. But none of these are as bad as the gender pay for private sector workers across all industries.
In 2025, women in the public sector were paid 4.9 per cent more than equivalent private sector female workers. Men with equivalent characteristics in both the public and private sectors were paid much more than private sector women, at 10.2 per cent and nine per cent, respectively. The five-point higher pay between equivalent women in the public vs. private sectors ensures that public sector workers, broadly, are paid more than private sector workerss—because women face less pay discrimination in the public sector.
Gender pay gaps are also analyzed along the wage spectrum. For the lowest-paid workers, there is no gender or public/private pay gap because wages are largely determined by minimum wage laws. In the lower-middle, women in the public sector achieve pay equity with men in either sector. But women in the private sector are left far behind. From that point onward, the gender pay gap only grows in both the public and private sectors.
The analysis tracks a distinct “motherhood penalty” in the private sector, where women with children make 0.9 per cent less than those without. On the public sector side, women experience no such penalty, earning slightly more if they have children. Both sectors feature a large “fatherhood premium,” rewarding men with children with a seven per cent wage advantage in the private sector and a 5.1 per cent boost in the public sector.
The public sector side of health care and social assistance shows the smallest gender pay gap in 2025, with women being paid only 1.8 per cent less then equivalent men. Women working for the federal, provincial and municipal governments are still paid 4.8 per cent less than their male equivalents.
The worst pay gap in public sector is in education, where women are paid 7.4 per cent less than equivalent men.
Several occupations show large divergences between public and private sectors. Senior executives are paid 35 per cent more in the private sector and private health professionals enjoy a 20 per cent advantage on the private side. Educators and community service workers secure an eight per cent wage premium by working for a public sector employer.
New Canadians are another group that faces discrimination. Even after adjusting for all 15 characteristics, they are, on average, paid less, although the gap is lower in the public sector.
Systemic pay disparities endure into 2025, but the public sector remains crucial for curbing inequality. Realigning public sector pay to mirror the private sector would dismantle this progress, cutting pay for women and new Canadians working in public administration, health care and education. All the while, executive compensation would have to ballon to reflect levels in the private sector. Ultimately, the private sector should strive to emulate progress made in the public sector at paying similar workers more fairly.
https://www.policyalternatives.ca/news-research/fairer-pay-in-the-public-sector-gender-and-new-canadian-pay-gaps-in-the-public-and-private-sectors-2025/?utm_source=CCPA+Master+List&utm_campaign=dca0f15f84-EMAIL_CAMPAIGN_2022_01_07_02_51_COPY_01&utm_medium=email&utm_term=0_243d98559a-dca0f15f84-51935605&mc_cid=dca0f15f84&mc_eid=26a8b9335a
Tags: economy, gender, immigration
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