Deputy Minister Salary in Canada: Economic and Political Forces

Since the late 1990s both the public and the federal and provincial governments in Canada have paid increasing attention to the issue of public sector salaries due to the availability of public compensation information, the aging of senior government officials and adoption of new public management by the public sector. This study investigates the factors determining the compensation level of senior government officials, namely deputy ministers (DMs), in the provincial and the federal governments in Canada. The key factors of interest are cabinet minister salaries, private sector salaries and the presence of pay-for-performance schemes. Using descriptive and regression analysis, this study shows that political elements play an important role in DM salary determination. In particular, regression results indicate a close relationship between DM and ministerial salaries during the period between 2000 and 2010. The relationship between DM salary and pay-for-performance schemes shows that DM salary is positively related to the presence of aggressive pay-for-performance schemes. This study argues that the introduction of pay-for-performance schemes is consistent with the politicization of the salary determination process for senior government officials. DMs with better performance are awarded with higher salaries in exchange for reaching performance measures that politicians lay out in advance