Canada’s Government Sector Is Growing Faster Than the Private Sector, PBO Says

Parliamentary Budget Officer Yves Giroux prepares to appear before the Senate Committee on Official Languages in Ottawa on June 13, 2022. Justin Tang/The Canadian Press

Canada’s government sector is growing faster than its private sector, and the public sector appears set to continue its growth pace, according to the Parliamentary Budget Officer (PBO).

“Growth has been faster in the public sector, generally speaking, than in the private sector,” PBO Yves Giroux told the Commons government operations and estimates committee on Dec. 1, adding that his conclusions were based off Statistics Canada reports from the last few years, as first reported by Blacklock’s Reporter.

Giroux’s office wrote in a November report that “government spending on public servant salaries and benefits is forecast to climb to almost $55 billion this year,” which represents “about $130,000 per full-time employee (FTE).”

The report said that between the 2015-16 and 2020-21 fiscal years, the number of FTE’s in the public sector grew by an average of 2.3 percent annually.

“Over the past 7 years, personnel spending grew by an average of 6.7 percent annually, from $39.6 billion to $60.7 billion. Compensation per FTE increased at an average of 4.0 per cent each year,” read the report, published on Nov. 18.

Conservative MP Stephanie Kusie questioned Giroux about these figures during Thursday’s committee meeting.

“What is the guiding factor for the significant increases to the public service?” she asked.

“It’s mostly recent and ongoing investments in various areas of government spending,” Giroux replied. “For example, in the fall economic statement, there were additional monies allocated to processing human grant applications, additional funding for the CRA.”

Public Sector

A Fraser Institute study published in August found that the public sector was responsible for more than 86 percent of new jobs that have been created across the country since the pandemic began in early 2020.

“It is clear that the government sector is disproportionately driving Canada’s labour market recovery,” read the report, “Comparing Government and Private Sector Job Growth in the COVID-19 Era,” written by researchers from the think tank.

The report also said Canada’s private sector employment is now “only slightly above pre-pandemic levels” without making a percentage adjustment for the country’s population growth since then.

“Once an adjustment is made for population growth, private sector employment is in fact lower than it was in February 2020,” the researchers wrote.

Giroux told the committee it’s difficult to pinpoint which areas of the public sector are most responsible for the recent growth.

“It seems to be rather widespread in the public service as the government increases its spending in various areas,” he said.

Liberal MP Irek Kusmierczyk asked Giroux how significant the public sector growth is considering Canada’s population has also seen consistent growth recently.

“The total federal public service still represents ... about 0.84 percent of the population, which is the same percentage proportion as back in 2010,” said Kusmierczyk, asking, “Is that a helpful number to look at?”

Giroux acknowledged that a growing population would naturally imply a larger federal service, but highlighted that certain areas of the government sector should also be finding ways to reduce employees considering the rise of online remote work.

“You'd expect also with more services moving online as opposed to in-person, as has been the case with the CRA, notably, there would be efficiency gains,” Giroux said.

“There may very well be other factors at play.”