Government Jobs Increased 13 Percent, Three Times Private, in COVID-19 Pandemic: Report

A steel worker in Ottawa on March 5, 2018. The Canadian Press/Sean Kilpatrick

Canadian public sector jobs increased by 13 percent during the COVID-19 pandemic and the following recovery while the private sector saw just 3.6 percent growth, says a new report.

“Canada’s net job creation in recent years has been disproportionately driven by growth in government employment rather than growth in the private sector,” said Ben Eisen, Fraser Institute senior fellow and co-author of the report, in an Oct. 22 news release.

Titled Economic Recovery in Canada before and after COVID: Job Growth in the Government and Private Sectors, the think tank report looks at the rate of net job creation in the government and private (including self-employment) sectors from 2019 to 2023.

Eisen and co-author Milagros Palacios said government employment as a share of total employment is at its highest point since the 1990s and that public sector job growth has “dramatically outstripped” its private sector counterpart in recent years.

“We find that the extent to which the current economic recovery is driven by government job growth is historically unusual,” they wrote. “We compare the current economic environment to five past economic recessions and slowdowns and find that none of those recoveries were nearly as reliant on job creation in the government sector.”

In the press release, Eisen called the trend “concerning” because “job growth and wealth creation in the private sector are needed to finance the activities of governments.”

Provincial Comparison

The report also looked at employment growth in the provinces and found that, in most, the government sector expanded faster than the private sector.

Public sector jobs in Manitoba rose by 10.6 percent while private sector employment grew by 7.8 percent.

In Quebec, government jobs increased by 10.8 percent while private sector jobs saw a 4.7 percent increase.

Ontario saw job growth in its public sector double that of the private sector, with government employment increasing by 14.6 percent compared to the private sector at 7.3 percent.

In British Columbia, private sector employment increased by just 1.2 percent, while the public sector grew 22 percent.

The number of public sector jobs in New Brunswick grew by 19.7 percent while the province only saw a 3.9 percent increase in private sector employment.

Public sector job growth in PEI was at 25.5 percent while private sector job growth increased by 7.7 percent.

Newfoundland and Labrador saw a 7.2 percent increase in government employment and a 0.6 percent increase in private sector employment.

Saskatchewan added 15.8 percent of public sector jobs and 3.6 percent in the private sector.

The trend did not hold true for all provinces. In Nova Scotia, government employment increased 4.7 percent while the private sector saw 7.7 percent growth. In Alberta, the public sector saw a 4.4 percent increase in jobs,while the private sector grew by 9.2 percent.

US Comparison

The authors also compared the data with job growth in the United States, which they said “differs sharply” from that in Canada.

“In the United States, the private sector has generated a large majority of all new jobs in recent years and the rate of net job creation in the private sector has been nearly identical to that in the government sector,” the report said.

In Canada, the public sector represented 46.7 percent of total job growth between 2019 and 2023, while in the United States it accounted for just 16 percent.