Since the pandemic, Canada’s public sector employment has grown nearly four times more than private sector employment

Between 2019 and 2023, the share of Canadians employed in the public sector grew by 13 percent–3.6 times more than private sector employment, which grew by 3.6 percent, making the post-pandemic recovery historically incomparable with past recessions.

The jump in public sector employment represented the greatest four-year increase and the second greatest gap (9.3 percentage points) between private and public sector employment since 1976.

According to a new report by the Fraser Institute, from 2019 to 2023, the number of public sector employees rose by 490,000–from 3.7 to 4.2 million, making up 46.7 percent of the period’s total job growth. As of September 2024, the number of public sector employees totaled 4.4 million, or 21 percent of the total workforce.

The number of private sector employees, including those self-employed, rose between 2019 and 2023 by 559,800–making up 53.3 percent of total job growth. Disaggregating these numbers, private sector employment rose by 5.8 percent while self-employment declined by 6.2 percent. As of September 2024, together they totalled 16 million workers or 78 percent of the total workforce.

Canada’s rapid growth in public sector employment, which includes Crown corporations, health care, and universities, varied across the country (with P.E.I. and British Columbia leading the way).

The public sector typically leads economic slowdown recovery, but this time was exceptional.

Since 1980, Canada has experienced six notable economic slowdowns. In two instances, in 2000 and 2014, there were “significant economic slowdowns characterised by weak growth,” report author Ben Eisen told The Hub. The other four were recessions–when GDP contracted for two straight quarters, the most recent of which was in 2020 during the COVID-19 pandemic.

At the end of these slowdowns, four-year growth in public sector employment ranged from 3.1 percent (in 1984) to 8.6 percent (in 2004). The same change in private sector employment ranged from -3 percent (in 1993) to 7.7 percent (in 2004), demonstrating that government employment has generally led to post-recession recoveries.

The relative magnitude of government job growth following the COVID-19 recession, however, differed from the usual recovery path. The difference between public and private sector employment growth is the most marked between 2019 and 2023, with the four-year gap representing nearly 10 percentage points.

“This is a problem, because government jobs are paid for by workers in the private sector,” explains a video published by the Fraser Institute.

As a result of British Columbia’s record-level government employment, “rapid spending growth and soaring government debt have led to B.C. suffering three credit downgrades since 2021,” economist Jock Finlayson wrote for Business Intelligence Vancouver.

This April, federal Treasury Board President Anita Anand said following a pandemic period that required additional public servants to “dispense” “massive programs,” every federal department will now have to contribute to the reduction of 5,000 positions overall. It’s part of the government’s 2024 budget plan to save $4.2 billion over the next five years.

But, not everyone agrees that this large rise in public sector employment is a problem.

“Public institutions like hospitals and schools buy billions of dollars of inputs from the private sector. Their workers patronise private businesses with their own household spending—from retail to construction to transportation. By building a healthier, better-skilled workforce, good public services facilitate private investment and innovation,” wrote economist Jim Stanford in Business Intelligence Vancouver, responding to Finlayson.

Post-COVID job sector growth has varied significantly across Canada.

The provinces with the largest public sector increase, across federal, provincial, and local governments, were Prince Edward Island (25.5 percent), British Columbia (22 percent), New Brunswick (19.7 percent), and Saskatchewan (15.8 percent).

B.C. saw the largest gap between public and private sector job growth, a difference of 21.5 percentage points, followed by P.E.I (18.6) and New Brunswick (17.6). Next came Saskatchewan (17.4), which was the only province to see private sector employment decline.

The largest private sector employment growth occurred in Nova Scotia (8 percent), Alberta (7.2 percent), and Prince Edward Island (6.9 percent). The first two were the only provinces where private-sector job growth was greater than public-sector growth. They also saw the least growth in their public sectors.

Canada’s unprecedented post-recession reliance on the public sector is fundamentally different from the recovery playing out in the United States. Since 2019, 16 percent of the U.S.’s new jobs were in the government sector, compared to Canada’s 46.7 percent.