Despite the Liberal government boasting about creating jobs, a recent study has found that the bulk of that increase is tied to the growth of the public sector and government jobs.
The Fraser Institute conducted a series of analyses on regaining employment since the COVID-19 pandemic began and in the years since finding that while the public sector has ballooned the private sector has not seen similar growth.
Canada’s economy saw the most rapid period of job loss in history due to the COVID-19 pandemic, with the employment rate falling from 62.3% in 2019 to 58.1% in 2020.
While the country’s employment rate has largely recovered to pre-pandemic levels in recent years, returning to 62.1% in 2023. It was primarily driven by “growth in government employment rather than growth in the private sector.”
Researchers found that from 2019-2023, private sector jobs saw an uptick of only 3.6%, while public sector employment grew by 13%.
“We find that the COVID recession and economic recovery fundamentally differ from any past slowdown in the extent to which job creation has been fueled by government hiring,” reads the report. “While the rate of growth in private and total employment has been comparable to several past periods, the rate of government job growth has been uniquely rapid.”
Of the 1,049,700 net jobs created in Canada from 2019 to 2023, 490,000 (46.7%) were created in the public sector. The institute also views the country’s economic recovery being driven by government job growth “historically unusual.”
“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,” it said.
The research firm also compared Canada’s current recession and recovery to that of the United States, which provided sharply differing results.
“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,” it said.
“It shows that total employment in the United States increased by 3,498,000 during this period. Of that, 562,000 (16%) were created in the government sector. The rate of job creation in the government sector of the United States was 2.7% during this period, slightly above the private sector rate of 2.1%.”
Additionally, the institute found that despite Canada’s rapidly growing population, the private sector has seen minimal job creation, noting that a previous study it conducted found that “the rate of job creation in the government sector outstripped job creation by the private sector in all ten provinces.”
The data concluded that the government’s share of “total employment has risen to its highest level since the fiscal consolidations of the 1990s” and that similar results cannot be found south of the border.
Statistics Canada also released data this week which found that an average of 54.4 hours were lost per 1,000 employees in the public sector last year, compared with 9.4 in the private sector.
“Since the late 1990s, employees in the public sector have been generally more likely to lose hours due to labour disputes,” reads the Statistics Canada report.