Canada's job growth in government exceeds private sector: report

Canada’s public sector is leading the way when it comes to creating jobs.

In eight of 10 provinces, the rate of government job growth has been higher than the private sector, finds a study published by the Fraser Institute.

“Canada’s net job creation in recent years has been disproportionately driven by growth in government employment rather than growth in the private sector, and as of 2019, government employment as a share of total employment in the country is at its highest point since the mid-1990s,” said Ben Eisen, Fraser Institute senior fellow.

During the COVID-19 pandemic and resulting recession, the Canadian economy suffered its most rapid period of job loss in history: Canada’s employment rate fell from 62.3% in 2019 to 58.1% in 2020.

Canada’s employment rate largely recovered to pre-pandemic levels in subsequent years, reaching 62.1% in 2023, according to the report, citing data from Statistics Canada (StatCan).

Source: Fraser Institute

The Canadian government has also been better than the United States government when it comes to creating jobs. Whereas the Canadian government is responsible for 46.7% of total job growth from 2019-23, the US government is responsible for just 16.1% of the total job growth in the same period.

“Canada has seen a much higher rate of job growth in the government sector than the private sector in recent years, which is a concerning trend given that job growth and wealth creation in the private sector are needed to finance the activities of governments,” said Eisen, who is co-author of Economic Recovery in Canada before and after COVID: Job Growth in the Government and Private Sectors.

The public sector is also keeping wages in Canada high, according to a previous Desjardins report.