Recent reports indicate that Canada's job growth in the government sector has outpaced the private sector in recent years. Specifically, between 2019 and 2023, government employment increased by 13.3% compared to just 3.6% in the private sector. This trend is particularly pronounced in British Columbia, where government job growth reached 22% during the same period, while private sector employment only grew by 0.5%.
This shift has led to a significant increase in the share of government jobs in the overall workforce. As of 2023, government employment accounted for 46.7% of total job growth, surpassing the private sector's 53.3%. This is the highest level of government employment as a share of total employment since the mid-1990s.
This trend raises concerns about the long-term sustainability of the Canadian economy. The private sector is typically seen as the engine of economic growth, and a reliance on government jobs may limit the country's potential for innovation and prosperity.
According to the report, government-related employment—including positions in public administration, health care, education, and other services funded by public revenues—has grown at a faster pace than private-sector employment. 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
Source: Fraser Institut
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.
Several factors contribute to this trend:
While government employment has surged, the private sector has faced obstacles, including:
The shift toward public sector-led job growth has both positive and negative implications. On the one hand, it reflects the government’s commitment to social stability and providing essential services. On the other hand, reliance on public sector jobs raises concerns about long-term sustainability and the balance of Canada’s economy.
To foster balanced economic growth, policymakers must consider strategies to stimulate private-sector job creation while maintaining robust public services. Initiatives such as skills training, innovation incentives, and investment in emerging industries could help bridge the gap.
Recent Developments in Canada's Employment Landscape
Canada's jobless rate jumps to 6.8%; bets up for 50 bps rate cut next week
VIEW Canada's jobless rate jumps to near 8-year high of 6.8% in November
Canada's services PMI rises to 19-month high in November
