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The government is responsible for over 80 percent of new jobs created in Canada since the pandemic started in early 2020, according to a recent think-tank study.
In an August bulletin, the Fraser Institute compared net job growth between Canada’s public and private sectors and found that the public—or government—sector has accounted for nearly 87 percent of all new jobs since the pandemic’s outset, leaving jobs in the private sector to account for less than 15 percent of new jobs.
“It is clear that the government sector is disproportionately driving Canada’s labour market recovery,” said the report titled “Comparing Government and Private Sector Job Growth in the COVID-19 Era,” written by researchers Milagros Palacios and Ben Eisen.
Statistics Canada defines the public sector as consisting of “all resident institutional units controlled by resident government units,” such as public schools and hospitals.
“Private sector total employment is now only slightly above pre-pandemic levels and once an adjustment is made for population growth, private sector employment is in fact lower than it was in February 2020,” the report said.
Prime Minister Justin Trudeau said in a press conference earlier this week that Canada’s unemployment rate is currently at a record low.
“We have to remember that the Canadian economy has recovered more jobs more quickly than even the U.S. has, following the pandemic,” he said.
Deputy Prime Minister Chrystia Freeland said at the beginning of August that Canada’s “big economic challenge, when it comes to the labour market, is a shortage of workers.”
“When we were fighting the COVID recession, for our government, the priority was to preserve Canadian jobs and to preserve the economic muscle of the country so that jobs could come roaring back when we lifted the pandemic restrictions,” she said during a press conference.
‘A More Complicated Picture’
The Fraser Institute’s report said that “media reports and some politicians” have cited the country’s low unemployment rate to “support claims of a robust labour market recovery in Canada.”
“However, an examination of trends in the public and private sectors of the Canadian economy reveals a more complicated picture,” Palacios and Eisen wrote.
At the pandemic’s outset, employment across the country plummeted by almost 3 million jobs, representing a drop of over 15 percent, according to the report.
But from February 2020 to July 2022, the report said, government sector employment grew by 366,800 jobs while the private sector added just over 56,000 jobs—representing a difference of over 300,000 jobs. In total, the public sector grew by over 9 percent during the pandemic and the private sector grew by less than 0.5 percent.
“To help put these numbers in context, consider that during this same period Canada’s population increased,” the report said.
The number of Canadian adults who are either self-employed or work in the private sector dropped by more than a full percentage point during the pandemic, while the amount of publicly-employed adults grew by almost the same amount, according to the report.
“Total employment in the private sector is now only slightly above pre-pandemic levels,” it says.
“Once an adjustment is made for population growth, private sector employment is in fact lower than it was in February 2020.”
