Private Sector Still Fundamental to Canada's Economic Prosperity
Over the past ten years, Canadian economic policy has operated under the assumption that substantial government borrowing and an expanding public sector would stimulate economic growth. The critical question remains: did the surge in government hiring after 2015 actually deliver the promised boost to overall economic expansion? According to a comprehensive study on public employment, the answer is a definitive no.
Decade of Sluggish Growth
The past decade witnessed slower economic growth than any period since the 1930s. Despite faster expansion in government employment, private-sector job creation continued to be the dominant force driving overall employment growth in every single province. Variations in job growth across different regions showed stronger correlation with differences in business investment levels than with trends in government payrolls.
Unprecedented Public Sector Expansion
Between 2015 and 2024, employment in Canada's government sector surged by an extraordinary 27 percent. This represents the largest increase ever recorded over a nine-year period and stands at exactly double the 13.4 percent increase in private-sector jobs during the same timeframe.
This rapid government employment growth marked a significant departure from Canada's historical patterns. For every nine-year period from 1985 to 2006, private-sector job growth consistently outpaced government employment expansion. The global financial crisis beginning in 2007 temporarily hampered private-sector growth, but the most substantial private-sector job increases exceeding 24 percent occurred during the mid-1990s and early 2000s.
Historic Shift in Employment Patterns
Starting in 2015, government-sector job growth leapfrogged past the private sector, creating a record excess over private-sector job growth of 13.6 percentage points by 2024. This accelerated growth of public-sector employment increased its share of total employment from 19.7 percent in 2015 to 21.5 percent in 2024.
Regional Variations and Private Sector Dominance
Provinces with traditionally large government sectors, particularly those in Atlantic Canada and Quebec, all recorded above-average increases in government-sector payrolls after 2015. Conversely, most provinces beginning with smaller government sectors, notably those on the Prairies, registered below-average gains.
However, these variations in government-sector job growth after 2015 had minimal impact on provincial rankings for total employment growth. Instead, the pattern bore a striking resemblance to private-sector employment gains, both in terms of growth rates and the ranking of provinces from fastest to slowest growth.
Private Sector's Overwhelming Economic Presence
This close correlation comes as no surprise to economic analysts. While Canada's public sector tends to dominate news headlines, the private sector overwhelmingly dominates both the economy and labor market. Even after a full decade of rapid government sector expansion, in 2024, 78.5 percent of all Canadian jobs remained located in the private sector.
The private-sector share ranged from 70.6 percent in Newfoundland and Labrador to 82 percent in Alberta. All Atlantic provinces maintain below-average shares of private-sector jobs in total employment, followed by Manitoba, Saskatchewan, and Quebec. In contrast, British Columbia, Ontario, and Alberta each boast private-sector shares above the national average.
The study's findings underscore a fundamental economic reality: despite significant public sector expansion over the past decade, private enterprise continues to serve as the primary engine of Canadian employment and prosperity. Business investment patterns and private sector performance remain the most reliable indicators of regional economic health across the nation.
