The economic pain of the pandemic is a distant memory for the public sector, where the number of workers has not only rebounded from the temporary dip of 2020 but has gone on to hit a record high.
In the latest labour force survey from Statistics Canada, the number of workers employed by federal, provincial and municipal governments rose to 4.1 million, up from 3.9 million in February, 2020.
The labour force survey doesn’t break down that figure between the three levels of government. But other data indicate that the expansion of the federal civil service has been a key driver in the growth of public-sector employment, particularly in the two years leading into the pandemic.
The pandemic briefly reversed the growth in jobs at all three levels of government. But as the chart below shows, it didn’t take long for the government sector to rebound. By last September, public-sector employment was higher than the prepandemic month of February, 2020. Employment by governments, which excludes members of the Canadian Armed Forces, continued to trend upward through to last month, with the public sector adding 257,000 workers since the start of the pandemic.
By contrast, the number of private-sector employees returned to prepandemic levels only last month, with that rebound still lagging the public sector. And the number of self-employed workers is much lower, and falling.
The public sector’s quick bounce back means that the number of public servants has risen to record levels, as the second chart shows below. In recent months, that growth likely comes from hiring in the health sector. The most recent data from the Canadian Institute for Health Information indicate that the ranks of health care workers were projected to expand in 2020, even before the onslaught of the coronavirus pandemic.
That record-breaking level has been years in the making, however. Since mid-2016, public-sector employment has been expanding briskly, outpacing the growth in private-sector jobs (counting both employees and the self-employed).
In the public sector, employment has expanded three times as fast as in the private sector. By contrast, from 2010 to mid-2016, public-sector employment grew more slowly than in the private sector. During that period, the public sector added two workers for every three that entered the private sector.
That timeframe roughly coincides with the changeover from Conservative to Liberal government in Ottawa. The Trudeau Liberals formed government after the October, 2015, federal election, and tabled their first budget in the following February. The 2016-17 fiscal year marked the first full year of Liberal rule – and the beginning of the years-long expansion in the ranks of the federal government.
There has been “pretty significant growth” in the size of the civil service since the Liberals took office, with the increase in Ottawa’s program spending more than keeping pace with economic expansion, said Kevin Page, president and chief executive officer of the Institute of Fiscal Studies and Democracy at the University of Ottawa, and a former parliamentary budget officer. (Mr. Page noted that the relative resilience of the public sector during the pandemic was an economic positive, since it provided some stability to GDP as private-sector employment nosedived.)
The Statistics Canada data include employees of provincial and municipal governments, so the contribution of federal hiring can’t be precisely assessed from those numbers.
But the government’s own statistics, published by the Privy Council Office, demonstrate how much the federal civil service has grown during the years of Liberal rule.
As this third chart shows, the federal Conservative government reduced the size of the federal civil service in the wake of the 2008-09 financial crisis, as part of its drive to rapidly reduce the deficit. By the end of fiscal 2015-16, the ranks of public servants, including federal agencies, had declined by 16.9 per cent.
But those reductions were reversed under the Trudeau government, with the pace of expansion picking up from fiscal 2018 onward – paralleling the increase in overall public-sector employment in the Statistics Canada data.
The PCO has yet to submit its annual report on the public service for fiscal 2021; that report would pinpoint how much the federal work force had expanded during the first year of the pandemic.
However, data from Statistics Canada on the salary and wages paid to federal public servants, excluding military personnel, also open a window in to the speed of the government’s expansion. As the chart below shows, Ottawa’s monthly payroll bill starts to rise in 2016, as one would expect as head count expands.
These data cover the past year – and indicate an acceleration in the size of government. The pace of increase picked up in August, 2020, and continued through to June, 2021, the last month for which there are data. A spike in March resulted from one-time retroactive payments under new collective bargaining agreements, Statistics Canada said.
Even ignoring that spike, it’s clear that the cost of the federal civil service has surged during the pandemic, rising 13 per cent between June, 2020, and June, 2021. In an e-mail, Mr. Page said that increase undoubtedly includes an expansion of the federal work force, in addition to increases in compensation and, most likely, significant overtime costs.
However, he added that the extra costs of the past year must be seen as part of the cost of government business during a public-health crisis.
Miguel Ouellette, director of operations at the Montreal Economic Institute, warned that the expansion in the size and cost of the federal civil service cannot be sustained. “The trend is out of control,” he said. “We need to reverse it.”
A key step in doing so, Mr. Ouellette said, would be to reconstitute the kind of spending review committee put in place by the Harper government. That effort resulted in $5-billion in continuing savings, he said.
The Liberals did promise a “comprehensive strategic policy review” in the most recent federal election. But the party said that review would not be “driven by cost savings or deficit-reduction objectives.”
Mr. Ouellette conceded that a repeat of Harper-era austerity is not likely under the current government. But a spending review focused on efficiency to free up dollars for other purposes would still be worthwhile, and in keeping with the Liberals’ bigger-government philosophy, he said. “It’s clearly something that can go with Trudeau’s vision.”
Tax and Spend examines the intricacies and oddities of taxation and government spending.
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Patrick Brethour