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FIRST READING: One in four Canadian employees now works for government

Share of public employment reaching levels of unsustainability last hit before 1990s debt crisis

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FIRST READING: One in four Canadian employees now works for government Back to video

With Canada continuing to hire government workers well out of proportion to job growth in the private sector, the country is now approaching conditions last seen in the 1990s as we neared the brink of a sovereign debt collapse.

The most recent labour force numbers published by Statistics Canada show that 4.6 million Canadians now work in the public sector, as compared to 13.8 million working in the private sector, and 2.7 million who are self-employed.

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This means that public-sector workers – those working for government or a government-funded sector such as health care – now represent one quarter of all Canadians working as employees, and 21.8 per cent of all workers generally.

As first noted by economist Charles Lamman in an analysis for The Hub, this means that Canada’s public sector is approaching a size last seen just before Canada was plunged into fiscal crisis in 1994.

In the early 1990s, the size of Canada’s public sector briefly peaked just above 22 per cent of the workforce, before entering a period of rapid decline as the government of then Prime Minister Jean Chrétien dramatically slashed program spending to avoid default.

By 1999, these cuts had resulted in the public sector’s share of the job market dropping to a low of 18.6 per cent.

And the rising imbalance of the Canadian labour market becomes ever starker when considering that Canada has been hiring public-sector workers at highs not seen since the Second World War – all while private-sector hiring remains largely stagnant.

In the last six years, Canada has added 833,000 public-sector jobs, despite just 1.2 million being added to the private sector in that same period. This works out to the wildly unsustainable ratio of each new government job being supported by just 1.4 new non-government jobs.

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The number of self-employed Canadians, meanwhile, has shrunk. There were 2.8 million of them at the start of 2020. Now there’s 2.7 million.

Analysts have long warned that Canada was hiding the true state of its jobs market simply by using public debt to expand government payrolls.

The most dramatic shift came at the depth of COVID lockdowns. Between February 2020 and July 2022, private-sector jobs increased by 56,100 jobs, against public-sector job creation of 366,800. In other words, 86.7 per cent of new jobs across those two years was in government.

Even in recent years, the national unemployment rate has often stayed constant purely because massive job losses in the private sector were being offset by massive job increases in the public sector.

In July 2024, for instance, the Canadian private sector lost 42,000 jobs, all while public-sector employment rose by 41,000 – resulting in no change to the country’s overall employment rate.

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In the 12 months between May 2023 and May 2024 – long before Canada was plunged into a tariff war with the United States – the public sector saw 208,000 new jobs against 190,000 new private-sector jobs.

And as government workers represent an ever larger share of the Canadian workforce, there is simultaneously a widening gap in the standard of living enjoyed by government workers versus non-government workers.

An October analysis by the Fraser Institute determined that public-sector workers now enjoy a wage premium of 4.8 per cent over their non-government peers, as well as more sick days, earlier retirement and more generous benefits.

Although Prime Minister Mark Carney has pledged cuts to the federal civil service, the effort would ultimately reverse only a few weeks’ worth of hiring conducted at the height of Canada’s feverish expansion of the public sector.

Of Canada’s 4.6 million public-sector workers, only 357,000 work for the federal civil service. The other 4.25 million either work for a provincial government, a school, a Crown corporation or in some corner of the health-care sphere.

A 2024 analysis by the C.D. Howe Institute concluded that while public-sector employment was ballooning everywhere, it wasn’t always in the same places. B.C., for instance, blew out its public sector with mass hiring in health and social services. New Brunswick, by contrast, blew out its public sector payroll by adding new public administration roles.

Carney’s 2025 budget pledged to eliminate 16,000 federal jobs over three years; an average of 4,000 per year. But for context, in the 12 months before Carney became prime minister, Canada added 92,000 public-sector workers; an average of 252 new government workers every day.

At that rate, Canada was adding an extra 16,000 public-sector workers every 63 days.

One somewhat unexpected outcome from the winter Olympics is discovering just how much the United States enjoyed beating Canada at hockey.

Last Sunday was far from the first time that the U.S. and Canada have met at the Olympics in an epic clash for the hockey gold medal. But in prior instances, passions were reserved almost exclusively to the Canadian side.

The 2010 final for Olympic hockey gold between the U.S. and Canada remains the most-watched TV broadcast in Canadian history, with at least 80 per cent of Canadians following at least one part of the game. And while the broadcast pulled similar ratings among the much larger U.S. audience, the game didn’t come anywhere near to the cultural phenomenon that it represented in Canada.

This time is different. The Sunday game became the third most-watched hockey game in U.S. history, behind only the two “Miracle on Ice” games played by Team USA at the 1980 Lake Placid Olympics. This is particularly impressive given that the game began at 8:00 ET on a Sunday. For this reason, it also broke the U.S. record for the most-watched sporting event with a start time earlier than 9 a.m.

The U.S. men’s hockey team also received a level of political attention afforded to few other U.S. athletes, culminating in the team being invited as special guests to the annual State of the Union address on Tuesday night.

“People have been asking me, please, please, we’re winning too much, we can’t take it anymore … and to prove that point, here with us tonight are a group of winners who just made the entire nation proud; the men’s gold medal Olympic hockey team!” said U.S. President Donald Trump.

As to why Americans are suddenly delighting in the defeat of Canadians, one easy answer is that professional sports have become a prominent outlet for U.S./Canadian political grievances. With the most notable example being that Canadian crowds keep booing the U.S. national anthem.

First Reading is a Canadian politics newsletter curated by the National Post’s own Tristin Hopper. To get an early version sent directly to your inbox, sign up here.

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