Economic Recovery in Canada before and after COVID: Job Growth in the Government and Private Sectors

Ben Eisen; Milagros Palacios

Several past analyses published by the Fraser Institute have shown that in recent years net job creation in the government sector has dramatically outstripped private-sector job creation.
This publication updates these data, showing that during the recession brought on by the COVID-19 pandemic and the following recovery (2019â2023), government employment has increased by 13.0% while employment in the private sector (including self-employment) increased just 3.6%
We further expand past analysis by comparing the ongoing recovery from the COVID-19 recession to past periods of economic recession and recovery.
We find that the extent to which the current economic recovery is driven by government job growth is historically unusual. We compare the current economic environment to five past economic recessions and slowdowns and find that none of those recoveries were nearly as reliant on job creation in the government sector.
We also compare the current recession and recovery in Canada to that in the United States, which differs sharply. In the United States, the private sector has generated a large majority of all new jobs in recent years and the rate of net job creation in the private sector has been nearly identical to that in the government sector.
As a result of disproportionately faster growth in the public-sector employment, governmentâs share of employment post-COVID is higher than at any point since the fiscal consolidations of the 1990s.