Job growth in government exceeded the private sector in 8 out of 10 provinces from 2019-23

In eight of 10 provinces the rate of government job growth has been higher than the private sector, finds a new study published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“Canada’s net job creation in recent years has been disproportionately driven by growth in government employment rather than growth in the private sector, and as of 2019, government employment as a share of total employment in the country is at its highest point since the mid-1990s,” said Ben Eisen, Fraser Institute senior fellow and co-author of Economic Recovery in Canada before and after COVID: Job Growth in the Government and Private Sectors.

The study finds that historically, no other recent era of recession and recovery in Canada have been so dominated by government sector job growth compared to private sector job growth.

During the recession and recovery periods related to the COVID-19 recession (2019-2023), government employment across the country, including federal, provincial and municipal increased by 13.0 per cent compared to just 3.6 per cent in the private sector (including self-employment.)

In every Canadian province save for Alberta and Nova Scotia, employment in the government sector expanded at a higher rate than the private sector. In BC, employment growth in the private sector (including self-employment) rose only by 0.5 per cent during the period compared to 22.0 per cent in the government sector. Ontario’s public sector experienced triple the growth the private sector had, with 14.6 per cent and 4.8 per cent, respectively.

The study also compares the current recession and recovery in Canada to the United States, where the private sector has generated a large majority of all new jobs in recent years. In Canada, the government sector is responsible for 46.7 per cent of total job growth from 2019-203 compared to 16.1 per cent in the United States.

“Canada has seen a much higher rate of job growth in the government sector than the private sector in recent years, which is a concerning trend given that job growth and wealth creation in the private sector are needed to finance the activities of governments,” said Eisen.

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 (2019–2023), 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, government’s share of employment post-COVID is higher than at any point since the fiscal consolidations of the 1990s.

Authors:

Ben Eisen

Senior Fellow, Fraser Institute

Milagros Palacios

Director, Addington Centre for Measurement, Fraser Institute

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Falling resource revenue fuels Alberta government’s red ink

Published on November 28, 2025

Todayville

From the Fraser Institute

By Tegan Hill

According to this week’s fiscal update, amid falling oil prices, the Alberta government will run a projected $6.4 billion budget deficit in 2025/26—higher than the $5.2 billion deficit projected earlier this year and a massive swing from the $8.3 billion surplus recorded in 2024/25.

Overall, that’s a $14.8 billion deterioration in Alberta’s budgetary balance year over year. Resource revenue, including oil and gas royalties, comprises 44.5 per cent of that decline, falling by a projected $6.6 billion.

Albertans shouldn’t be surprised—the good times never last forever. It’s all part of the boom-and-bust cycle where the Alberta government enjoys budget surpluses when resource revenue is high, but inevitably falls back into deficits when resource revenue declines. Indeed, if resource revenue was at the same level as last year, Alberta’s budget would be balanced.

Instead, the Alberta government will return to a period of debt accumulation with projected net debt (total debt minus financial assets) reaching $42.0 billion this fiscal year. That comes with real costs for Albertans in the form of high debt interest payments ($3.0 billion) and potentially higher taxes in the future. That’s why Albertans need a new path forward. The key? Saving during good times to prepare for the bad.

The Smith government has made some strides in this direction by saving a share of budget surpluses, recorded over the last few years, in the Heritage Fund (Alberta’s long-term savings fund). But long-term savings is different than a designated rainy-day account to deal with short-term volatility.

Here’s how it’d work. The provincial government should determine a stable amount of resource revenue to be included in the budget annually. Any resource revenue above that amount would be automatically deposited in the rainy-day account to be withdrawn to support the budget (i.e. maintain that stable amount) in years when resource revenue falls below that set amount.

It wouldn’t be Alberta’s first rainy-day account. Back in 2003, the province established the Alberta Sustainability Fund (ASF), which was intended to operate this way. Unfortunately, it was based in statutory law, which meant the Alberta government could unilaterally change the rules governing the fund. Consequently, by 2007 nearly all resource revenue was used for annual spending. The rainy-day account was eventually drained and eliminated entirely in 2013. This time, the government should make the fund’s rules constitutional, which would make them much more difficult to change or ignore in the future.

According to this week’s fiscal update, the Alberta government’s resource revenue rollercoaster has turned from boom to bust. A rainy-day account would improve predictability and stability in the future by mitigating the impact of volatile resource revenue on the budget.

Tegan Hill

Director, Alberta Policy, Fraser Institute

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Higher carbon taxes in pipeline MOU are a bad deal for taxpayers

Published on November 28, 2025

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By Franco Terrazzano

The Canadian Taxpayers Federation is criticizing the Memorandum of Understanding between the federal and Alberta governments for including higher carbon taxes.

“Hidden carbon taxes will make it harder for Canadian businesses to compete and will push Canadian entrepreneurs to shift production south of the border,” said Franco Terrazzano, CTF Federal Director. “Politicians should not be forcing carbon taxes on Canadians with the hope that maybe one day we will get a major project built.

“Politicians should be scrapping all carbon taxes.”

The federal and Alberta governments released a memorandum of understanding. It includes an agreement that the industrial carbon tax “will ramp up to a minimum effective credit price of $130/tonne.”

“It means more than a six times increase in the industrial price on carbon,” Prime Minister Mark Carney said while speaking to the press today.

Carney previously said that by “changing the carbon tax … We are making the large companies pay for everybody.”

A Leger poll shows 70 per cent of Canadians believe businesses pass most or some of the cost of the industrial carbon tax on to consumers. Meanwhile, just nine per cent believe businesses pay most of the cost.

“It doesn’t matter what politicians label their carbon taxes, all carbon taxes make life more expensive and don’t work,” Terrazzano said. “Carbon taxes on refineries make gas more expensive, carbon taxes on utilities make home heating more expensive and carbon taxes on fertilizer plants increase costs for farmers and that makes groceries more expensive.

“The hidden carbon tax on business is the worst of all worlds: Higher prices and fewer Canadian jobs.”