By Jack Mintz, January 17, 2023
We often talk about Canada’s poor productivity and low per capita income growth. What we don’t discuss is productivity in the public sector. The goal of governments may be to make our lives better but is a bigger public service really giving us a higher standard of living?
Since 2015, the number of federal, provincial and local employees has grown by 18.5 per cent, twice as fast as in the private sector, where employment growth was 9.0 per cent. What is less appreciated is the over-the-top employment growth in federal departments and agencies. There were 336,000 federal government employees in 2022, up from 257,000 in 2015 — a 30.7 per cent increase.
That bigger-than-ever federal bureaucracy is costing Canadians a bundle. Federal employee compensation rose from $38 billion in 2015 to $58 billion in 2021 (the latest year for which data are available) — a whopping 52 per cent increase. Yet this growth has not led to a higher standard of living: Canada’s per capita economic growth has been among the weakest among OECD countries since 2015.