Public Sector Employment in Canadian Provinces

A followup to this post can be found here.

This post was inspired by the terrific NL politics blog Labradore.  A few months ago, he posted a chart (reproduced below) showing provincial public sector employment as a share of total employment.

This was meant to demonstrate that the provincial public sector in Newfoundland is unusually large and growing rapidly.  I accepted this conclusion on first reading, but today when I happened upon the post a second time I started to wonder.  Since so many public services go to the elderly (healthcare) and the young (education) who are not normally part of the workforce, isn't it more appropriate to compare public sector employment to the population, rather than to total employment?

So here is what I found.  The following chart shows public sector employment (minus federal general government and federal government business enterprises) as a percentage of population.  Note that the time period is reduced because the data I used only goes back to 2001.

By this measure, it is the prairie provinces Manitoba and Saskatchewan that have historically had the largest public sectors and the large anglophone provinces Alberta, BC and Ontario that have the smallest public sectors. Ten years ago NL was with the rest of the provinces in the middle, but over the last five years we have jumped up to join the prairie provinces.  By this measure, our public sector is big and growing but isn't an outlier.  When compared only to the smaller provinces (those under 3 million people) we have remained somewhere in the middle.

Another reasonable measure is public sector wages as a share of GDP.  Here is the chart.

By this measure the NL public sector dropped from the highest to the second lowest, before climbing back up to the middle of the pack (update:  This is due mostly to the recent economic boom that has driven up GDP.  Public sector wages have actually been rising in real terms).

Together, these charts tell a different story than the one told by Labradore.  The public sector has certainly grown over the last decade, but we have also become wealthier as a province so we can afford to spend more on public services.  If you compare us to the other five provinces with populations under 3 million we seem to be about average.

On the whole, I think it is reasonable to argue that the public sector may be growing too quickly, but it certainly isn't scandalously large by national standards.

Sources: Statistics Canada, CANSIM tables 183-0002, 384-002, 051-0001.