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The pandemic has caused a government hiring binge, says Fraser Institute

Government sector accounts for 86 per cent of new jobs in Canada since 2020
Office job pexels photo
(Pexels-Andrea Piacquadio photo)

Why are many Canadian employers scrambling to fill tens of thousands of jobs? A new study by the Fraser Institute sheds some light on one reason why.

A just-released report by the Canadian public policy think-tank said the government sector accounted for 86.7 per cent of all new jobs in Canada since the pandemic began in early 2020.

The authors of the concise six-page report examined labour market statistics between February 2020, the start of the pandemic, and July 2022. It reveals that jobs in the government sector have increased by a net 9.4 per cent versus 0.4 per cent in the private sector, including self-employment.

The government sector added a net 366,800 jobs during this period. The private sector, including self-employment, added 56,100.

“The government sector, not the private sector, is driving job creation in Canada since the onset of the COVID pandemic and recession,” said Ben Eisen, senior fellow at the Fraser Institute and co-author of Comparing Government and Private Sector Job Growth in the COVID-19 Era.

The share of adults (15 years or older) employed in the private sector, including self-employment, has actually fallen from 49.3 per cent to 48.2 per cent, stated a Fraser Institute news release.

The impact of COVID-19 meant many entrepreneurs took it on the chin. The study said there's been “decimation” among the ranks of the self-employed as shown by the net 214,400 jobs lost since the pandemic began.

Canada’s labour market has largely recovered from the shock of the COVID-19 pandemic as the unemployment rate is at historically low numbers. But the Fraser Institute said don’t be fooled by political or media talk of a “robust labour market recovery in Canada.”

“Many of the headline statistics surrounding the Canadian labour market appear encouraging at a glance, but the reality is more complicated,” said Eisen. “Canada’s job creation in recent years has not been driven by private sector-growth, but rather has primarily been the result of government hiring.”