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In a hurry: Canada’s labor force recovery is being driven by the government sector

The public sector has accounted for 86% of new jobs since the start of the COVID-19 pandemic in Canada

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The government sector accounts for the majority of new jobs since the start of the COVID-19 pandemic in Canada, according to a new study by the Fraser Institute.

The public sector was responsible for 86.7% of all new jobs created since the start of 2020, according to the report Comparing Government and Private Sector Job Growth in the COVID-19 Era. Net employment in the sector increased by 366,800, or 9.4%, between February 2020 and July 2022.

In contrast, there was virtually no job creation in the private sector, including self-employment, with net employment increasing by only 56,100, or 0.4%, during the same period.

“The government sector, not the private sector, has been 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 the report, in a press release.

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The results are even less impressive for the private sector after adjusting for population growth, with the share of the population over the age of 15 who are either self-employed or employed in the private sector increased from 49.3% to 48.2%.

The share of the population employed in the public sector fell from 12.6% to 13.4%, although it accounts for a smaller number of jobs, representing only 21.8% of them in July 2022.

The report highlights that while some of the most commonly used economic indicators suggest that the Canadian labor market has largely recovered from the shock of the COVID-19 pandemic, it is being disproportionately boosted by the government sector.

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“Many of the key statistics surrounding the Canadian labor market seem encouraging at first glance, but the reality is more complicated,” Eisen said. “Job creation in Canada over the past few years has not been driven by private sector growth, but rather by government hiring.

Total employment in Canada has increased during the economic recovery. The employment rate is now only 0.3 percentage point lower than in 2019. In addition, the unemployment rate is at a historic low of 4.9% in July, according to Statistics Canada.


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RENTAL FOR OWN WON’T DO MUCH Industry watchers predict that a proposed lease-to-own program across Ottawa Affordable Housing Innovation Fund will at best have a differential effect on Canada’s housing affordability crisis. The fund has dedicated $200 million to support lease-to-own proposals: $100 million available now for up to 1,300 units, and $100 million in loans for up to 1,500 units available more late in 2022. This funding is available for the next five years, or until all funds are allocated, whichever comes first. Read the full story by Shantaé Campbell of the Financial Post. Photo by Carlos Osorio/Reuters files


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Today’s Posthaste was written by Noella Ovid, with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.

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