April Questions & Answers and April Graph

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Joel Emes

Click here for the April Graph

Q: How many people does the public sector in Canada employ? How much is paid out to them in wages and salaries? How has public sector employment changed over the last two decades?

A: In 1999, the public sector employed 2.8 million people and paid out $103 billion in wages and salaries. Tables 1 and table 2 show, respectively, public sector employment and pay by province. Public sector employment grew by 4.1 percent between 1981 and 1999; employment grew in every year from 1981 to 1992, fell between 1992 and 1998 and increased marginally in 1999. There were fewer public servants in 1999 than there were in 1981 in Nova Scotia, Saskatchewan, and Alberta.

Table 1 presents an absolute measure of public sector employment. It provides some information, but ignores the fact that the population mix among the provinces has changed since 1981. For example, part of the large increase in the civil service in British Columbia can be explained by the fact that its population is now a larger share of the Canadian population than it was in 1981. Relative measures of the size of the civil service reveal that BC's is relatively small (see the April Graph).

The April Graph shows two relative measures: public sector employment as a percentage of population and as a percentage of total employment. In 1981, the smallest share of the population employed by the public sector was in Newfoundland (9.6 percent). In 1999, the smallest share was in Ontario (8.3 percent). Ontario had the lowest percentage of its total employment in the civil service in 1981 (20.9 percent); Alberta had the lowest ratio in 1999 (16.7 percent).

Q: Is the size of the public service a good indicator of the size of government?

A: This is an important question because the size of the civil service is often used as a proxy for the size of government. Table 1 and the April Graph show that the civil service is not much larger than it was in 1981. Using the civil service alone to measure the size of the public sector is insufficient because of the fact that governments can spend more money with the same or fewer employees simply by changing the structure of their spending. For example, governments can increase their spending and influence on the economy by increasing transfer payments to individuals. A much better indicator of the size of government is total government spending as a percentage of Gross Domestic Product (GDP). Table 3 reveals that two of the three provinces (Saskatchewan and Alberta) that had a smaller civil service in 1999 than in 1981 also had increases in government spending as a percentage of GDP between 1981 and 1997.

Q: How big is the public sector in Canada? Which province has the largest government sector? How has this changed over the last three decades?

A: Table 3 shows that public sector spending equalled 44.2 percent of Canada's GDP in 1997, down from its 1992 high of 52.7 percent. Government-spending-to-GDP was 74.0 percent in Newfoundland in 1997, down from an astonishing 83.9 percent in 1992. Government-spending-to-GDP increased in every province between 1961 and 1992, and fell in every province between 1992 and 1997. There is a positive and often large net change from 1961 to 1997 in all provinces except Alberta. In 1997, Alberta's public sector spending as a percent of GDP was slightly lower than it was in 1961.

Notes

The definition of the public sector used is based on Statistics Canada's Financial Management System and includes administration, government business enterprises, hospitals, school boards, the military, and universities.

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