Good news, bad news about public sector employment in Ontario

Don’t blame provincial government for increases in public sector employment in Ontario

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THUNDER BAY, ON Jul 3, 2015/ Troy Media/ – According to Statistics Canada, between 1981 and 2012 public sector employment in Ontario grew by 50 per cent – from 897,291 to 1,343,922 employees. It may surprise you, however, as to where most of that increase occurred.

In fact, Ontario’s provincial civil service is about the same size now as it was in 1981, when 88,194 people were directly employed in the provincial civil service. In 2012, it stood at 88,483 by 2012. As a proportion of total public sector employment, the provincial government share has actually declined from 10 per cent to 7 per cent. Moreover, the share employed in provincial government business enterprises (for example, like Hydro or the LCBO) has also declined from 4 to 3 per cent.

Where did increase in public sector employment occur?

Ontario’s share of federal government public sector employment has also declined, from 16 to 13 per cent, even though total federal government employment in the province grew during the same period, from 142,827 to 177,792.The federal business enterprise share dropped even more steeply – from 8 to 3 per cent, with employment declining (for example, VIA Rail or Canada Post) from 75,049 to 43,168.

So where did the increase in public sector employment occur? In the so-called MUSH sector – municipalities, universities, schools and hospitals – with municipal government employment enjoying the greatest growth.

While some of these increases were the result of provincial government downloading, municipal employment growth does appear to have taken on a life of its own in Ontario. From 1981 to 2012, municipal government employment in Ontario grew 110 per cent, from 128,623 to 269,461 employees. The municipal share of public sector employees grew from 14 to 20 per cent. Moreover, these figures do not include employment in municipal business enterprises such as locally-owned utilities, where employment grew 162 per cent over the same period – from 21,852 to 57,220 employees.

Education in Ontario has also been marked by substantial employment increases at the elementary, secondary and post-secondary levels. Employment at the school board level grew from 162,011 in 1981 to 285,624 by 2012 – an increase of approximately 76 per cent. Meanwhile, employment at the provinces colleges and universities surged from 81,719 to 143,908, also an increase of 76 per cent. The public sector employment share of school boards grew from 18 to 21 per cent while that of the post secondary sector grew from 9 to 11 per cent.

Finally, Ontario’s employment in health and social services increased from 157,837 jobs in 1981 to 238,555 by 2012 – an increase of approximately 51 per cent. But the share of public sector employees accounted for by this sector actually remained flat at 18 per cent.

While Ontario’s public sector employment since 1981 has matched its population and economic growth, more recent performance trends – that is, since 2000 – are worrying because the trend is starting to diverge. Between 2000 and 2012, public sector employment in Ontario grew by 40 per cent while its population only grew by 15 per cent, total employment grew by 17 per cent and Ontario’s real GDP only grew by about 22 per cent.

 Health and social services suffering

Furthermore, there has been a shift in the composition in public sector employment towards municipal and education and away from health and social services – despite the province’s aging population.

So, even though Ontario’s provincial government has actually managed to curtail the growth of its own civil service and the federal share of public sector employment has fallen, the expansion of the broader public sector has continued, with the key growth areas being in in education and municipal government.

Unfortunately for these two sectors, Ontario’s current attempts to balance its budget will ultimately affect spending and employment in its broader public sector.

Livio Di Matteo is Professor of Economics at Lakehead University.

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