VANCOUVER — A new study by the Fraser Institute is putting Alberta’s job growth recovery into question, showing that much of the province’s recent growth has been in government jobs rather than private companies.
According to the public policy think-tank, Alberta’s employment growth over the past four years is being driven by approximately 79,000 new government jobs, while the private sector has dropped more than 46,000 jobs.
The study, The Illusion of Alberta’s Jobs Recovery: Government vs. Private Sector Employment, shows provincial, municipal and federal jobs increased 21.5 per cent from 2014 to 2018. Private-sector jobs dropped three per cent.
This resulted in an increase of the government’s share of total employment from 19.5 per cent to 23.2 per cent. According to the institute, growth in government employment isn’t always tied to low commodity prices or Alberta’s recession. The institute noted in Alberta’s neighbour, Saskatchewan, government employment only grew 2.1 per cent in the past four years, or one tenth the rate of Alberta despite both provinces having deep economic ties to the energy industry.
“The Notley government touts total employment growth in Alberta as a sign of improvement, but it omits the fact that almost all employment growth in the province has been in the government sector,” said Steve Lafleur, a senior policy analyst with the Fraser Institute, in a press release. “The reality is government jobs are driving Alberta’s employment growth while private-sector employment is shrinking, and that is not sustainable.”
In Alberta’s 2018 budget, Premier Rachel Notley’s government declared that the provincial economy had recovered from the economic downturn, noting in the last three months of 2017 employment increased sharply, marking a full recovery of the number of jobs lost during the recession.
According to the study, an increase in government employment can have a negative impact on the business community. The authors explain this is because when government sector employment increases, it can artificially drive up the general wage level as private sector employers compete with the government sector for workers. As a result, private employers are less able to afford to pay workers and thus hire fewer employees.
“This is problematic because political factors largely determine the wage-setting process in the government sector while economic realities — such as productivity concerns, profitability, and resource constraints — guide the process in the private sector,” reads the study.
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