The Size and Cost of Atlantic Canada’s Public Sector

Halifax, NS (18 September 2014): A new paper published this morning by the Atlantic Institute for Market Studies (AIMS) shows that high rates of public sector employment in Atlantic Canada come at a significant cost to taxpayers. The study shows that public sector employment in excess of the national average in Atlantic Canada–relative to population–cost taxpayers in the region $1.9 billion in 2013.

In The Size and Cost of Atlantic Canada’s Public Sector, authors Ben Eisen and Shaun Fantauzzo compare public sector employment rates in the ten Canadian provinces. They show that the public sector employment rates are higher than the national average in all four Atlantic Provinces, and that public sector workers receive a larger share of all labour income in the regional economy than elsewhere in the country. 

Specific findings include (all data is from 2013):

• Nationally, 17.8 per cent of all jobs are in the civilian public sector. In Atlantic Canada, this number is significantly higher, at 22.6 percent.

• Sub-national public sector employment–excluding federal employees–rates are significantly higher in Atlantic Canada than in the rest of the country. The cost of employing these additional workers is a significant expense for the region’s taxpayers. Nationally, there are 84 sub-national public sector employees per 1,000 residents. This number is higher in all four Atlantic Provinces. In Newfoundland and Labrador, there are 109 such employees per 1,000 residents. In Nova Scotia, there are 99 employees per 1,000 residents, in PEI there are 95 such employees and in New Brunswick there are 85 sub-national public sector employees per 1,000 residents. 

• Due to high rates of public sector employment, and a large gap between the average compensation for public- and private-sector workers, public sector workers in Atlantic Canada earn a significantly larger share of all labour income in the economy than in the rest of the country. Nationally, public sector workers receive 22.3 per cent of all labour income. In Atlantic Canada, that figure is 31.3 per cent. The provincial figures are: 40.3 per cent in PEI; 31.6 per cent in Newfoundland and Labrador; 31 per cent in New Brunswick; and 30.2 per cent in Nova Scotia.  

• The authors calculate the impact of high rates of public sector employment in excess of the national average on the public sector wage bill that is borne by taxpayers. They show that public sector employment in excess of the national average increases the public sector wage bill in the region by a total of $1.89 billion. To put this figure in context, the combined regional provincial budget deficit in the 2012-13 fiscal year was $1.08 billion 

“A high-quality public sector workforce that delivers public services efficiently and effectively can contribute to economic prosperity and maintaining such a workforce requires paying competitive wages,” said Mr. Eisen. “At the same time, governments across the region are facing an ongoing fiscal crunch and need to be frugal and carefully examine all areas of spending. Gradually working to bring public sector employment rates closer into line with the national average is one strategy that may help address the fiscal challenges we are facing.” 

Click here to read the study!

For more information, or to arrange an interview, please contact the authors:

Ben Eisen, Director of Research and Programmes
T: 347-422-0006
E: beneisen@aims.ca

Shaun Fantauzzo, Policy Analyst
T: 902-456-0076 ext. 228
E: shaunfantauzzo@aims.ca