The Charlottetown Guardian, 07 December 2016

Employment by the provincial government and municipalities is significant on Prince Edward Island, comprising nearly a fifth of all jobs. But unlike work in the private sector or the federal government, compensating this labour requires that wealth be taken from the local economy.

Islanders should care about keeping expenses within reasonable bounds, including government employment. In Nova Scotia and Newfoundland, public sectors have grown considerably. Without active checks, correcting oversized government in the future will be difficult for P.E.I.

Last week, AIMS released a report on the size and cost of public sectors in Atlantic Canada. We found that all Atlantic provinces, save New Brunswick, employ more people than the national average on a per capita basis.

For every 1,000 Islanders there are 93 sub-national employees, which includes the provincial government and the municipalities. It is important to mention the municipalities because of their personnel growth. Over the last two decades, municipal per capita employment has grown by a third – far greater than any provincial government sub-sector.

Across Canada, the average rate of employment is 83 per thousand, 10 fewer than P.E.I. Relative to population, this means that Island governments employ 1,500 people above the Canadian norm. We calculated that employing this many extra people in 2015 cost provincial and municipal governments $108-million.

By some metrics, however, P.E.I.’s situation is favourable. Since 1997, the Canadian average for per capita government employment has increased by 10 per cent. P.E.I.’s own rate of increase over this period was half as great. In 2010, P.E.I.’s per-thousand rate peaked at 100, declining by an average of 1.5 per cent in each subsequent year.

Our discussion of public sector employment has met with some objections. The commonest is that P.E.I. simply needs larger government employment to provide necessary services.

This is true to some extent. It would be unreasonable to expect our public service to function at the relative personnel capacity of Ontario, which has many dense population centres and lower costs for service delivery.

But “the national average” doesn’t mean “Ontario.” This figure includes provinces with large public sectors, such as other Atlantic provinces, Saskatchewan and Manitoba. To say that P.E.I. should aim to close the gap with the national average means that we should join the company of provinces with many similar challenges.

P.E.I. should set long-term targets regarding the size of the public sector. By 2025, the Island should aim to be as close to the national average as possible.

Fortunately, this goal would not require firing workers or eliminating positions. Instead, governments need to roughly hold the line at the current number of employees. In 2015, they employed 13,635 people.

A modest projection of P.E.I.’s 2025 population is 156,700. If provincial and municipal governments together could make do with 13,750 workers, the 2025 per thousand figure would be 88, down from today’s 93. Meanwhile, if Canadian growth in government employment continues at its current pace, the 2025 national average (accounting for Statistics Canada’s projection of population) would also be 88 employees per 1,000 residents.

Reaching national levels will require discipline. But for P.E.I. to prosper, the province needs to align the cost of government with the means of government. Keeping a close eye on public sector employment is an important task for our elected officials.