Canada & Ontario Budget 2012 | Expected Cuts in the Public Sector

The Government of Ontario will be releasing the budget on March 27, 2012.

Finance Minister Dwight Duncan, on Thursday March 15th 2012, said:

“This will probably be the most significant budget this government has ever delivered, arguably it will be a very significant budget relative to any budget that’s been delivered in Ontario” Duncan said Thursday.”

The aim of this austerity package will be to balance the books by 2017-2018.

The Government of Canada will be releasing the budget on March 29, 2012.

Prime Minister Stephen Harper and Finance Minister Jim Flaherty have both suggested that the budget being release March 29, 2012 will be full of spending cuts and downsizing of the public sector.

The charts below explain why these cuts were inevitable as public sector employment grew at a much faster rate than private sector over the past few years.  This higher public sector employment growth rate was a cushion for the economy during the Great Recession.  The quickest way to reduce the unemployment rate is to hire more public servants.  With private sector jobs growth improving, it appears that the Canadian Government will reduce the public sector to a size more in-line with the historical ratio of private employees : public employees.

A crude estimate of the potential cuts at both the federal and provincial level is to take the pre-Great Recession public sector employee percentage of total labour force and multiply it against the most recent total labour force.  This results in a rough estimate of 80,330 positions cut from all levels of government.

2007 2008 2009 2010 2011 2012E Estimated 
All industries 16,805,600 17,087,400 16,813,100 17,041,000 17,306,200 17,306,200 Cuts
Public administration 865,100 925,700 930,300 956,400 971,200 890,870 80,330
% of labour force from public sector 5.148% 5.417% 5.533% 5.612% 5.612% 5.148%

Source: Employment by Industry – Statistics Canada

Public sector employment growth outpacing private

Private vs public sector employment data Canada

Source: Chart: Public sector employment growth outpacing private by Phil Froats


Change in private sector vs. public sector employment in Canada

private vs public sector employment 2004 to 2010 Canada

Source: Change in private sector vs. public sector employment in Canada by Alex Carrick

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