Cuts to the public service won’t help the economy

The public service is an important driver in the Canadian economy.

Governments, worldwide, tout cuts to the public service as a key tool for cutting deficits or balancing budgets. But it turns out that’s far from the case. In reality, investments in the public service benefit the economy.

A recent report from IRIS (Institut de recherche et d’information socioéconomiques), a research institute in Quebec, shows that each dollar invested in the Canadian public service raises the GDP by $1.22 and benefits provincial economies.

Every dollar invested in the federal public service translates to economic gains. Federally, for every million dollars invested in the federal public service there are benefits of $1.77 M.

Most significantly, in Alberta and Nova Scotia, for every million dollars spent on the federal public service there are economic benefits of $2.26 Million and $2.07 Million, respectively.”


The report assessed public sector employment trends going back as far as the post-war era. And makes clear that the Canadian economy would benefit from increased hiring in the federal public service, stating that the 25,000 jobs cut by Harper in 2011 have not been replaced.

The Harper-era cuts were wrong-headed, dollar for dollar. Spending on public services generates more residual jobs and growth than spending on other industries.

A large number of secure jobs stabilize the volatility of the private sector and mitigate the pain of negative shocks that are inevitable in industries such as manufacturing and resource extraction.

“The public sector is a tool that governments can use to achieve full employment, by providing high-quality jobs that have a beneficial effect on economic growth in general and on the resilience of regions that are less diversified.”

In the recent budget, the Alberta government has announced a 7.7% cut to their provincial public service over the next four years. This will mean the loss of 1588 jobs.

A strategy proven ineffective under Harper will be no more successful today in Alberta. In an already volatile, resource-dependent economy, cuts to the public service will exacerbate challenges and do little to balance the budget.

We stand in solidarity with public servants in Alberta. We oppose austerity measures at all levels of government. And, we are working for a thriving economy that benefits all people in Canada.