Post-crisis economic recovery will mean supporting private sector job growth

April 24, 2020
Ken Peacock

So far during the COVID-19 crisis, job losses have been a private sector story. Rebuilding the B.C. economy will be about regaining and creating as many jobs as possible. This means keeping businesses viable in order to maintain employment once the worst of the crisis has passed. It also requires that policymakers work to establish conditions for new businesses to flourish and hire – or re-hire – employees. Not all businesses and organizations will survive this pandemic. Getting employment back to pre-pandemic levels will happen through a combination of laid off employees returning to work and the creation of new jobs outside of the public sector.

This is not to discount recent job losses in a few areas of public administration. The impact of the government policy responses to COVID-19 – in particular, the shutting down of schools and many businesses and non-profit organizations – is widespread and the public sector has not been left entirely unscathed. The most visible public sector job losses are in municipal parks and recreation departments. But there are others. In total, Statistics Canada estimates that public sector jobs in the province fell by 5,700 in March. However, in the same month private sector employment plummeted by 134,000. In the early stages of this economic crisis, the public sector has accounted for just 4% of the decline in the number of employees (while it comprises 22% of all employees in the province).

Figure 1 shows the number of public and private employees in B.C. The series are indexed to 100 at the start of 2014, with the job growth paths for public and private sector employment shown on the graph. From the figure, it is clear several years of private sector hiring were obliterated within a single month. Many more private sector jobs are set to disappear in April and perhaps May as well.

Figure 1:

The current economic and labour market environment is fluid and changing rapidly so we can’t say how much further private sector payrolls will contract. But we do know that layoffs continued in B.C.’s hard-hit food, accommodation and leisure and recreation sectors in the weeks since Statistics Canada completed its March 2020 Labour Force Survey. The March survey also didn’t reflect secondary impacts from the crisis as layoffs broaden to business, finance and professional service firms. While the federal government’s Wage Subsidy Program will help B.C. businesses retain some workers, we project that private sector employment will decrease by at least 90,000 in April.

As Figure 2 below shows, a decline of this magnitude means the number of private sector employees will soon have fallen all the way back to 2013 levels. If payrolls shrink further in May/June, it is conceivable that a full decade of private sector job creation will be erased in the span of a few short months.

In the face of these extraordinary job losses, governments need to be focused on retaining jobs, minimizing business insolvencies – some are inevitable, but hopefully not in the tens of thousands – and doing whatever they can to help B.C. companies create jobs once the pandemic is under control.

Figure 2:

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