Opinion: B.C.’s anemic growth in private payrolls is not sustainable

Strong headline numbers hide sluggish private sector, propped up by government hiring

Employment in B.C. increased by 23,400 people in April, a solid monthly advance underpinned by a respectable rise in the number of private sector employees (1.3 per cent) coupled with a bigger gain in public sector employment (2.5 per cent). The additional private sector jobs are certainly welcome, as these have proven elusive in recent years. The bump in jobs meant B.C.’s unemployment rate fell from 5.5 per cent to five per cent.

A glance at April’s Labour Force Survey might lead one to conclude that B.C.’s labour market is healthy, as the government likes to claim. But a single month of data obviously doesn’t provide a full picture. And in this case, a one-month snapshot is especially misleading.

The reality is that B.C.’s private sector labour market has been unusually weak. Overall employment has managed to grow at a modest rate, but only because of surging public sector payrolls. In 2023, even as governments delivered unneeded fiscal stimulus, the U.S. economy held up remarkably well, B.C.’s tourism sector rebounded and our population grew at a record pace, the number of B.C. private sector jobs actually declined. Meanwhile, the number of employees in B.C.’s burgeoning public sector jumped by an eye-popping 4.6 per cent.

The sluggishness of the private sector job market might lead one to infer that higher interest rates and slower global growth are weighing on B.C.’s small, trade-dependent economy. But this is at odds with the inconvenient truth that every other Canadian province saw private sector employment race ahead by three to 4.5 per cent last year. It seems unlikely that external factors explain the gap between B.C. and other provinces in private sector hiring.

Public sector employment in the rest of Canada rose 1.4 per cent last year. With the pandemic well behind us, it is striking that B.C.’s public sector continues to grow at three times the pace of the rest of the country—as well as three times faster than B.C.’s own long-term average.   

If 2023 witnessed a chasm between B.C. and other provinces in private sector job creation, the reality is a divergence has been evident for several years. In early 2024, the number of employees in the B.C. private sector stood just two per cent higher than in the early 2019. In absolute numbers, private sector jobs have risen by a feeble 30,000 net positions in the last five years, at a time when our population has skyrocketed.  

By this time readers will not be surprised to learn that public sector employment has charted a rather different growth path, but the 33-per-cent increase in public sector positions over the same period (about 160,000 additional jobs) should still come as a shock.  

Elsewhere in Canada, public sector employment has also been climbing, but at only half of B.C.’s head-spinning pace. While also tilted too heavily towards public sector hiring, proportionately more jobs have been created in the private sector in the rest of Canada. Specifically, in the other nine provinces combined, for every new private sector job since 2019 there have been “just” 0.6 new public sector positions. Here in B.C., every additional private sector job has been accompanied by 5.5 net new public sector jobs.

This remarkably unbalanced public-versus-private-sector-hiring ratio is not sustainable. While the winding up of a handful of major capital projects is weighing on B.C.’s labour market, this factor does not explain the large and persistent difference in public compared to private sector employment growth in the province over the last five years.

Even with clear evidence of sub-par job creation and accelerating out migration to Alberta as young adults seek better career opportunities (and cheaper housing) elsewhere, the B.C. government is pressing ahead with an ever-more interventionist policy agenda. In its present form, this agenda features costly and unattainable climate targets, unprecedented changes to the management of Crown lands and resources (with little input from business), jaw-dropping fiscal deficits and an endlessly growing regulatory burden in many industries. Continuing down this road points to a future of depressed private sector capital investment and ongoing anemic growth in private sector payrolls.

Jock Finlayson is chief economist of the Independent Contractors and Businesses Association. Ken Peacock is the Business Council of British Columbia’s senior vice-president and chief economist.

As published in Business in Vancouver on May 16, 2024.