Statistics Canada’s monthly Labour Force Survey was published late last week, and the numbers were not encouraging. The overall rate of unemployment increased to 6.9 per cent, which was the highest rate in eight years except during the pandemic years. Although an increase in the unemployment rate is never a good thing, the real story was in which sectors and regions the employment decline took place.
The manufacturing sector was hit hard with a net loss of 31,000 jobs. Much of this was attributed to the tariff threats coming from the U.S., but the reality is that Canada has been bleeding manufacturing jobs for years as competitive conditions such as taxation, energy costs and red tape in Canada have deteriorated and been particularly punitive to manufacturing. Not surprisingly, Ontario with its large manufacturing sector was also hard-hit, losing 33,000 manufacturing jobs. This was due in part to losses in the auto sector, which has been singled out by Trump for particular tariff hikes. An increase in unemployment to 10.7 per cent in major auto city Windsor underscored the impact on this industry.
Wholesale and retail trade was also a big loser in April, with a reduction of 27,000 jobs. Other data have shown how consumer confidence is at a low ebb in Canada after a number of years of a declining standard of living, inflation and uncertainty from bad government policies and more recently Trump’s attacks on Canada. This uncertainty has led both consumers and businesses to hold off on spending for the time being.
The natural resources sector was also hit hard with job losses of 8,000. Canada has a serious productivity problem, which is a key reason for our standard of living decline. It is therefore discouraging that the two most productive economic sectors – manufacturing and natural resources – were both shedding employees in April.
Another worrisome development was the growth in public sector job numbers coupled with a decline in private sector employment. From March 2025 to April 2025, the public sector grew by almost 23,000 jobs while the private sector shrunk by just under 27,000. Part of the public sector growth was explained by temporary hiring due to the federal election. However, we have seen for some time in Canada that, over the past few years, public sector hiring has outstripped private sector growth. This is a very worrisome development.
From 2019 to 2023, employment in Canada’s public sector expanded at a rate more than twice that of the private sector. During this period, public sector growth expanded by 13 per cent as compared to only 5.9 per cent in the private sector. Although much of this expansion took place at the federal level, provinces also grew their public sector with P.E.I. leading the pack with a 25 per cent increase in government employment over the five-year period. Provinces with better economic performance – such as Alberta and Nova Scotia – saw private sector job growth outstrip that of government.
Excessive public sector expansion also has its impact on productivity. Government productivity typically lags that of private businesses. As a growing public sector represents a larger share of total employment, economic productivity for the country as a whole is dragged down. A shrinking of government size at both the federal and provincial levels is therefore necessary to return Canada to a more acceptable productivity performance.
These labour market trends cannot continue. Canadian governments are currently blaming all of our economic challenges on Trump. Yet long before Trump and the tariff threats, Canada had seen more growth in public sector employment than in the private sector. As government employees are reliable Liberal voters, the Trudeau government was shameless in its gross expansion of the federal government by more than 40 per cent during their decade in power. Pierre Trudeau did exactly the same thing back in the 1970s. Despite this substantial increase in costs for private sector taxpayers, no discernable improvement in public service could be seen. In fact, many Canadians perceive a worsening in the quality of public services despite all the added cost. It’s too early in the Carney era to judge what he will do about our bloated, expensive and inefficient federal government sector. The early indications are not promising.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
