The Parliamentary Budget Office's most recent release "The Fiscal Impact of Federal Personnel Expenses: Trends and Developments" provides some interesting statistics on the amounts of employee compensation paid by Canada’s federal government. According to the report: “in 2011-12, Canada’s federal personnel expenses were $43.8 B, or 2.55 per cent of GDP. These expenses supported a workforce of 375,500 employees and provided approximately $114,100 on average in total compensation per employee.” Media reports attributed to the President of the Treasury Board claiming that these average compensation amounts were inaccurate and that actual compensation was lower (Tony Clement said the average compensation was closer to $95,000) were rebutted by the PBO with an information update. As entertaining as all this was, the fact is that any discussion of public employee compensation in Canada should cover more than just the federal government and that it might be more appropriate to compare us to where we stand relative to other countries.
The Banca D’Italia’s December 2012 edition of Public Finance Statistics in the European Union provides a table (Table 19) listing the compensation of public employees as a percentage of GDP for the EU countries as well as Canada, the United States and Japan. Compensation is defined as “General government payments in cash or in kind to employees, including net earnings and actual and imputed social security contributions.” The accompanying Figure 1 plots the public compensation to GDP shares for 2005 and 2011 (only those up to 2010 were available for Canada and Japan). In the Canadian case, this share is much larger than 2.55 percent of GDP because it also would include provincial/territorial and municipal governments.
Note: Figures for Canada and Japan in 2011 are from 2010.
The results show that amongst the G-7, the compensation of public employees in Canada as a share of GDP is only second to France. Moreover, between 2005 and 2011 (actually 2010 in the Canadian case), Canada had the most growth in this ratio rising from 11.2 to 12.5 percent. Believe it or not, Canada and Greece in 2010 both had the same public employee compensation to GDP ratio of 12.5 percent. As Figure 2 shows, between the mid-1990s and mid 2000s, Canada devoted a higher share of its GDP to public employee compensation compared to the European Union (EU), the United States and even Greece, though it has declined. Now that is food for thought.