Ottawa

Is now a good time?

Stephen Gordon projects the sort of job cuts the public service might be facing.

Federal program spending accounted for 7.4 per cent of GDP in the fiscal year that preceded the spring 1995 austerity budget, and this share fell by 1.3 percentage points over the next two years. In 2011-12, federal program spending was projected to be 7.0 per cent of GDP, and was to fall by 0.8 percentage points by 2013-14. In other words, the cuts in program spending announced in last year’s budget were roughly 60 per cent as large as what we saw in the mid-1990s.

Federal public service employment fell by 29,000 in 1996, and by an additional 26,000 in the following three years. If the effects of the planned cuts are proportional to what was experienced in the 1990s, then the number of job lost would be on the order of 30,000.

Stephen also considers whether now is a good time for austerity. Not that this spring’s budget will have anything to do with austerity.

See also: Looking the wrong way

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