The federal government is by far the area's largest employer, with one in five workers in Ottawa-Gatineau on its payroll.  

"When the federal government sneezes, we catch a cold at the local economy," said Watson.

And the public service had a big sneeze in 2013. It shed 12,000 jobs, a sharper drop than ever before, according to the Conference Board of Canada.

Those kinds of downturns are the reason Watson said he has taken such a keen interest in the economic development file at city hall. He wants to boost other industries.

"We don't have a choice," said Watson.

Shovels in the ground

One antidote is to have money flow to infrastructure projects. It's no coincidence the city started to do major roads projects just as the post-recession stimulus spending blitz was coming to an end, Watson said.

Other city projects, such as the redevelopment of Lansdowne Park and the $2.1 billion first phase of light rail, are a boon to those who work in construction, he said.

But Watson also points to big private sector projects that are creating jobs, such as expansions of Bayshore Shopping Centre and the Rideau Centre, as well as new Tanger outlets and a Bass Pro Shop in Kanata.

"These individuals with deep pockets would not be investing in this city if they didn't have the confidence that this city knows where it's going from an economic development point of view," said Watson. "We recognize government is always going to be our number one employer, but we can't continuously put all of those eggs in that one basket if we're going to thrive."

Omar Dabaghi-Pacheco Susan Burgess Kate Porter CBC Ottawa Work Shift

From left, CBC Ottawa reporters Omar Dabaghi-Pacheco, Susan Burgess and Kate Porter. (Kristy Nease/CBC)

All week, CBC Ottawa will bring you stories about how who's winning and who's losing in Ottawa's job market.

Tourism paying off

In 2011, the city came out with a strategy to give particular sectors a big push for the long term.

Some key areas it bet on, like expanding the local film and television industry, have yet to take off. Plans for a new soundstage fell apart, and the film commissioner left after 15 months with little explanation provided.

But other areas, such as tourism, are making headway. The city set out to be able to attract big events, sports tournaments, and conferences.

"Our slogan is 'bid more, win more, host more,'" said Watson.

The opening of the Ottawa Convention Centre gave the city a venue to host the NHL All-Star Game in 2012, a large event that Ottawa used to have to leave to Montreal or Toronto. Such events draw money to the city, Watson explained, and gives event and meeting planners a steady stream of contracts.

One major event on the horizon is the celebration of Canada's 150th birthday. Economic development staff at the City of Ottawa are working with the private sector to make Ottawa the place to hold meetings and symposia in 2017.

Watson even envisions attracting an outdoor classic hockey game between the Ottawa Senators and Montreal Canadiens in December of that year, marking 100 years since the creation of the National Hockey League.

"We're turning the corner. We used to be this sort of grey flannel government town, that was comfortable with the 9 to 5 environment," said Watson. "That's changed."

Focus on entrepreneurship

A major shift in this mindset, Watson said, is a focus on entrepreneurship, and getting people to take risks to build a business and create jobs.

The chief vehicle for that is Invest Ottawa. The former Ottawa Centre for Research and Innovation was rebranded two years ago and given a new mission: to attract investment to the city, and to keep and grow local businesses.

Watson, who co-chairs the Invest Ottawa board, said he sees optimism among the young people whose companies are taking part in its incubator programs. He points to a resurgence in venture capital investments, and the success of local retail software company, Shopify.

"Ottawa was not viewed for a long time as an entrepreneurial centre. It is now," said Watson.

There's much more work to do, said Ottawa Mayor Jim Watson, but the direction the city has taken has helped Ottawa weather the storm after the global financial crisis.

"I think these investments have made a big difference, and I think if we didn't go ahead with some of these investments our unemployment rate, trust me, would be a lot higher."