Federal government's plan to reduce public service will include layoffs

OTTAWA — Next week’s federal budget will include a broad plan to reduce the size of the federal public service that will include layoffs, government sources say, part of Ottawa’s effort to deal with a massive deficit and a host of other priority spending areas.

Federal sources told National Post that the cuts to reduce the federal workforce would go beyond the attrition plan that had been announced earlier this year, as the Carney government has since attempted to wrestle its costs under control. One source said the “right-sizing” plan will emphasize attrition, early retirement packages and moving employees to departments and agencies with the most needs, before layoffs.

Finance Minister François-Philippe Champagne seemed to confirm the plan Wednesday at a public event when he said that Ottawa would implement “workforce adjustments” in a “fair and smart way.”

Speaking at a funding announcement to advance equality at the National Gallery of Canada, Champagne implied strongly that the government’s moves would go beyond simply not replacing employees who leave through voluntary retirement and other forms of attrition.

“Yes, we need to bring back the civil service to a sustainable level,” he told the gathering. “We’ll be very transparent with people but we’re going to be very compassionate in how we do it as well.”

Champagne said the size of the civil service has increased in recent years at a pace that isn’t sustainable and that it needs to be “aligned” with needs. “We need to get back to something more sustainable.”

Beyond eliminating jobs, Champagne also said the government could find efficiencies through greater use of technology.

When asked for confirmation that Champagne’s comments should be interpreted as cuts beyond attrition, John Fragos, the minister’s press secretary, pointed to the government’s efforts to cut unnecessary spending so that it can invest in priority areas. “This approach speaks to the steps that we are undertaking to modernize, streamline and recalibrate government spending,” Fragos said in a statement. “This is part and parcel of how we’re going to spend less so we can invest more. That means finding more efficiencies, rightsizing and better integrating tech into our processes.”

A representative from the Public Service Alliance of Canada (PSAC), the largest union of federal public sector workers, couldn’t be reached for comment late Wednesday.

Earlier this year, Carney said the government would put a ceiling on the size of the federal public service, instead of widespread cuts, and implied that the reductions would be accomplished through attrition. Champagne’s comments ON Wednesday strongly suggested that the government has since decided that those reductions won’t be enough to achieve the necessary savings.

Between 2024 and 2025, the size of the federal public service decreased by about 9,807 employees, down to 357,965 from 367,772. But between 2018 and 2023, the public service increased by between 4.1 and 6.4 per cent, despite the increased use of digital technologies designed to boost efficiency. Employee figures vary depending on whether crown corporations and other affiliated organizations are included.

In recent months, however, the Canadian economy has been cooled by trade disputes with the United States and China, and other factors. The Carney government has decided that attrition won’t be enough to trim costs, thereby allowing spending in other areas.

Carney has said that the government’s priority spending areas involve investments such as infrastructure projects to support exports, defence spending, and tax cuts, each designed to make the Canadian economy stronger and more attractive to investors in the long term.

National Post also reported Wednesday that the upcoming budget will also feature a broad new strategy to boost the performance of Canadian business, including measures that will allow companies to write off their new machinery and other capital costs more aggressively.

The government also announced at the Ottawa event that the budget will include $382.5 million over the next five years for the Women’s Program that supports a variety of equality projects.

National Post

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