Canada Faces Workforce Cuts as Government Prioritizes Downsizing

As the reopening of Parliament approaches, Canada is preparing for significant changes to its federal workforce. The upcoming federal budgets are expected to initiate substantial reductions in the size of the public service, a shift that reflects evolving fiscal policies and priorities.

Recent developments indicate that this downsizing effort began gaining momentum with the last budget from Prime Minister Justin Trudeau‘s government in 2024, which aimed to streamline operating budgets. The urgency of this transformation was highlighted when Mark Carney‘s government prioritized “government transformation” and directed various departments and agencies to submit proposals for workforce reductions by the end of summer.

Visible changes have already occurred in sectors such as immigration, public health, and revenue agencies, where downsizing has been linked to shifts in workload demands. Some agencies opted for a straightforward approach, allowing term appointments to expire and delaying the hiring of replacements for permanent positions.

As discussions surrounding these cuts intensify, key players have struggled to present a clear and realistic strategy to achieve a smaller yet more effective public service. Unions have voiced strong opposition, asserting that layoffs would devastate essential services. Yet, their ability to influence decisions appears limited, as their political allies in Parliament are currently unable to mount a significant challenge to the Liberal government during budget discussions.

Both major political parties seem hesitant to address the uncomfortable reality of involuntary layoffs. Instead, they have perpetuated the notion that natural attrition will suffice in reducing workforce numbers. This assumption overlooks the fact that retirements and resignations may not align with the government’s strategic needs, risking the loss of younger employees who are vital for a digitally adept public service.

A candid dialogue on downsizing is essential. This conversation should occur not only at union-management meetings but also within parliamentary committees. Unions must acknowledge the inevitability of cuts and engage in discussions about the best methods to implement them. Concurrently, the government should focus on proactively shaping the future workforce, emphasizing the need to retain and enhance the capabilities that will be crucial moving forward.

One potential approach to facilitate smoother transitions would involve establishing a short-duration, early departure window. This plan could involve offering incentives for employees nearing retirement, effectively prepaying expected attrition and preserving the jobs of younger workers. Additionally, it is crucial to create robust support systems to assist displaced individuals in navigating a job market increasingly influenced by technological advancements, including artificial intelligence.

Private sector practices suggest that successful workforce reductions should be accompanied by a commitment to ongoing training and skill development for remaining employees. A proposal to double the current investment in training, professional development, and management skills could enhance productivity and agility within the public sector.

Moreover, structural changes could improve efficiency. Banning salaried public servants from serving as government contractors could eliminate conflicts of interest. Streamlining management layers could also lead to increased responsiveness and productivity across government agencies.

The prevailing attitudes of denial and ideological rigidity hinder the development of a comprehensive workforce strategy. It is essential to recognize that cuts will have real implications for families and communities, as well as future capabilities within the public sector.

Canada must avoid the pitfalls seen in other regions, where rigid unionism and unrestrained governmental cuts have caused significant disruptions. The country has the opportunity to navigate this transition thoughtfully, ensuring that it retains skilled workers while adapting to the changes ahead.

Michael Wernick serves as the Jarislowsky Chair in Public Sector Management at the University of Ottawa and is a former clerk of the Privy Council.