Government Aims to Avoid Layoffs
Despite warnings from economists that significant staff reductions may be unavoidable to meet operational spending targets, Government Transformation Minister Joël Lightbound says the federal plan is to shrink the public service primarily through retirements and resignations. Speaking after the unveiling of a new Cultural Heritage Science facility, Lightbound reiterated that the government’s “intention” is to rely on attrition rather than direct layoffs, although he acknowledged it is too early to confirm if job cuts can be completely avoided.
The approach follows instructions from Finance Minister François-Philippe Champagne and Treasury Board President Shafqat Ali, who in July asked all cabinet ministers to present strategies by the end of summer for finding operational savings. The targets are steep: 7.5% savings in the 2026-27 fiscal year, 10% in 2027-28, and 15% in 2028-29. These reductions will form part of the upcoming fall budget and are in line with the government’s pledge to cap the size of the federal workforce.
Fiscal Pressures and Think Tank Warnings
The spending review comes amid concerns that current measures will not deliver the fiscal results needed. A report from the CD Howe Institute argues that the planned review will produce less than half of the savings required to maintain a stable fiscal trajectory. It recommends expanding the scope to cover all forms of spending, including programs delivered through the tax system, to achieve meaningful results.
On the other side of the spectrum, the Canadian Centre for Policy Alternatives warns that the scale of the government’s savings plan could translate into a 24% reduction in public service spending, potentially making it “the worst spending cuts in modern history.” The think tank cautions that such deep reductions would inevitably impact the quality and accessibility of public services.
Balancing Savings and Service Quality
Lightbound suggested that, in addition to attrition, technology could play a role in boosting efficiency and reducing costs. He highlighted the adoption of new systems as a potential way to streamline operations without eroding service delivery. However, critics note that technological upgrades often require substantial upfront investments and may not fully offset the impact of significant workforce reductions.
The challenge for the federal government lies in balancing the need for fiscal discipline with its commitments to service quality. With public service employment having grown in recent years, reducing headcount through natural turnover could take several budget cycles, especially given the government’s stated goal of avoiding abrupt layoffs.
Next Steps
The savings plans from each department are expected before the end of summer, feeding into the fall budget process. If approved by Parliament, the phased cuts will be implemented starting in the next fiscal year. Whether attrition alone can meet the ambitious targets — without resorting to more direct job eliminations — remains a central question for both policymakers and the public sector workforce.