OTTAWA — The upcoming federal budget is set to unveil a comprehensive plan aimed at reducing the size of the federal public service, which will include layoffs, according to government sources. This initiative is part of Ottawa's strategy to address a significant deficit and prioritize various spending areas.

Sources indicate that the planned workforce reductions will extend beyond the previously announced attrition strategy. The Carney government is now focusing on controlling costs more aggressively. One source described the approach as a "right-sizing" plan that will prioritize attrition, early retirement packages, and reallocating employees to departments with the greatest needs before resorting to layoffs.

Finance Minister François-Philippe Champagne confirmed the government's intentions during a public event, stating that Ottawa would implement "workforce adjustments" in a "fair and smart way." At a funding announcement for equality initiatives at the National Gallery of Canada, he emphasized the need to return the civil service to a sustainable level. "We’ll be very transparent with people but we’re going to be very compassionate in how we do it as well," he said.

Champagne noted that the civil service has expanded at an unsustainable rate in recent years and must be aligned with actual needs. He added that the government could also achieve efficiencies through increased use of technology.

When asked if his comments indicated cuts beyond attrition, John Fragos, the minister’s press secretary, highlighted the government's commitment to reducing unnecessary spending to invest in priority areas. "This approach speaks to the steps that we are undertaking to modernize, streamline and recalibrate government spending," Fragos stated. "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."

Gina Grattan, a spokesperson for the Public Service Alliance of Canada (PSAC), expressed concern over the potential job losses. She warned that Canadians would be "shocked" by the scale of the reductions. If the government reverts to pre-pandemic employment levels, it could mean a loss of approximately 70,000 jobs, which Grattan believes would severely weaken essential public services. "Gutting the public service now is a recipe for disaster," she stated.

Earlier this year, Carney indicated that the government would cap the size of the federal public service rather than implement widespread cuts, suggesting that reductions would primarily occur through attrition. However, Champagne's recent comments imply that the government has reassessed this strategy and determined that attrition alone will not suffice to achieve necessary savings.

From 2024 to 2025, the federal public service saw a decrease of about 9,807 employees, dropping from 367,772 to 357,965. Despite this reduction, the public service grew by 4.1 to 6.4 percent between 2018 and 2023, even with the introduction of digital technologies aimed at improving efficiency.

The Canadian economy has faced challenges recently, including trade disputes with the United States and China. In light of these factors, the Carney government has concluded that attrition will not adequately address cost-cutting needs, allowing for increased spending in other areas.

Carney has identified priority spending areas that include infrastructure investments to support exports, defense spending, and tax cuts, all intended to strengthen the Canadian economy and enhance its appeal to investors in the long term. Additionally, the upcoming budget will introduce a new strategy to improve Canadian business performance, allowing companies to more aggressively write off new machinery and capital costs. The government also announced a commitment of $382.5 million over the next five years for the Women’s Program, which supports various equality initiatives.