Efficiency and automation are key, but real strength comes from experienced workers delivering programs Canadians rely on.
FACTS & FIGURES
- 16,000 job cuts in 2025 (through attrition and voluntary departures + protected pension)
- 40,000 job cuts by 2028-29
- 1,000 management positions cut over the next two years (CAPE had lobbied for this)
- 20% cut to consultants in three years’ time (CAPE had lobbied for this, cut is not enough)
- $280B in capital investment (big ideas require a competent workforce to action) :
- $115B in infrastructure
- $30B in defence
- $25B in homebuilding
- $110B in productivity and effectiveness
SUMMARY
Budget 2025, titled “Canada Strong,” represents a pivotal moment for the federal public service. While framed as a plan for generational investment, fiscal discipline, and modernization, the implications for public servants are significant. The budget signals a move toward a smaller, more automated government, driven by workforce reductions and technological transformation.
>> Workforce adjustment and job losses
The Comprehensive Expenditure Review confirms a major contraction of the federal workforce. The government estimates that 40,000 positions will be eliminated over the next few years through retirements, attrition, and other separations. Workforce Adjustment measures will apply, supported by pension waivers for early retirement. This represents the largest public service downsizing since the 1990s.
Although described as “rightsizing,” these cuts risk the loss of experience, capacity, and institutional knowledge. The fine print indicates that the government used gender-based analysis plus (GBA+) in its analysis of what to cut, but unions should still pay careful attention to see if this holds true in implementation. The budget also confirms the elimination of 1,000 management positions over two years. While management ranks will shrink, front-line and administrative employees face increasing uncertainty as automation and artificial intelligence expand across departments.
The government is promising a safe landing for those who wish to retire early through pension waivers. This will be funded out of the Public Service Pension Fund.
>>Artificial intelligence and the digital shift
Artificial intelligence is a central theme of Budget 2025. The government plans to adopt AI “at scale” to improve productivity and reduce costs, with the introduction of “made-in-Canada sovereign AI tools.” Oversight will be managed by a new Office of Digital Transformation. While this initiative aims to modernize public services, there is little information on workforce retraining, governance, or accountability.
From a union standpoint, the increased reliance on AI raises concerns about job security, transparency, and the privatization of digital functions. Unions will need to ensure that new technologies support rather than replace employees, and that the use of AI remains consistent with ethical standards and collective agreements.
>>Collective bargaining and workers’ rights
The budget coincides with the start of a new round of collective bargaining. It reaffirms the government’s commitment to negotiating “fair and reasonable agreements” and to respecting the right to organize, bargain collectively, and undertake legal labour action. However, proposed amendments to the Federal Public Sector Labour Relations Act would align public service compensation with the government’s fiscal position.
This language suggests a constrained bargaining environment where fiscal restraint could outweigh the pursuit of fair wages. Public sector unions will need to assert that collective bargaining must remain a negotiation between equal parties, free from pre-set fiscal limits.
>>Spending priorities and service delivery
There are limited but positive measures for public servants. The government will reduce spending on consultants and management services by 20 percent over three years to empower the public service to take on more responsibility. The budget also commits to reducing office space in selected departments, provides one year of funding for proactive pay equity, and introduces a “25-and-out” early retirement option for more frontline workers. These measures reflect partial progress on long-standing union priorities, though their impact will depend on how savings are reinvested.
>>Notable omissions
Several areas important to our members received little or no attention. The budget does not mention the Translation Bureau, interpreters, or the TR group, and makes no reference to official languages. Equity-deserving groups are barely addressed beyond limited funding through the Department for Women and Gender Equality.
The document also fails to address the Phoenix pay system or provide compensation for damages. It includes only a line item for continued pay system modernization through 2026–27 as the government transitions to Dayforce. This lack of accountability remains a source of frustration for employees affected by ongoing pay issues.
>>Conclusion
Budget 2025 outlines a vision of modernization driven by efficiency, automation, and fiscal restraint. For public servants, it represents both opportunity and risk. While some investments may improve systems and reduce external contracting, the focus on job reductions and AI-driven efficiencies could erode capacity, morale, and service quality.
The challenge for unions will be to ensure that modernization strengthens rather than weakens the public service, protecting both the rights of workers and the integrity of the programs they deliver. The true strength of the federal public service lies not in technology, but in the people who serve Canadians every day.
