Cap or cuts? Public servants have 40,000 reasons to worry

Ottawa Citizen

14-07-2025

Public Service Confidential is a workplace advice column for federal public servants. The following question has been edited for clarity and length.
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The prime minister said he will only cap the size of the public service. The Parliamentary Budget Officer says significant cuts will be needed to achieve the Liberals' spending promises.
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So which one is it? What should we expect?
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Inquiring and concerned minds want to know.
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That is probably the most stressful question on the minds of public servants this summer, particularly those who are early to mid-career.
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Let me start by saying that no one knows for sure how deep the new prime minister and his government will go with cuts to the public service in their efforts to reconcile their election promises and new spending commitments with the current tax and revenue base.
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While they will undoubtedly have a rough idea, even the prime minister and his closest advisors likely do not have final numbers yet as the details are probably still being sorted as part of preparations for the fall budget.
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Given this, the best I can do is provide a sense of what to expect, recognizing that I, like the PBO, the Canadian Centre for Policy Alternatives, and a host of political pundits, will have to make some planning assumptions and speculate a little to answer your question.
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Here is what we know so far.
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In their election platform, the Liberals stated that, 'A Mark Carney led government will launch a comprehensive review of government spending … [and] are committed to capping, not cutting, public service employment'.
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It isn't clear what level the government will set its 'cap.' But what is clear is that the government's intent is to reallocate a significant amount of spending towards new priorities.
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For those employees whose jobs will be impacted by savings measures, it will feel like a cut, regardless of how the government spins its overall 'reallocation' plan, even within the idea of a 'cap.'
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We also know that the government's savings target is at least $28 billion. This is a cumulative number over several years. The number that matters most in the government's election platform is the $13-billion target in ongoing savings starting fiscal year 2028-29.
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'Ongoing' in this context means a permanent reduction in spending in current programs. This was an electoral commitment made before more recent additional spending announcements, including in defence.
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The report from the Canadian Centre for Policy Alternatives stated that hitting these savings targets will require a 24 per cent cut to the public service. I believe this number is overstated because it is derived from a spending base of $89 billion and relies heavily on salary savings only.
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A more accurate spending base is likely annual direct program spending, which is roughly $230-$240 billion, and includes both personnel expenditures (think salary dollars) and operating expenditures (think consultant dollars). Given this, the starting point base target of $13 billion more likely represents a 6 to 7 per cent cut in spending on current programs.
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There are currently roughly 360,000 to 370,000 federal public servants. So, a cut in program spending in the realm of 6 to 7 per cent would translate into a reduction of approximately 22,000 to 26,000 FTEs (full-time equivalents). Given new spending commitments, this is likely the minimum. Recent news reports suggest the target is 7.5 per cent to 10 per cent and higher in 2028-2029. A 10 per cent target translates closer to 40,000 FTEs or significantly more, depending on the portion of savings derived from salary.
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I also say FTEs (not jobs) on purpose. An FTE does not represent a job cut one for one. A funded FTE can be a vacancy, where the salary budget for the FTE gets reduced, with no direct job impact on an employee.
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Figuring out the size of the reductions, however, is only the first and easiest step. More challenging and important to the people and employees impacted by savings measures will be how the cuts get managed, and the speed with which savings must be realized.
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Once final decisions are made, public service executives and managers will have the daunting task of realizing identified savings. The rolling three-year average attrition rate in the federal government is roughly 4 per cent or 10,000-12,000 employees per year. So, even at 40,000 FTEs, a significant portion of the desired FTE savings can likely come from not staffing current vacancies and using attrition.
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Reductions that can't be absorbed will likely result in the use of workforce adjustment to help employees find another job within growing sectors of the government or make the transition out of the public service altogether.
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I was the lead director general for implementing the Deficit Reduction Action Plan targets at the CBSA from 2012 to 2014, under the government of then-prime minister Stephen Harper. We had to cut more than 1,000 FTEs.
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We harvested salary savings from funded vacancies, used voluntary departures through early retirement, internally deployed staff from cut positions to vacancies, found offsets from new spending to deploy cut personnel to new jobs (where skill sets fit), and employed targeted use of workforce adjustment. In the end, the CBSA managed to realize its savings from 2012 to 2014 with fewer than 100 employees who lost their jobs involuntarily.
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I think it's reasonable for you and many public servants to be concerned about the next federal budget and coming FTE cuts. Few people know for certain how deep the cut side of the ledger will be (as opposed to the reinvestment side of new spending under a new 'cap'). In any scenario, I would be doing you an injustice to say 'don't worry' because the net impact will be hard on people.
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I will, however, leave you with the following advice. The real issues that will come into play are not about the numbers – the cuts will be about real people with real lives. Try to be kind, take care of yourself and colleagues to the extent you can, and have empathy with the people impacted, particularly the employees who may have to live through workforce adjustment and job loss, but also the managers and executives who must implement the savings measures.
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I can honestly say from personal experience that it will be hard on everyone. But, as the public service has proven in the past, it will find a way to rise to the challenge.
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