Public sector job cuts are on the table amid government-wide belt-tightening
A sweeping cost-cutting directive from the federal government could lead to widespread job losses across multiple departments, as Prime Minister Mark Carney’s administration moves to reduce spending and reallocate funds toward long-term national priorities, including housing and infrastructure.
Internal memos outlined efforts to trim operating budgets and programs over the next four years, prompting questions about how federal priorities like housing affordability will fare.
ESDC, which manages employment insurance and job training programs, reported more than 36,000 employees as of March 2024.
“Given the scope of requested spending reductions, adjustments to our workforce may be necessary,” senior officials wrote in a memo obtained by Bloomberg.
ESDC’s memo confirmed that departments are drafting 15% savings plans that would involve targeting “underperforming” programs and reducing the government’s day-to-day operational costs.
“Organizations are being asked to bring forward ambitious savings proposals to spend less on the day-to-day running of government by targeting programs and activities that are underperforming,” the memo stated.
At Global Affairs Canada, responsible for diplomacy and international policy, warned its workforce of similar risks, senior managers revealed that budget reductions could total $1.1 billion by 2028–29 and that the cost-cutting “will require difficult decisions affecting our workforce.”
Finance Minister François-Philippe Champagne has called on cabinet members to cut spending, totaling up to 15% by 2028–29, starting with a 7.5% reduction next fiscal year. The budget shake-up is part of the government’s plan to prioritize “productive” investments and rechannel spending toward national defense, infrastructure, and capital projects.
Despite the looming layoffs, housing affordability remains high on the federal agenda. The Carney government has emphasized its commitment to boosting supply, including a proposed housing delivery agency called Build Canada Homes aimed at ramping up residential construction and funding affordable developments.
Transport and internal trade minister Chrystia Freeland also confirmed that cost savings will be redirected toward investments designed to enhance Canada’s economic capacity, including new trade corridors and housing infrastructure.
Meanwhile, Canada Mortgage and Housing Corporation (CMHC) announced this week that it will invest over $5 million into affordable housing research. The funding will support 20 initiatives under its Demonstration Initiative and Solutions Labs Program. These projects will explore innovative models for unlocking capital, securing land, and strengthening the delivery of community-based housing across the country.
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