Canada's public service is shrinking as costs bite

Canada is shedding nearly 30,000 public service jobs over the next several years — part of a global trend as democracies grapple with the cost of pandemic hiring and spending.

The moves aren't unique to Ottawa. New Zealand is cutting about 14 per cent of its public service (roughly 8,700 positions) for an estimated $2.4 billion in savings. Australia is seeking voluntary redundancies. The U.K. is slashing department budgets. And major opposition parties are calling for more drastic measures.

"Countries are under similar pressures," said Lori Turnbull, a political science professor at Dalhousie University. "The economic crisis is forcing governments to say: 'We are reducing the cost in our own house.'"

Many governments expanded their workforces significantly during COVID-19. Canada's public service grew from around 285,000 in 2019 to about 365,000 in 2024 — the same pattern seen in New Zealand and the U.K. Now, with inflation still a concern and debt mounting, those governments are reversing course.

For federal employees in Ottawa, the cuts mean job uncertainty. For the broader economy, the reduction in government spending could affect local contractors and service providers who work with the public sector. The timing matters: Canada's economy has declined for the last two quarters, and lower government payroll could deepen that contraction in the short term.