Budget 2025: Feds project 16,000 public service job losses as part of spending review
Ottawa is launching an early retirement incentive program allowing employees aged 50 and older with at least ten years of service to retire early without penalties. The initiative anticipates roughly 16,000 job reductions within the federal public service over the next four years as part of the Liberal government’s spending review.
According to the federal budget released on Tuesday, the measures aim to achieve combined annual savings of about $13 billion by the 2028–2029 fiscal year. Departments are expected to implement internal efficiencies and restructuring to meet these targets.
Public Service Overhaul
The changes include a comprehensive restructuring of the federal workforce, reducing about 40,000 full-time positions within the same timeframe. Nearly half of these reductions stem from internal cost-cutting efforts.
“We are modernizing government operations to deliver better results for Canadians and reduce costs.”
“To meet the moment, we must reinvent government to be fit for the 21st century.”
“This means recalibrating activities and fiscal room towards our core mandates — spending less on the day-to-day running of government.”
Rising Costs and Fiscal Challenges
The Parliamentary Budget Officer noted that without spending cuts, staff costs could rise by $7 billion by the 2029–2030 fiscal year. The federal workforce has grown continuously since the Liberals took office in 2015, reaching nearly 369,000 full-time positions in 2023–2024, according to Treasury Board data.
Summary
The federal budget outlines a large-scale restructuring aimed at cutting 16,000 jobs and saving $13 billion, with early retirement options to ease the transition and modernize government operations.