Budget ushers in 'transformational' era for federal public service
The 2025 federal budget sets out to reduce the size of Canada's public service while introducing several modernization initiatives. It plans to achieve a smaller, more efficient workforce and reduce external dependencies.
Planned Workforce Reduction
Over the next three years, the government expects to cut approximately 16,000 full-time equivalent positions, representing about 4.5 percent of the current workforce. Around 1,000 of these are projected to be executive-level roles. By the 2028–29 fiscal year, officials anticipate a total reduction of nearly 40,000 positions compared to the 2023–24 peak staffing level.
Early Retirement Program
The budget introduces a voluntary Early Retirement Incentive (ERI) under the Public Service Pension Plan. This program would allow employees aged 50 and older, with at least 10 years of service and a minimum of two years of pensionable time, to apply for early retirement.
Shift in Operational Approach
In addition to personnel reductions, the government pledges to rely less on external consultants and deploy a Canadian-developed artificial intelligence tool across departments to enhance efficiency and service delivery.
"This is a transformational time for the public service to revisit how we work, how we can improve services to Canadians and how we can build for the future."
Impact on the National Capital Region
Many of the affected employees live and work in the National Capital Region, where the federal government remains the largest employer. The upcoming changes are expected to redefine how public servants collaborate and deliver services to Canadians.
Author’s summary: Budget 2025 reshapes the federal public service through workforce cuts, early retirements, and homegrown AI tools to streamline operations and future-proof governance.