Ottawa residents have legitimate concerns about how proposed federal public service cuts will impact the local economy, given that nearly half of all federal employees call the Ottawa-Gatineau region home. With ongoing uncertainties around housing affordability and food prices, these workforce reductions add another layer of anxiety to an already cautious city.
Understanding the Scale of Job Losses
Labour leaders including Alex Silas, national executive vice-president of PSAC, Sharon DeSousa, president of PSAC, Sean O'Reilly, president of PIPSC, Nathan Prier, president of CAPE, and Vivian Funk, vice-president of the AJC, have been vocal in decrying the announced cuts. The Conference Board of Canada predicts that beyond the 16,000 public service job cuts expected in Ottawa, an additional 6,000 jobs will disappear in retail, accommodation, food services, real estate, finance, construction and transportation sectors due to economic aftershocks.
Overall, these reductions will account for approximately 2.5 per cent of Ottawa's workforce. While there will undoubtedly be devastating consequences for affected individuals and their families, the broader economic picture appears less dire than initially feared.
How This Differs From 1990s Austerity
The current situation differs significantly from the mid-1990s when Jean Chretien's government reduced the federal workforce by about 55,000 people between 1995 and 1999, from 382,000 to 326,500, while freezing wages for many remaining employees. The workforce size that Mark Carney's government is targeting remains 10 per cent higher than the 300,450 employees it had pre-pandemic.
Kevin Page, president of uOttawa's Institute of Fiscal Studies and Democracy and former Parliamentary Budget Officer, provides crucial context: "There are 10,000 to 14,000 people who pack it in and move on every year. Now we're talking about trimming 40,000 jobs by 2029? The prime minister wasn't wrong; you can get there pretty much just by attrition."
The Attrition Advantage
The 38,000-person staff reduction target making headlines is measured from the 2024 peak and includes the subsequent net reduction of approximately 10,000 workers - close to the number who typically retire or leave the public service annually. This attrition-based approach means fewer people will likely leave the region altogether compared to scenarios involving massive layoffs.
Where downsizing may have more lasting impact is by limiting opportunities for new, younger workers who might otherwise choose to build careers in the National Capital Region. However, the current strategy of relying heavily on attrition and voluntary retirement incentives suggests the economic disruption will be more manageable than the austerity measures of previous decades.
