Cutting People Isn't the Same as Cutting Work
Canada’s job losses are coming from government. How the cuts are made will decide whether services hold up.
Canada lost 68,000 jobs in September, and the unemployment rate rose to 6.5%. Tariffs weren't the main culprit. Manufacturing, the sector most exposed to U.S. tariffs, lost about 13,000 jobs. The public sector lost about 70,000, led by education (roughly 35,000) and health care and social assistance (about 23,000). Canada has now lost about 41,000 jobs since December, and BMO's economists point out that the whole decline for the year is in the public sector.
Some of that is colleges and schools adjusting to fewer international students. But a lot of it is by design. Ottawa's 2025 budget set out to shrink the federal public service by about 28,000 positions by 2029, asked departments to find up to 15% in savings over three years, and targets $60 billion in total savings. More than 26,000 federal employees have received notices that their jobs may be affected, and about 68,000 were told they may qualify for early retirement.
Getting a deficit under control is a legitimate goal, and reasonable people can argue about how big the public service should be. The question that matters for anyone who relies on government services is a different one: when the people go, what happens to the work?
The work doesn't leave with the people
In most cases, nothing happens to the work. It stays. Someone still has to process the immigration file, answer the benefits question, inspect the food plant and teach the class. When headcount drops and the workload doesn't, the people who remain absorb it. They get stretched, they burn out, and the people they serve feel it: longer waits, more errors, fewer real answers. For government, those are constituents trying to get something done that only a human can help with.
Canada Revenue Agency staffing went from about 59,000 in 2024 to about 52,500 in 2025. Last year, the tax employees' union reported phone waits of up to three and a half hours, and the Taxpayers' Ombudsperson said about a quarter of complaints were about the call centres. The finance minister eventually ordered a 100-day plan to fix it. Cutting without redesigning doesn't save money cleanly. It moves the cost onto the public, and then often back onto the government as emergency fixes and outside contractors. Ottawa spent more than $19 billion on outside professional services in 2024-25, according to the federal professionals' union.
Who goes first matters
How the cuts are made also says a lot about whose interests come first. The government's stated approach is to rely on attrition and early departures where possible. That's humane, but it means whoever happens to retire or leave is the one who goes, not the work that matters least. And in practice the cuts have landed at the bottom: of the roughly 12,600 federal jobs cut over the year to July, nearly half were term, casual and student positions.
Executives, meanwhile, made up about 9,000 of the roughly 345,000 federal public servants as of March, and their numbers fell at about the same pace as everyone else's. Trimming executive roles won't close a 15% budget gap on its own, because there aren't enough of them. But that's not really the point. When an organization asks its front line to do more with less, credibility starts at the top. Cutting heavier salaries and management layers first shows the burden is shared, and fewer layers usually means faster decisions.
What leaders should do now
This applies to any organization under cost pressure.
1. Start at the top. Cut senior roles and management layers before you touch the front line. It's fairer, it builds trust for what comes next, and it shortens the distance between a problem and a decision.
2. Find the services people actually lean on. In almost every organization, a small share of services carries most of the value for the people it serves. Identify them using real demand data (call volumes, case loads, wait times), protect them, and fund them properly, even if that means stopping other things completely.
3. Redesign the work before you remove the people. Map how decisions get made and how work flows through the processes that matter most. Remove approval steps that add delay but no value, clarify who decides what, and simplify governance. That's how a smaller team serves people faster instead of just more slowly.
4. Measure service, not just savings. Track wait times, backlogs and error rates alongside the budget. If service is falling, the cuts aren't finished. They've just been pushed onto the public.
Budgets are going to get smaller. The organizations that come through it well won't be the ones that cut the most or the least. They'll be the ones that decided what matters before they started cutting.
When headcount drops and the workload doesn't, the people who remain absorb it, and the public feels it.