A new analysis from the Parliamentary Budget Officer reveals that while the cost of Canada's federal public service continues to climb, the rate of growth has begun to decelerate as workforce reductions are set to commence.
Personnel Spending Reaches $76.3 Billion
Total personnel spending for the public service grew by six percent in the 2024-25 fiscal year, reaching $76.3 billion compared to $71.9 billion in the previous year. This significant expenditure covers salaries, wages, pension compensation, overtime, bilingual bonuses, and various employee-related benefits.
Salary Increases and Collective Agreements
The PBO points to negotiated wage increases in collective agreements as a primary driver of rising costs. Average salaries increased by 4.8 percent, reflecting both higher wages and non-recurring lump-sum payments administered under new agreements that took effect in 2024-25.
Marianne Laurin, author of the PBO analysis, noted that excluding one-time payments, personnel spending still reached $64.2 billion in 2024-25, representing a 6.7 percent increase from the previous fiscal year.
"While this growth is lower than the 10 percent increase recorded in the previous year, it remains above the pre-pandemic average annual growth rate of 3.1 percent," Laurin wrote in the report, referencing data from 2006 to 2019.
Workforce Growth Slows Significantly
Despite the rising costs, the expansion of the public service workforce has begun to moderate. The federal public service grew by only 7,000 full-time equivalents (FTEs) in 2024-25, representing a growth rate of just 1.6 percent compared to the previous year.
A full-time equivalent designates the work of one full-time employee, though multiple part-time public servants could compose one FTE.
"While the size of the federal public service continued to grow in 2024-25, the annual growth rate reached its lowest point since 2016-17, marking a slowdown in the trajectory observed in recent years," Laurin explained.
Population-Adjusted Decline and Future Reductions
The analysis found that the number of FTEs per 100,000 of the population decreased from 1,083 in 2023-24 to 1,077 in 2024-25, a decline of 0.5 percent. This reflects both slower workforce growth and historically strong population expansion in 2024.
Further reductions are anticipated as Prime Minister Mark Carney's spending review is expected to result in thousands of public servant layoffs. According to the most recent federal budget, approximately 16,000 FTEs are projected to be cut from the public service over the coming years.
The PBO analysis provides crucial insight into the evolving dynamics of federal personnel expenditures, highlighting both persistent cost pressures and emerging trends toward workforce stabilization as the government implements austerity measures.
