Carney Promised ‘Caps, Not Cuts.’ 68,000 Federal Workers Just Got Early Retirement Letters. 40,000 Jobs Are Being Eliminated.

The Liberal Party platform in the April 2025 federal election was explicit: “capping, not cutting, public service employment.” Mark Carney repeated it on the campaign trail. The unions heard it. The public servants heard it. It was one of the clearest commitments of the election — a line drawn against the kind of austerity that both the NDP and the Conservatives had also gestured toward. Carney was promising something different: a public service that would be managed, not gutted.¹

Five months later, Budget 2025 announced the elimination of 40,000 federal positions by 2028–29 — a reduction of roughly 10% from the public service’s 2024 peak of 367,772 employees. The target is 330,000. The government said it would rely on a mix of attrition, early retirement, and layoffs. It acknowledged that attrition alone would not be enough.²

This week, 68,000 federal employees learned they are eligible for the Early Retirement Incentive Program — one of the government’s primary tools for achieving those cuts. The program, which opened for applications on March 27 after the budget implementation bill received royal assent, allows public servants over the age of 50 (in some cases 55) to retire without the standard pension penalty. Normally, a public servant who retires early sees their pension reduced by 5% for every year before they qualify for a full annuity. Under the incentive, that reduction disappears.³

The cost to taxpayers: $1.5 billion over five years, with roughly half of that expense coming in 2026. Eligible workers have until July 24 to apply. Anyone approved must retire by January 20, 2027. Experts are predicting significant uptake. Gisèle Tassé-Goodman, chair of the National Association of Federal Retirees, said: “We expect that there will be many employees that will be interested in applying.”⁴

The Public Service Alliance of Canada is not cooperating. PSAC has filed complaints with the Federal Public Sector Labour Relations and Employment Board, alleging the government is offering separation packages directly to individual members — “circumventing” the workforce adjustment process negotiated under collective agreements. The union calls this “interference.”⁵

PSAC national president Sharon DeSousa has been the most direct critic. She called Carney’s claim that reductions would happen through attrition “flat-out misleading” and said it “ignores the hard truth facing Canada’s public services.” She pointed out that thousands of permanent public servants have already been told their jobs are being cut — not through retirements or voluntary departures, but through direct layoffs.⁶

Eric Prouzet / Unsplash — More than 26,000 public servants have received formal notices that their jobs are at risk. The Public Service Alliance of Canada has filed complaints alleging the government is circumventing collective agreements.

“Canada’s public service isn’t a piggy bank we can dip into whenever the government wants to fund new projects,” DeSousa said. PSAC’s position is that it does not oppose early retirement options, but insists they must be “negotiated, lawful, and protect workers’ rights.” The union says the program was rolled out without proper consultation and that members are “making decisions without full knowledge of the terms.”

The scale of the reductions goes far beyond what “caps, not cuts” implied. Budget 2025 mandated departments to find savings of up to 15% — cuts of 7.5% in 2026, 10% in 2027, and 15% in 2028. The Canadian Centre for Policy Alternatives warned the austerity could eliminate almost 57,000 jobs by 2028. CUPE said: “Not even Stephen Harper could dream of cuts this deep.” The former clerk of the Privy Council, Michael Wernick, said the budget savings are “essentially a starting point” — departments still have to decide specifically what gets cut.⁷

The cuts are already materializing. More than 10,000 federal jobs were lost in the year ending March 2025 — many of them PSAC members. Since then, further rounds have hit the Canada Revenue Agency, Employment and Social Development Canada, Library and Archives Canada, and the Public Health Agency. More than 26,000 public servants have received workforce adjustment notices. The Speech from the Throne repeated the “caps, not cuts” language — five days after 1,100 jobs were cut at Service Canada and the CRA.⁸

The Professional Institute of the Public Service was blunt. President Sean O’Reilly: “In the platform, they promised to cap the public service, not cut. And now we’re seeing across-the-board cuts. That really does concern me.” CAPE, the Canadian Association of Professional Employees, called the budget cuts a broken promise: “The Liberal Party platform clearly stated its commitment to capping, not cutting, public service employment. Fast forward to Carney’s first budget, and the federal government is ready to slash public service jobs at a rate not seen in decades.”⁹

The irony is that the cuts are being demanded at the worst possible moment. U.S. tariffs are pushing private-sector workers onto employment insurance. Service demand is rising. Wait times at the CRA, Service Canada, and IRCC are already stretching. The government is shrinking the workforce that processes the benefits and services Canadians need during an economic crisis caused by an external trade shock — while simultaneously spending $1.5 billion to incentivize the departures.

The unions have pointed to alternatives the government has ignored. PSAC says the government could save billions by reining in consulting contracts — which ballooned under both Trudeau and Carney — and by reversing the return-to-office mandate, which costs roughly $2 billion per year in office space that workers don’t need. CAPE noted that a wealth tax starting at 1% on household assets over $10 million — estimated by the PBO to generate $22 billion annually — would more than cover the proposed cuts without eliminating a single position.¹⁰

Mark Carney campaigned on four words: “caps, not cuts.” The Liberal platform was explicit. The unions were told. The public servants believed it. Five months later, Budget 2025 announced the elimination of 40,000 positions — the largest reduction in decades. Departments were told to find 15% in savings. More than 26,000 workers have received notices. Ten thousand jobs have already disappeared. The early retirement incentive — 68,000 letters, $1.5 billion in taxpayer cost — is the mechanism for making it happen while calling it “voluntary.” The union that represents the majority of these workers was never consulted. It filed a formal complaint. The government’s response is to proceed anyway. Carney said “caps, not cuts” in April. By November, the budget said 40,000 jobs. By March, 68,000 workers had letters in their inboxes. The promise did not last a year. It barely lasted a season. And the workers who took Carney at his word are now choosing between an early retirement they didn’t plan for and a layoff the prime minister said would never come.