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How will Budget 2025 impact job search and employers?
Editorial by Christian Saint Cyr
National Director / Canadian Job Development Network
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I'm often asked to define what labour market information is and my common response is that LMI is a reflection of what happens in the economy. Every time something happens in the economy 'human impacts' are created and that is labour market information.
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When government makes changes to legislation, laws, regulations, hiring, immigration, conservation and in dozens of other areas, the results cost some people jobs, creates jobs for others and often increases the skill set or sustainability of many jobs.
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For instance, one year ago, Canada imposed a 100% tariff on all Chinese-made electric vehicles. In response, in March, China imposed a 100% tariff on canola oil and canola seed. These two actions have supported EV manufacturing in Canada but has been devastating to canola oil producers, workers and the supply chain supporting them.
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While we see provincial, federal, regional, county, municipal and First Nations government announcements every day, when either the Province or the federal government releases their budget for the year, it gives us a list of spending, cutting and policy announcements that will help us better understand what we can expect in the next year.
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Many of these announcements will support employers, while others will cost them and tie their hands. Some will illuminate new areas of employment, program support and areas of skill enhancement. This will also impact educators and trainers as government looks to augment education to meet our future demand.
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Two weeks ago, the Government of Canada revealed their budget for the coming year which outlines a wide range of new spending, cuts to existing spending and a road map to deal with increased security, economic independence from the United States and preparation for a declining economy. Today, is the final confidence vote for enacting the budget and as long as the Liberal government is successful, the budget has a number of announcements that will significantly impact our labour market.
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Budget 2025 includes $141 billion in new spending commitments over the next five years on national defence, personal income-tax relief and infrastructure investments among other priority areas. These are partly offset by approximately $60 billion in planned expenditure restraint and a 10 per cent reduction in federal public service (about 40,000 positions) over three years.
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The new budget introduces workforce and skills investments to strengthen Canada’s labour market resilience and hopes to support workers through economic transitions. This includes $75 million over three years to expand the Union Training and Innovation Program, enhancing union-led apprenticeship training in Red Seal trades and a $97-million Foreign Credential Recognition Action Fund to tackle workforce shortages in health care and construction.
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Through Labour Market Development Agreements, the funding source which pays for most provinces' employment training programs, the federal government will provide $570 million over three years to help workers affected by tariffs and global market shifts access training and employment supports.
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To pay for new spending, the feds will cut the total workforce of the federal government by 16,000 full-time equivalent positions over the next three fiscal years.
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It's part of a larger goal to reduce the federal public service to 333,000 employees by 2029 — about 40,000 fewer workers than the all-time high in 2024. Job reductions are already underway, shrinking the bureaucracy by about 10,000 employees since last year.
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Prime Minister Carney has said this will be possible by turning to new forms of technology such as AI to make workers more efficient. Critics argue that either this is too short a period to effectively make these changes or that the government doesn't have a strong track record of incorporating new technologies.
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Already, federal government employees are overwhelmed with the demands placed on them. The Canada Revenue Agency will experience a $4.1 billion cut and yet a recent reports suggests less than 15 per cent of callers to CRA are actually able to speak with a person.
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Whlle there's more than $140 billion in new spending, multiple federal agencies are going to undergo major cuts. Employment and Social Development Canada will be cut by $2.24 billion over the next four years, Immigration, Refugees and Citizenship will be cut by $2.06 billion, Indigenous Services by $1.98 billion and National Defence by $1.92 billion, while Canada tries to simultaneously expand our military to meet NATO spending targets.
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Employment and Social Development Canada says it's going to reduce its property portfolio by cutting office space, use fewer consultants, and limit travel and conferences. It will also increase its use of AI.
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The department is shifting funding away from underperforming programs, and is consolidating the Canada Service Corps and the Supports for Student Learning Program to lower administration costs.
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Immigration, Refugees and Citizenship Canada (IRCC) is making "targeted adjustments" to programs such as the Interim Housing Assistance Program (IHAP), which helps provinces, municipalities and non-profits support and house asylum claimants.
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To reduce duplication, IRCC is transferring compliance inspections for employers who hire temporary foreign workers to the International Mobility Program to the Department of Employment and Social Development, which already conducts similar inspections.
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For its Student Work Placement Program, the federal government is planning to set aside $635.2 million over three years, starting in 2026-27, for 55,000 “work-integrated learning opportunities” — basically, skills training and short-term job placements — for post-secondary students.
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It’s also proposing $594.7 million over two years toward the Canada Summer Jobs program, an initiative it began exploring a few years ago that it says will support 100,000 jobs for youth next summer.
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Among the more targeted proposals is a “Youth Climate Corps” — a paid skills training program for young people in which they will be “trained to quickly respond to climate emergencies, support recovery and strengthen resilience in communities across the country.”
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The program allocates $40 million over two years to Employment and Social Development Canada, though it’s not clear how many young people will benefit.
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The government says it will also allocate $307.9 million over two years to a Youth Employment and Skills Strategy. The funding goes toward jobs, training and other supports starting in 2026-27, including mentorship, transit and mental health counselling.
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That portion allocates $75 million over three years to expand union-based training in the Red Seal Trades, a list of designated trades that includes jobs like carpentry, heavy equipment operating, ironworkers, machinists and plumbers.
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Budget 2025 sets out the most substantial defence investment in decades, committing $81.8 billion over five years (starting in 2025-2026) to rebuild, rearm, and modernize the Canadian Armed Forces (CAF). This includes $20.4 billion for recruitment, retention, and health-care supports; $19 billion to maintain existing capabilities and infrastructure; $17.9 billion to expand the military’s operational capacity, including logistics, light and armoured vehicles, counter-drone and precision-strike capabilities, and domestic ammunition production; $10.9 billion for digital and cyber-defence infrastructure; and $6.6 billion to launch a new Defence Industrial Strategy that will expand Canada’s domestic defence-manufacturing base.
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Canada’s new Defence Investment Agency will receive $30.8 million over four years to accelerate procurement, while a new sovereign space-launch capability is allocated $182.6 million over three years.
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Not all of the budget revolved around spending. Budget 2025 also announced an Immigration Levels Plan with admission targets at 380,000 per year for three years and an increased share of economic migrants (64 per cent of total). The budget also cuts temporary resident admissions by almost half by 2026 (from 673,650 to 385,000) while taking into account industries impacted by tariffs and the unique needs of rural and remote communities.
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The budget also calls for the transition of 33,000 work permit holders to permanent residency which will cost about $19.4 million over four years (in part offset by fee revenues) for processing.
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Canada will also invest $382.9 million over five years to establish new Workforce Alliances that unites employers, unions, and industry associations to coordinate public and private skills investments. This includes a Workforce Innovation Fund to support local, sector-specific projects that strengthen recruitment and retention. There will also be $50 million over five years to develop a digital job-matching tool and launching a national online training platform in partnership with the private sector.
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The government also plans to introduce temporary flexibilities to the EI Work-Sharing program, similar to those introduced during the pandemic, to help employees work reduced hours instead of facing layoffs, at a cost of $370.5 million over five years. Additionally, it provides $3.7 billion over three years for enhanced EI income supports to aid workers impacted by economic uncertainties and trade disruptions.
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Already announced in October 2025, Budget 2025 proposes to provide $97 million over five years, starting in 2026, to establish the Foreign Credential Recognition Action Fund. Employment and Social Development Canada will work with provinces and territories to improve the fairness, transparency, timeliness, and consistency of foreign credential recognition, with a focus on the health and construction sectors.
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With a new Prime Minister and the rising tensions with the United States, this year's budget includes far more than previous versions, but it's still a good look at the cumulative change we can expect in the year to come.
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While the federal government puts an extremely positive spin on the budget, the changes will be extremely hard for many public servants and the workers who continue to provide services as new forms of technology are adopted and the workload increases.
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The benefit of reviewing this information, is it helps us better inform employers, guide those in career transition and see the changes before they are enacted.
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We’ll be discussing the Budget 2025 in more detail at our #MotivatingMondays meeting of the Canadian Job Development Network, Monday November 17th at 8:30am Pacific; 9:30am Mountain; 10:30am Central; 11:30am Eastern; 12:30pm Atlantic and at 1pm in Newfoundland.
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On the morning of Monday November 17th 'Click this Link' to join the session LIVE.
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'2025 Labour Market
Year-in-Review Workshops'
Registration is Closing Soon
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Registration is closing soon for our Labour Market Year-in-Review workshops, taking place respectively in British Columbia and Ontario.
To learn more:
BC Workshop Link | Nov. 28th / Dec. 1st
or
Ontario Workshop Link | Dec. 5th and 8th
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