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On September 28, Stelco announced its plans to idle parts of their Hamilton and Nanticoke operations in order to “ensure the survival” of the company, potentially impacting up to 500 workers, the latest casualties in the U.S. trade war.
Ottawa is threatening legal action but Stelco is proceeding with lay-offs, part of a larger play to force Canada into line with American tariff policy on China and to gut Canada’s industrial base. Workers are left twisting in the wind, wondering where their next pay cheque will come from.
An even larger group of workers is also wondering where their next pay cheque will come from, as reported in Friday’s labour force report. Public sector austerity is cutting a swath through Canada’s care economy and public administration. Why aren’t these cuts making the headlines?
Steep drop in public sector employment over the summer
In September, employment fell by 68,000, following a drop of 35,000 in August. As a result (in combination with a shrinking labour force), the employment rate fell 0.2 percentage points to 60.6 per cent and the unemployment rate edged up to 6.5 per cent.
Public sector austerity is picking up speed, dragging the economy down with it.
Families are struggling across the country with the high cost of living. Demands on public services have never been higher, yet governments at all levels are cutting back on care economy and public admin workers.
Schools don’t have the funding for the teachers and educational assistants they need. Long-term care homes operate short-staffed every day. People applying for federal benefits wait for hours trying to get through to CRA. All the result of job cuts and the often stealthy erosion of program budgets.
September’s employment decline was wholly accounted for by the public sector, down 70,000 workers in a single month. This report caps off a bad summer; the number of public sector workers has fallen by almost 150,000 since May.
Women have accounted for more than 80 per cent of these losses, their employment levels in the public sector falling by 4.2 per cent between May and September.
These job losses were concentrated largely in educational services, down -44,000 in total since May, followed by public administration (-22,000), agriculture (-16,000) and forestry (-15,000). Health care and social services held steady from May through August but dropped by -23,000 in September.
The manufacturing sector, for its part, held its own this summer up until August and then employment levels dropped in September (-12,700) as tariff pressures mounted. It is likely that layoffs will rise as the fall proceeds.
Public sector austerity well underway
The overwhelming majority of public sector losses are happening in central Canada. Over the summer, public sector employment dropped by roughly 60,000 in Quebec and Ontario, followed by Manitoba and Alberta, with losses of 11,000 in each province.
These figures capture not only cuts in health, social services and education, but also all levels of government. Federal job cuts are well underway as announced by the Carney government in summer 2025, targeting $57 billion in program cuts and the elimination of 30,000 positions by 2028—almost half of which are in the National Capital Region.
Ontario and Quebec face tremendous pressures related to growing demands for care—yet both provinces have been “underspending.” In Ontario, funding for health is set to increase by a paltry 0.5 per cent this year, and then decline by 1.6 per cent next year, as more and more funding is being diverted to for-profit providers.
K-12 schools are cutting back too as the September labour force report shows and parents discovered during the first week of school. Staffing pressures will only increase as real provincial operating funding to school boards continues to decline—from $15,074 per student in 2026-27 to $14,775 per student in 2028-29.
The former CAQ government in Quebec was in the middle of an austerity program when it lost the election last week. This year, program spending is expected to rise by only 1.6 per cent, far short of the 3.2 per cent increase needed to sustain current programming, amounting to a $2.6 billion shortfall. This includes de facto cuts to all departmental budgets excluding health.
The federal program cuts are already hitting female workers and other equity groups hard, and we can expect the same to play out in Quebec and Ontario too—reducing the stock of “good jobs” in the economy and potentially rolling back the gains that have helped reduce economic disparities.
The invisible labour of public sector workers
The business press takes the position that public sector spending crowds out virtuous private investment. Yet despite decades of favourable tax breaks and corporate subsidies, the private sector continues to sit on hordes of “dead money” as Mark Carney famously called it that could be used to build and strengthen Canada’s economy.
This self-serving argument not only blithely ignores the critical role public services play in generating and sustaining the economy through investments in foundational infrastructure, research, health, education and care, it also neglects the impact of public sector jobs losses on individual household incomes and spending power, the primary driver of economic growth in Canada.
These messages work to reproduce the idea that private sector employment is inherently more productive, more valuable than public sector employment, that public sector workers are somehow expendable, not essential to our collective well-being and prosperity. Nothing could be further from the truth.
Meanwhile, as bank economists ponder whether September’s decline in employment will “pour some more cold water on near-term rate hike expectations” (the next Bank of Canada interest rate announcement due on October 28), thousands of families are now trying to figure out how they will pay the bills and highly skilled young people despair at finding a decent job or an affordable place to live.
Ongoing public sector austerity will further magnify these concerns undermining both the ability of Canada to mount a forceful response to American aggression (and other major public policy challenges) and the ability of individuals and families to weather this economic storm.
There is no path to a just and prosperous future without effective government and strong public services. The ongoing silence about public sector job losses is unacceptable. It’s time to call out the threat to education, health care and community services and stand up in support of public sector workers in the crosshairs of neoliberal governments.
About the author
Katherine Scott
Katherine serves as the director for the CCPA’s gender equality and public policy work. She has worked in the community sector as a researcher, writer and advocate over the past 20 years, writing on a range of issues from social policy to inequality to funding for nonprofits.
