Public service cuts hit Ottawa: defence and tech offer the clearest openings
More than 10,000 federal workers were told their jobs may be at risk as Ottawa’s public service shrinks. Economists call the private market sluggish, with defence, tech and health showing demand.
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By Torontoer Staff
More than 10,000 federal public servants were notified last week that their positions may be affected as the government pursues a broad reduction in the size of the public service. Ottawa economists describe the private-sector job market as soft and sluggish, but point to defence, technology, health care and professional services as the most likely sources of new work.
The government plans to trim roughly 40,000 jobs from a 2023-24 peak of 368,000. While officials say attrition will be used where possible, thousands of employees will leave the labour force in the months ahead, with knock-on effects across the National Capital Region.
What the data and economists are saying
Local labour-market data are limited, but several economists sketched a common picture: job openings are relatively scarce, unemployment has risen, and the full impact of federal layoffs may take months to show in official statistics. The region’s unemployment rate climbed from about three to four per cent in 2022 to roughly seven per cent in the latest update.
Overall, not a lot of strength at all in labour markets in the National Capital Region. I think this is due, in essence, to the knock-on effects from the public service cuts.
Pedro Antunes, chief economist, Signal49 Research
Bank and independent economists describe Ottawa’s economy as ‘soft’ rather than in recession. That means more workers are looking for jobs than there are openings, and bargaining power for job seekers is reduced. Tariff uncertainty and sector-specific shocks are also weighing on hiring in parts of Ontario.
Sectors most likely to hire
Several areas are expected to absorb displaced federal workers more readily than others. These are sectors where Ottawa already has capacity and where recent or planned investment is creating demand.
- Defence and defence tech: Federal investment and a national push to position Ottawa as a defence innovation hub are directing capital into startups and established suppliers that need engineers, program managers and business development staff.
- Technology and professional services: Growth in software, systems integration and technical consulting can create roles for former policy, IT and project-management staff, especially in firms that serve government clients.
- Health care and social assistance: Ongoing hiring in hospitals, clinics and community services provides steady openings at a range of skill levels.
- Contract and consulting work: Short-term contracts, procurement roles and government-adjacent projects can bridge the gap while workers search for permanent roles.
I think we are at the low end of a ramp up in terms of an exciting time for Ottawa private sector jobs. We’re seeing an incredible amount of capital flow towards technology startups, which employ engineers, business development, sales and marketing jobs.
Glenn Cowan, founder and managing director, ONE9
City and business leaders are pushing to make defence and innovation a clear economic priority. The municipal bid to be ‘Canada’s Defence Innovation Hub’ seeks to link procurement, research and private investment to local hiring.
Any layoffs or downsizing have to be done very thoughtfully, because there will be a ripple effect to other sectors, and particularly impacting our downtown.
Sueling Ching, president and CEO, Ottawa Board of Trade
How displaced public servants can approach the market
Workers leaving federal employment face a market that will be competitive in the near term. Practical steps can improve prospects and shorten the job search.
- Map transferable skills: project management, procurement, policy analysis, communications and IT skills are in demand across defence, tech and consulting.
- Target government suppliers and contractors: firms that bid on federal work often need staff with public-sector experience.
- Consider short-term contracts or consulting: these roles can provide income and contacts while permanent openings materialize.
- Use local supports: the Ottawa Board of Trade and sector-specific accelerators can help with networking and retraining opportunities.
- Plan for timing: economists say the employment impact may unfold over several months, so treat the job search as a medium-term process.
Universities and policy institutes are watching the situation for signs of a longer adjustment. Some analysts view the current period as a correction rather than a structural collapse, noting increases in defence and technology spending that could offset losses over time.
On balance, the outlook for Ottawa-Gatineau is moderately positive, with losses offset by investment in infrastructure, defence and technology. I hope the public servants getting notices can find timely work in other sectors.
Kevin Page, president and CEO, Institute of Fiscal Studies and Democracy
What business and government leaders are asking for
Local business groups want a transparent, data-driven workforce strategy from the federal government, including clear timelines for cuts and information on where reductions will occur. That would allow employers, training providers and municipalities to align supports for workers and mitigate impacts on downtown firms and services.
Economists say the pace and scale of hiring in defence and tech will determine how quickly the local labour market recovers. For now, displaced workers should prioritise mapping their skills to the sectors that are actively hiring and use available supports to shorten the transition.
Ottawapublic servicejobsdefencetechnologyeconomy
