OTTAWA – The federal budget kicked off a spending review public servants knew was coming. This time, however, the Liberals have a pact with the labour-friendly NDP that could protect the bureaucracy from the job losses of previous reviews.

Treasury Board President Mona Fortier will lead a year-long strategic review that’s aimed at saving $6 billion over five years, and then $3 billion per year from 2027 onward.

The review rolls out in two streams. First, the government wants to ensure all programs align with its top priorities – economic growth, inclusiveness and climate change. Second, it’s looking for savings by “adapting programs and operations to a new post-pandemic reality.”

A big part of adapting operations is the shift to a hybrid workforce, which should reduce office space and change the way public servants travel and use technology. The government could save billions of dollars unloading buildings and leases.

“While it will take time for this shift to play out, we need to ensure public assets will be used productively over the long-term,” said Fortier in an email.

Fortier never mentions cuts. She talks about “efficiencies” and “smarter government, not smaller government” and “digitization.” But for unions that have faced four major reviews since the Mulroney era, the message is code for job cuts.

“The government is trying to frame this review as a way to find savings in the wake of the pandemic,” said Chris Aylward, president of the Public Service Alliance of Canada (PSAC).

“But we have serious concerns, and will be keeping a close eye on the implementation to make sure that public service workers aren’t paying the price of these so-called savings, through job cuts and austerity.”

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This review was expected. Liberals promised a strategic review in their election platform. The last one was a decade ago when the Harper government did a strategic review and adopted a deficit-reduction action plan (DRAP), which shed thousands of jobs. The public service has more than bounced back, adding 10,000 new hires a year over the past five years.

But the Liberal-NDP agreement, which could stave off an election until 2025, brings a new dynamic to the government’s relationship, as an employer, with the public service.

“You’ve got a government that has not shown a lot of interest in cuts. . . that now has a partner who is definitely not interested in cuts,” said NDP strategist Kiavash Najafi.

Sahir Khan, executive vice-president at the University of Ottawa’s Institute of Fiscal Studies and Democracy, said the Liberal-NDP pact could also play a big role in modernizing the public service and the changing nature of work.

Unlike the Harper deficit-driven cuts, he said this review is about performance and offers “an opportunity to reconsider the nature of the workforce.”

“With the NDP, the unions are in the tent now so the level of collaboration might be very different,” he said.

Minority governments keep public servants on edge, waiting for the government to fall. The agreement with the NDP could stave off an election until 2025, offering the public service some stability and possibly time for long-term planning.

Unions are banking on the agreement for leverage to protect public servants from job cuts, layoffs or back-to-work legislation.

Some managers, however, worry the pact scuttles any hope for much-needed structural reforms that need union buy-in and concessions to bring the public service into the digital age. “Now that the government is “dependent on the NDP, there’s no chance at all,” said one senior bureaucrat not authorized to speak publicly.

Michael Wernick, a former clerk of the Privy Council Office, said the agreement could cut different ways for the government.

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“The extra three years of stability means they have time to take on a more ambitious public service agenda if they want, and can tap the fiscal brakes over three budgets and chart a more gradual path,” he said.

“On the other hand, they are beholden to the NDP, so they can’t buck the unions.”

The NDP deal and strategic review are converging at a time when the government and its 17 unions are negotiating new contracts. All signs are it will be a tough round of bargaining.

With talent shortages, workers and unions can flex their muscles. Workers who delivered the government’s COVID response want bigger raises, remote work and the right to “disconnect” so employees aren’t obliged to check emails and calls after work hours. They will press for more training to help employees keep up with technological changes and better layoff protection.

“It will be helpful to the success of collective bargaining not to have the threat of a giant hammer like back-to-work legislation hanging over negotiations,” said Najafi.

PSAC, the first big union at the table, is already sabre-rattling about a possible national strike in the fall. Talks are already sputtering over the union’s demands for raises of 4.5 per cent a year over three years to cover rising inflation. The government is offering 1.75 per cent a year.

Whether looking for “efficiencies” to save money or improve performance, people end up losing jobs. Unions worry technology, whether automation or AI, will put public servants out of work.

In the past, governments often managed job losses with attrition, buyouts and early retirement packages, some more generous than others.

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With the NDP as a partner, Khan said the government will be pressed to be more creative and collaborative than offering generous buyouts.

“They’re not trying just to protect jobs here. They can manage any cuts through attrition. The question is will people have the right skills for the right jobs? A different challenge,” he said.

“The deal with the NDP, with the move to hybrid work, will probably force the Treasury Board president to think a lot more creatively about renewal of the public service,” said Khan.

A growing economy and tight labour market could easily entice some workers to leave with early retirement. They could leave the public service with a slimmed down and younger workforce. Some departments are bracing for a surge of departures from employees who delayed retirement and stayed on for the pandemic.

But the government also has to rethink its human resources strategy and its demographics. How does it recruit and retain workers, especially those with digital skills? Does it recruit new, young workers, lay off, retrain or upskill older workers? How does it recruit for diversity and inclusion?

“Workforce adjustment is going to be harder and it may have to incorporate reskilling and upskilling and that’s going to mean that the nature of those collective agreements and discussions are going to be different over the next year,” said Khan.

In fact, NDP strategists like Najafi say the pact will help drive modernization, pressuring the government to include unions as partners and look for common ground.

This article was produced with support from the Accenture Fellowship on the Future of the Public Service. Read more of Kathryn’s work here.