The shrink

Freedom 51. “It’s a pretty cool feeling I’m trying to absorb,” says Jay, a Blog Dog and federal government worker.

Buried in the recent Mark Carney budget was the Early Retirement Incentive Program, a bald attempt to get people like Jay to quit in order to slice Ottawa’s payroll. Folks who started with the government in 2012 or 2013, have at least a decade of and two pensionable years, will be able to retire under the program at age 50 or 55 with no cut in pension benefits.

Ut used to be that throwing in the towel before aging out meant a 5% annual drop in retirement income. So, leave five years early = 25% less money. But not now. No penalty. Retirees will get the full pension earned.

“In my office that is the majority of the staff,” says Jay, “and most are interested. More broadly, it’s a lot of people in the federal service.”

The unions have been having a cow over the progressive conservative administration’s plans to axe 40,000 federal workers. “Canadians want their government to spend wisely, and public service professionals agree. But when you eliminate the people who inspect food, deliver benefits, protect data, and track wildfires, you’re not cutting waste – you’re increasing risk,” says the Professional Institute of the Public Service of Canada.

“Canadians expect efficiency, not erosion,” said Sean O’Reilly, President of PIPSC. “Behind every cut is a service delay, a slower emergency response, or a system that’s one failure away from crisis. These cuts don’t make us leaner – they make us more fragile.”

“Public service professionals are the experts who protect our data, manage emergencies, track disease outbreaks, and maintain the systems Canadians rarely see but rely on every day. Reducing their capacity doesn’t just shrink government – it erodes Canada’s resilience.”

By the way, this is the new credo in Ottawa. Fire people (who take holidays, get sick, bitch and join unions). And hire AI. “Government itself must become much more productive,” said the budget, “by rightsizing, cutting red tape and wasteful spending, and adopting AI at scale.”

And here is what Carney says about folks like Jay.

“This will contribute to returning the size of the public service to a more sustainable level, with an estimated reduction of 16,000 full-time equivalents, or roughly 4.5 per cent of the workforce as of March 2025… These reductions will continue the trend towards a more sustainable public service size of roughly 330,000 by 2028-29, a decline of about 40,000 or 10 per cent from the 2023-24 peak—where attrition has, and will continue to be, a driver.”

As for AI, the new crew running Canada is all in. They promise a new “made-in-Canada AI tool that can be deployed across the federal government. Shared Services Canada will partner with leading Canadian AI companies to develop this internal tool.”

And here are some examples of where AI will replace, gulp, humans…

• Shared Services Canada will apply AI and automation across internal operations, and automate common IT support requests, reducing call volumes and costs while improving the user experience.
• The Department of Justice will integrate AI, advanced analytics and automation tools to streamline routine tasks, enhance decision-making and free employees to focus on higher-value strategic work.
• Transport Canada will use AI and automation to optimise back-office activities and reduce costs of dedicated resources assigned to repetitive tasks, and realign service delivery models with a greater focus on self-service and technology-enabled solutions.
• Public Services and Procurement Canada will implement digital delivery of procurement-related documents to better manage project delivery.

Now, on a related note, the latest US jobs report came out today. New hiring in November was weak. In October a mess of jobs were lost. The unemployment rate has gone up at the same time Trump has said the economy is booming. It’s not. But AI is having a hell of a bubbly time.  It’s also powered the stock market into record, nosebleed, territory.

Federal government employment in Washington dropped a sharp 162,000. As for the whole workforce, “employment reports for October and November confirmed what we feared based on the alternative data — the labor market can no longer be described as resilient,” says BMO Economics. “The evidence of labour market slowing continues to mount.”

So what are we to make fo this?

On one hand, a lower burden on taxpayers – more efficient, AI-dependant, leaner and meaner governments – is to be celebrated. Under Justin Trudeau, for example, the public service bloated by 40%. Under Carney, the hacking and slashing starts – so money can be diverted into building stuff. Good.

But vanishing will be human jobs. And, especially, those with defined benefit pension plans attached. More and more, day by day, Canadians will be on their own to finance their entire lives. It is a task for which, evidence shows, we are profoundly unready.

So envy Jay. But maybe good riddance.

About the picture: “As the year draws to a close I wanted to send you a note of personal thanks for all of the work that you put into your greater fool blog,” writes Matthew. “I’ve been a daily reader since I was introduced to the blog nearly 5-years ago. I credit your blog for greatly enhancing my financial literacy and am immensely grateful for how this has enabled me to better provide for my wife, 3 daughters and the family dog (Ava).  Attaching a picture of our German Shepard. She’s 11 now and has been with us since the beginning. Merry Christmas!”

To be in touch or send apicture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2025/12/16/the-shrink/