The job market in the Ottawa-Gatineau region is experiencing significant turmoil, with a recent report highlighting a staggering 3.5 per cent decline in employment year-on-year, equating to approximately 32,000 jobs lost. This downturn comes as the federal government embarks on a workforce reduction initiative, raising concerns about the broader economic implications for the area, which has already been grappling with job market challenges.
A Steep Decline in Employment
In a troubling trend for the region, the Ottawa-Gatineau area has reported four consecutive months of job growth contraction, with reductions exceeding 5 per cent. This marks the most severe decline since record-keeping began in 2011, surpassing even the setbacks witnessed during the early pandemic phase. The situation mirrors the downturn in 2013, when the Harper administration cut 15,000 federal civil service jobs in a bid to rectify the budget deficit.
The recent decline in employment is not solely attributed to the impending federal job cuts, which aim to reduce the public sector workforce by 40,000 over the next five years. David Macdonald, a senior economist at the Canadian Centre for Policy Alternatives, noted that the current job losses are a precursor to the larger layoffs anticipated in the coming months. “The loss in employment we’re seeing is front-running the larger number of layoffs that are still to come,” he remarked.
Impact on Private Sector and Broader Economy
While the federal government’s workforce in the national capital has decreased for the first time in over a decade, the actual number of positions lost—around 1,500—represents less than 1 per cent of the federal workforce. However, this decline is compounded by cuts in contractors and non-governmental organisations reliant on federal funding. More than 16,000 job cuts have been earmarked across various federal departments, signalling a broader concern for the economy in the Ottawa-Gatineau region.
The chilling effect of these layoffs extends beyond those directly affected. “There are the people getting layoff notices, the people being told they might get laid off, and then there’s everybody else watching from the sidelines wondering if they’ll be next,” Macdonald added. This atmosphere of uncertainty is likely to lead to decreased consumer confidence, with individuals hesitant to make significant purchases or dining out.
Shifting Dynamics in the Job Market
The situation marks a pronounced turnaround for a city that had been buoyed by a burgeoning federal workforce throughout the pandemic. Alita Fabiano, director of communications at LRO Staffing, observed an uptick in résumés from federal employees seeking new opportunities. Despite this, many are biding their time until final decisions are made regarding layoffs.
For the first time since the pandemic’s onset, the private sector is becoming a key player in job growth for the Ottawa region, as public sector employment has reverted to levels seen six years ago. Sueling Ching, president and CEO of the Ottawa Board of Trade, noted that while public administration had expanded significantly, the current adjustments have rattled the market’s confidence. “We know public administration grew significantly over the last few years, so there was going to be some right-sizing, but it’s been a confidence shake in the market,” she explained.
Ching remains optimistic about the tech industry’s potential to absorb some displaced federal workers, as well as the opportunities arising from increased defence spending. Nonetheless, Macdonald cautioned that the defence sector’s ability to offset the looming layoffs may be limited.
Why it Matters
The unfolding job crisis in Ottawa-Gatineau is not just a local issue; it reflects broader economic vulnerabilities within Canada. As the federal government implements significant cuts, the repercussions are likely to ripple through the economy, impacting consumer behaviour and private sector growth. With an uncertain job market, residents may curtail spending, further exacerbating the challenges faced by local businesses. Understanding this dynamic is crucial for policymakers aiming to mitigate the economic fallout and support a resilient recovery.
