Public Servants Brace for Major Changes in 2026

Federal public servants in Canada are preparing for significant changes in 2026 as the government implements a series of workforce adjustments and new policy initiatives. Following a tumultuous 2025 that included the end of a government, an early election, and the appointment of Prime Minister Mark Carney, public servants can expect a wave of adjustments that may reshape the landscape of the public service.

Workforce Adjustments on the Horizon

As of January 2026, many public servants will receive workforce adjustment notices as part of Carney’s plan to reduce the size of the public service by tens of thousands of positions. Reports indicate that approximately 30,000 jobs could be on the chopping block, although the exact number of cuts anticipated for this year remains unclear. Hundreds of public servants have already begun receiving letters regarding their potential layoffs.

To mitigate the impact of these job cuts, the government has stated that it will facilitate alternative employment opportunities for affected workers. Earlier this month, around 68,000 public servants were informed of their eligibility for an early retirement incentive program, although it is uncertain how many will opt to leave voluntarily.

New Agencies and Leadership Changes

Despite the overall reduction in workforce, Carney’s government has established three new agencies designed to execute specific policy goals. These include the Major Projects Office, which will focus on expediting major resource projects and will be led by Dawn Farrell, former CEO of Trans Mountain Corporation. Another notable appointment is Ana Bailão, a former deputy mayor of Toronto, who will head the newly created Build Canada Homes agency, aimed at incentivizing housing development across the country. The Defence Investment Agency, under the leadership of Doug Guzman, will oversee defence procurement.

The staffing for the Major Projects Office is intended to be “flexible and agile,” with a focus on recruiting talent from both the public and private sectors. According to Pierre-Alain Bujold, spokesperson for the Privy Council Office, the objective is to attract top-level expertise to enhance project execution.

Union Negotiations and Collective Bargaining

In 2026, collective bargaining will also take center stage as two of the largest federal public service unions, the Professional Institute of the Public Service of Canada and the Canadian Association of Professional Employees, prepare to negotiate new agreements with the government. The Public Service Alliance of Canada (PSAC), the largest federal union, is pushing for a 4.75 percent annual raise for its members, alongside discussions on remote work policies, overtime, and the introduction of artificial intelligence in the public sector.

Artificial Intelligence Expansion and Concerns

Public servants can anticipate an increase in the number of entries in the government’s artificial intelligence (AI) register, which currently lists over 400 uses of AI systems across various institutions. The register is part of the federal AI strategy aimed at integrating advanced technology throughout the public service. Carney has indicated a commitment to expanding AI use, having signed a memorandum of understanding with Canadian AI firm Cohere to accelerate adoption.

While the government plans to enhance productivity through technology, there are growing concerns regarding the implications of AI, particularly in terms of linguistic rights and bias in automated translation tools such as GCTranslate.

Return to Office Mandates and ‘Buy Canadian’ Policy

As discussions about a full-time return to office for public servants circulate, Carney has indicated that negotiations with unions will take place in the coming weeks. The proposed plan may include various levels of return based on seniority and role, though public servants have expressed concerns over the condition of federal office spaces and public transit readiness.

Additionally, the government is implementing a ‘Buy Canadian’ policy designed to support domestic industries in response to U.S. tariffs. This initiative, which officially began at the end of 2025, prioritizes Canadian companies in government contracts exceeding $25 million and is expected to expand in 2026, reducing the minimum threshold to $5 million.

Overall, 2026 promises to be a year of significant transformation for Canada’s public service, with far-reaching implications for workers, policy implementation, and the future of public sector operations. As these changes unfold, public servants will need to stay informed and adaptable amidst a shifting landscape.