On November 4, the Carney government released its 2025 Federal Budget, outlining a plan to save money: eliminating 40,000 public service jobs by 2029.
The government calls this a “measured and strategic approach to improve public service productivity.” Let’s be clear about what that means: tens of thousands of people—real people—will lose their livelihoods.
And women will pay the highest price.
The Canadian Centre for Policy Alternatives analyzed the cuts and found that women, Indigenous, and racialized workers are disproportionately represented in the departments targeted for reductions. The budget isn’t trimming fat—it’s carving into the parts of government where equity-seeking groups have finally begun to gain ground.
But the damage doesn’t stop at job losses.
The Budget quietly weakens women’s pay equity rights
Canada’s Pay Equity Act, which came into force in 2021, was supposed to correct decades of wage discrimination. It requires public sector employers with 10 or more employees to develop and post a Pay Equity Plan, and to pay out compensation owed to workers who have been underpaid because of gender bias.
The core public administration—the largest federal employer—asked for an extension. It got one. The deadline to post its plan is August 31, 2027, with compensation owed due on September 1.
That means lump-sum payments, plus interest.
And the budget has now introduced a method to stop the clock and limit pay equity justice for thousands of workers.
The government plans to reduce the public service by 10 per cent—almost half of that by next March—using the Early Retirement Incentive (ERI). Eligible employees, many of them senior-level women, will be encouraged to retire early, with the implied threat of layoffs if they don’t.
On paper, it sounds generous: retire early and receive your full pension.
In reality, it’s a clever two-for-one austerity tactic.
- Women, including racialized and Indigenous women, nearing retirement—who are statistically more likely to benefit from pay equity adjustments—are nudged out before the Pay Equity Plan must be posted.
- Because pay equity payouts are calculated only up to an employee’s last day of work, the lump sum (and interest) owed to them shrinks dramatically.
The government saves money twice: now, through staffing cuts, and again in 2027, when the pay equity bill comes due—with far fewer women left to collect it.
This is structural inequality disguised as fiscal prudence
Women 50 and over already face a lifetime of wage gaps compounded by unpaid caregiving, interrupted career trajectories, and lower retirement savings. Encouraging them to exit before pay equity is implemented means:
- a longer retirement to finance with the same pension,
- a smaller pay equity settlement,
- and another missed opportunity to close the gender pension gap.
We are watching a historic pay equity effort get quietly sidestepped by a promise to “modernize government” and “improve efficiencies.”
This is not what leadership looks like
As the Founder & CEO of the Canadian Women’s Chamber of Commerce, I have spent years advocating for gender and economic equity. When the Pay Equity Act came into force, I felt cautiously optimistic. At last, Canada had a legal mechanism compelling employers—starting with the federal government—to fairly value women’s work.
I hoped that the public service would lead by example, setting a standard for the private sector to follow.
Instead, the government is poised to become the cautionary tale.
Budget cuts are always political choices. And when those choices consistently protect systems of privilege while short-changing the people who have waited the longest for fairness, we need to call it out.
Pay equity must protect every worker
Women shouldn’t be the collateral damage of fiscal tightening.
In 2024, the Trudeau government cut 10,000 public service jobs. Women who were laid off before September 1, 2024, will not be included in the pay equity settlements due on September 1, 2027.
The federal government must commit to honouring pay equity obligations for all affected employees—including those pushed out the door before 2027.
Employers were initially required to post their Pay Equity Plan by 2024. By extending that deadline and allowing settlements to be calculated only from a future date, the Pay Equity Commissioner unintentionally created a loophole: employers can reduce their payouts simply by laying off the workers owed the money.
To fix this, the settlement period should be set retroactively—for example, September 1, 2021, to August 31, 2024—ensuring that pay equity applies to everyone who earned it, not just those still on the payroll.
Anything less amounts to wage discrimination.
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