Canada’s parliamentary budget officer (PBO) estimates that the federal government spent $71.1 billion on wages and other personnel costs last year.

That would represent a $1.5-billion increase from the $69.6 billion spent on staff in 2023-24, according to a report by the independent body published on Thursday, and despite the public service shedding about 10,000 jobs.

The new analysis, which uses more frequent snapshots of federal staffing than previous reports, shows that if left unchecked, staffing costs are expected to rise to $76.2 billion by 2029-30 — two per cent higher than the amount the budget watchdog projected in March.

“As personnel expenses constitute the single largest component of federal operating spending, a more granular understanding is essential for effective parliamentary scrutiny,” the PBO report reads.

Higher federal spending on public servants would cumulatively increase the deficit by $8.5 billion over the next five years, the PBO says.

The latest PBO projection does not account for federal announcements made after May, such as pay hikes for Canadian Armed Forces members and the comprehensive expenditure review.

Between 2024 and 2025, the population of the federal public service shrank by 9,807 members, according to Treasury Board Secretariat data.

Yet, in a July report, the PBO said that the government was expecting an increase of more than 13,000 full-time equivalents compared to last year’s plans.

Full-time equivalents is a metric used to reflect the labour of one full-time worker or several part-time workers whose labour amounts to one full-time position.

The report shows that the average costs for full-time equivalents — mainly driven by salaries, wages and other standard compensation — is expected to jump to $139,400 by 2029-30.

But when pensions and other benefits are considered, the average cost jumps to more than $172,000 by the same fiscal year.

The number of full-time equivalents is expected to drop over the next two years, before reaching nearly 442,000 by 2029-30, said Marianne Laurin, one of the lead senior analysts behind the PBO report.

Expected budget cuts not included

Prime Minister Mark Carney promised during the last election campaign to balance the federal operational budget by reining in operational spending, so “Canada can invest more.”

In July, Finance Minister François-Philippe Champagne asked cabinet members for “ambitious savings proposals” that will lead to spending less on the day-to-day running of government.

Champagne wants to cut operational spending by 7.5 per cent for the 2026-27 fiscal year, 10 per cent the following year and 15 per cent in 2028-29.

“Our projection is presented as a baseline without those announcements,” Laurin said. “Once those announcements are taken into account, we can expect directionally that it could decrease.” 

But Sloane Mask, director of parliamentary relations and planning at the Office of the Parliamentary Budget Officer, said the cost of federal wages could still grow, depending on which public service jobs are eliminated.

“If lower-level positions are what are cut, then with the economic increases and inflation, the salary bill could increase,” Mask said. “It wouldn’t necessarily make as big of an impact on spending.”