Public spending is up, but where are the jobs? Staffing firms must look beyond Ottawa’s payroll cuts

The shift in public sector spending

At first glance, recent headlines appear contradictory. On one hand, staffing firms have watched federal government contracts—particularly in tech staffing—dry up. Ottawa’s slimming civil service and cost-cutting procurement reviews have dented what was once a reliable pipeline of temporary assignments and IT mandates. Yet on the other hand, latest analysis point to a clear rise in public sector spending—one that’s fuelling economic momentum and contributing to surprising resilience in Canada’s job market.

So what gives?

The answer lies not in contradiction, but in transformation. While traditional federal staffing opportunities are narrowing, new windows are opening elsewhere in the public domain—just not always in the same places, or under the same names.

In recent years, the federal government has trimmed the number of employees on its payroll and scrutinized spending on external consultants, including staffing agencies. Departments such as Shared Services Canada and Immigration, Refugees and Citizenship Canada have notably reduced tech mandates. A Treasury Board crackdown on outsourcing has meant fewer federal RFPs for IT talent and compliance contractors.

Yet at the same time, provincial and municipal governments are ramping up spending, especially in education, healthcare, infrastructure, and clean energy. Public sector outlays are playing an outsized role in buffering the economy against sluggish exports and waning private investment. In essence, Ottawa may be stepping back, but the provinces are stepping up.

Staffing firms traditionally rooted in federal supply chains, particularly in the National Capital Region, may find fewer immediate prospects with crown corporations or ministries. But opportunities are increasingly found in distributed forms of public spending: school boards investing in digital learning, hospitals modernizing systems, municipal climate adaptation projects requiring engineering and project management talent.

This shift represents a structural rebalancing. The public sector is no longer a monolith headquartered in Ottawa—it’s a mosaic of decentralized employers across Canada’s urban and rural fabric. For staffing firms, this means pivoting from bidding on large federal contracts to building local relationships with regional agencies, health networks, and educational consortia.

Opportunities in Public-Funded Private Projects

Another often-overlooked consequence of rising public spending is its multiplier effect on the private sector. Government grants and subsidies—especially in housing, green tech, and infrastructure—are leading to job creation in construction, advanced manufacturing, and clean energy firms that receive public dollars but operate as private employers.

For example, recent federal-provincial agreements on EV battery plants in Ontario or wind energy projects in Alberta are creating temporary and permanent hiring waves. Staffing agencies that can supply logistics coordinators, environmental technicians, or safety officers in these sectors are well positioned to ride the momentum—even if the checks are no longer signed by the federal government directly.

The Strategic Shift for Staffing Firms