With the federal budget due to be released next week, just two days after Ontario releases its own fiscal blueprint, public sector workers are nervously awaiting what many expect to be massive cuts.
Federal Finance Minister Jim Flaherty could be looking at cuts worth as much as $8 billion in his March 29 budget as a major plank in his deficit-elimination plan, economists predict.
And Ontario, Canada's largest and most debt-ridden province, is also likely to slash expenses.
"Basically we've seen decades of a trend towards public sector workers being paid more, retiring earlier with better pensions," said Catherine Swift, president and CEO of the Canadian Federation of Independent Business.
That is changing, she said, as Canada's baby boomers enter retirement, and the nation's tax base begins to shrink. The costs that government has been able to take on in terms of the public sector are simply not sustainable going forward, she said.
"We've had a very big group of baby boomers in the economy able to pay at least temporarily for these kind of benefits and pay and so on," Swift told CTV's Canada AM.
"And that is now changing all over the world -- the baby boomers are starting to retire and we've got a smaller group of workers coming up under us who aren't going to provide the same level of tax dollars to government."
The result, she said, is that public sector workers are likely going to experience the recession-like conditions that the private sector already went through beginning in 2008 when the global economy began to stumble.
It isn't clear yet whether the cuts will be enacted on a short timeline, resulting in immediate layoffs, or spread out over a longer period, which would allow attrition to cover most of the reductions.
The budgets come at a time when tensions between labour unions and governments are close to the boiling point in many parts of Canada.
The Conservative government has intervened several times in the past year in labour disputes at Air Canada -- saying work stoppages would inconvenience travellers and hurt the economy, and weren't acceptable.
B.C. teachers were also recently banned from enacting a work stoppage when the provincial government passed legislation that brings in a mediator, suspends job action and imposes fines of $1 million per day if teachers do walk off the job.
In Halifax, Metro Transit drivers reached a collective agreement last week but only after a month-and-a-half-long labour dispute with the city that forced riders to find other means of getting around.
Swift suggested the B.C. Teachers Federation represents an entitled and outdated way of thinking that simply isn't sustainable anymore.
"These are people who do very, very well, work nine months of the year. Nobody's blaming an individual for taking a raise or whatever but none of these people faced the recession that hit the private sector back in 2008," she said.
Swift noted that as the private sector suffered during the recession, the public sector was largely immune to cuts because governments ramped up spending to stimulate the economy.
Sid Ryan, president of the Canadian Federation of Labour, said unionized workers are simply fighting to maintain fair wages and job security, as governments try to strip them away.
When the federal government steps in and intervenes in the collective bargaining process -- as it did with Air Canada -- the system falls apart, he said.
"It's unheard of for the government to step in and prop up one industry," Ryan told Canada AM.
"Eventually people are demoralized, people get fatigued and get stressed, people call in sick and the airline is still having its services disrupted so eventually this will continue to manifest itself."
Swift, however, said Canadians are "fed up" with unions, especially in the public sector, and will be expecting government budgets next week that cut back on public sector spending.
