Alberta Budget 2025: Public Sector Union Stakeholder Brief

Executive Summary

Alberta Budget 2025 projects total public sector compensation at $26.5 billion in 2025-26, growing to $27.7 billion by 2027-28 -- a 3.2% increase in the first year and 7.8% over three years. However, operating expense growth is capped at 3.6%, below the combined population growth (2.5%) plus inflation (2.6%) benchmark of 5.1%. The $4 billion contingency, doubled from $2 billion, explicitly includes provisions for collective bargaining settlements, but also competes with tariff response and other emerging priorities. The health system refocus into four new agencies affects thousands of health sector workers, and the program review process has already identified savings that may translate to staffing changes. For public sector unions, the budget establishes the fiscal framework within which bargaining will occur -- a framework of fiscal restraint tempered by the recognition that most collective agreements have expired and compensation pressures are substantial.

Top 5 Relevant Budget Measures

1. Total Public Sector Compensation: $26.5 billion in 2025-26 -- Comprising $10.5 billion in health entities, $7.5 billion in school jurisdictions, $4.2 billion in post-secondary institutions, $3.5 billion in Alberta public service departments, and $896 million in other government agencies. Physician compensation adds $6.9 billion, bringing the total to $33.4 billion including physicians.

2. Contingency Fund: $4 billion, partly for collective bargaining -- The fiscal plan explicitly states the contingency is increased for unforeseen tariff implications and compensation expense for collective bargaining currently underway. The contingency drops to $3.3 billion in 2026-27 (tariff needs lessening) then rises to $3.7 billion in 2027-28 as compensation pressures compound.

Operating Expense Ceiling: 3.6% growth -- Operating expense grows from $62.1 billion (2024-25 forecast) to $64.3 billion in 2025-26, $64.8 billion in 2026-27, and $66.5 billion in 2027-28. The legislated ceiling limits growth to the prior year's population plus inflation, but the actual growth rate of 3.6% is below the 5.1% ceiling in 2025-26.

Health System Refocus: 4 new agencies -- Recovery Alberta, Primary Care Alberta, Acute Care Alberta, and Assisted Living Alberta replace the Alberta Health Services structure. Health entity compensation grows from $10.3 billion to $10.8 billion over three years. An Integration Council will coordinate the agencies.

Program Review: savings and re-focussing -- Budget 2025 implements savings from the 2024-25 program review, with the process continuing in 2025-26. Identified savings include reductions in multiple ministries that could affect staffing levels, program delivery, and working conditions.

Risks

The operating expense ceiling framework is the most significant structural constraint on bargaining outcomes. By capping operating growth below population plus inflation, the government creates a fiscal environment where wage increases must come at the expense of other spending or from the contingency fund. The 3.6% operating growth in 2025-26 falls short of the 5.1% population-plus-inflation benchmark, meaning that in real per-capita terms, the operating budget is declining.

The health system refocus creates direct workforce risk for health sector union members. The creation of four new agencies from the existing Alberta Health Services structure involves organizational restructuring, management reorganization, and potential reassignment of workers between agencies. During transition periods, classification changes, reporting structure modifications, and workplace uncertainty affect member morale and working conditions.

The $4 billion contingency is not exclusively allocated to collective bargaining. It must also cover tariff response, natural disasters, and other emerging priorities. If tariff impacts consume a significant portion of the contingency, less remains available for compensation settlements. The government retains discretion over contingency allocation, creating uncertainty about what fiscal room actually exists for bargaining.

Program review reductions, while often framed as efficiency measures, may translate to staffing reductions, increased workloads for remaining workers, or elimination of programs that members deliver. The explicit statement that program review will continue in 2025-26 means ongoing uncertainty about job security in affected areas.

The three-year deficit trajectory ($5.2 billion, $2.4 billion, $2.0 billion) will be used as context in bargaining, with the government likely arguing that fiscal responsibility requires modest wage settlements. The deficit environment constrains the political space for significant compensation increases.

Opportunities

The $4 billion contingency explicitly includes collective bargaining provisions. This represents the government's acknowledgment that most agreements have expired and significant compensation adjustments are necessary. The contingency profile -- $4 billion declining to $3.3 billion then rising to $3.7 billion -- suggests the government expects the largest bargaining costs in 2025-26.

Total compensation growing to $27.7 billion by 2027-28 (7.8% over three years) indicates that the government has budgeted for meaningful wage growth. While much of this is driven by employment growth (new positions for population-driven service demand), it also reflects anticipated bargaining outcomes.

Health entity compensation growing from $10.3 billion to $10.8 billion over three years, combined with physician compensation growing from $6.9 billion to $8.1 billion, demonstrates that the health sector receives the largest compensation increases. Unions representing health workers can leverage this allocation in negotiations.

Education enrolment growth funding of $814 million over three years creates demand for teachers, educational assistants, and support staff that strengthens bargaining positions for education sector unions. The revised funding formula and increases in specialized learning support positions further support employment growth.

The Employment and Income Support increase of 26% ($1,255 million) and disability services growth ($1,710 million) signal front-line staffing needs that unions can use to advocate for adequate staffing ratios and workload management.

The Compassionate Intervention Act and two new specialized addiction and mental health facilities create new positions for mental health and addiction workers, expanding the workforce in a high-demand area.

Likely Government Intent

The government is approaching collective bargaining with a fiscal framework designed to limit total compensation growth while acknowledging that expired agreements must be settled. The contingency structure provides negotiating room without committing to specific settlement parameters in the budget document.

The government's emphasis on program review and efficiency signals an intent to offset compensation increases with operational savings, maintaining the total operating expense within the legislated ceiling. The message to unions is clear: the government will negotiate, but within a fiscal envelope defined by the operating expense ceiling and contingency fund.

The health system refocus is intended to create organizational efficiencies that, in the government's view, will enable better service delivery at manageable cost. Unions should expect the government to argue that restructuring savings justify modest compensation increases rather than the reverse.

Immediate Questions to Ask Ministries

1. What portion of the $4 billion contingency is designated for collective bargaining settlements versus tariff response? Is there a formal allocation between these categories?

2. What are the workforce transition plans for the health system refocus? How will existing collective agreements be honoured during agency restructuring?

3. What specific staffing implications emerge from the program review? Which ministries and programs face headcount reductions?

4. How does the government reconcile operating expense growth below population plus inflation with the need for front-line service expansion?

5. What is the timeline for concluding collective agreements across major bargaining units?

48-Hour Action Checklist

• Analyze the $4 billion contingency allocation between collective bargaining and tariff response provisions
• Assess health system refocus implications for member employment, classification, and working conditions
• Prepare a public statement on the operating expense ceiling relative to population plus inflation
• Review physician compensation growth ($6.9 billion to $8.1 billion) for comparator data in negotiations
• Brief local leadership on the budget fiscal context for collective bargaining strategy development

30-Day Monitoring Checklist

• Submit formal bargaining positions informed by the budget's fiscal capacity analysis
• Engage with health agencies on workforce transition plans for the four-agency restructuring
• Monitor program review outcomes for staffing implications in affected ministries and agencies
• Track Employment and Income Support caseload growth data for front-line staffing advocacy
• Coordinate with other public sector unions on common bargaining positions and information sharing
• Assess the Compassionate Intervention Act and new mental health facility staffing requirements
• Monitor contingency fund allocation decisions throughout the fiscal year

Suggested Message Frames

Frame 1 -- Real Cut: "Operating spending below population plus inflation is a real cut to public services. Alberta's workers keep this province running, and they deserve compensation that reflects the cost of living and the value of their work."

Frame 2 -- Fair Bargaining: "The $4 billion contingency includes provisions for fair collective agreements. We expect the government to bargain in good faith and deliver compensation that respects the essential role of public servants."

Frame 3 -- Health Workers: "Health system refocus affects thousands of workers. Restructuring must respect collective agreements, protect jobs, and maintain working conditions that deliver quality care to Albertans."

Opposition Narratives to Anticipate

Government supporters will argue that public sector compensation at $26.5 billion is generous and that wage restraint is necessary during a deficit period. Fiscal hawks will frame any significant wage settlement as irresponsible given the $5.2 billion deficit. Media will compare public sector compensation growth to private sector wage trends, which may be lower due to tariff-related economic weakness. Management-side advocates will argue that the health system refocus creates efficiencies that should moderate compensation demands.

Public sector unions should counter with data on inflation erosion of real wages, comparisons to private sector compensation for equivalent roles, front-line service delivery impacts of understaffing, and the essential nature of public services during economic uncertainty. The physician compensation trajectory ($6.9 billion to $8.1 billion, a 17% increase) provides a powerful comparator for other health sector workers.

Data Points to Monitor

• Contingency fund allocation announcements and remaining balance throughout the fiscal year
• Health system refocus implementation milestones and workforce transition announcements
• Program review decisions and staffing impact assessments
• Public sector compensation settlement announcements in other provinces for comparison
• Consumer Price Index data for Alberta as cost-of-living benchmark for bargaining
• Employment and Income Support caseload data as indicator of front-line service demand
• Health entity and school jurisdiction budget allocation details
• Physician compensation agreement terms for comparator analysis