Budget 2025: What It Means for Labour / Workforce Development
Alberta Budget 2025 raises income support 26% to $1.26B for tariff preparedness, invests $135M/yr in trades, and faces 7.4% unemployment.
Employment & Income Support
$1,255M
+$258M (+26%)
Unemployment Rate
7.4%
+0.4pp from 2024
Skilled Trades Programs
$135M/year
Addressing shortages
AISH
$1,641M
-$49M (delivery costs)
Sector Impact Summary
Alberta's labour market enters 2025-26 under significant stress. Unemployment is forecast to rise to 7.4%, up from 7.0% in 2024, with employment growth decelerating from 3.1% to 1.9%. The budget assumes U.S. tariffs of 15% on all goods except energy (10%), which are expected to weigh heaviest on goods-producing industries, including construction, manufacturing, and trade-dependent sectors. The fiscal plan explicitly adds $38 million to Employment and Income Support in anticipation of tariff-driven job losses.
Budget 2025 responds to this environment through two main channels: a massive 26% increase in Employment and Income Support to $1,255 million, and sustained investment of $135 million per year in skilled trades programs through Advanced Education. The first addresses immediate demand from a softening labour market; the second builds the skilled workforce Alberta will need when economic conditions recover.
The budget also introduces significant reforms for Albertans with disabilities. AISH funding stands at $1,641 million, with the new Alberta Disability Assistance Program launching in 2026 to better enable people with disabilities to work without losing income assistance or medical benefits. Disability services programs receive $1,710 million, an $86 million increase.
Total public sector compensation across all government sectors is forecast at $33.4 billion in 2025-26, with collective bargaining currently underway and the $4 billion contingency partly allocated for compensation implications. The outcome of these negotiations will significantly affect the fiscal trajectory of the budget.
Key Budget Measures
Employment and Income Support
The most striking workforce number in the budget is the $1,255 million for Employment and Income Support, a $258 million (26%) increase from the 2024-25 third quarter forecast, which itself had already increased $208 million from the initial Budget 2024 estimate. The increases are driven by significant population growth in late 2023 and early 2024 that was not fully anticipated, plus $38 million added specifically for potential U.S. tariff impacts. Expense is projected flat in 2026-27, then decreases to $1,189 million in 2027-28 as the tariff impact is assumed to moderate.
Assured Income for the Severely Handicapped (AISH)
AISH funding is $1,641 million in 2025-26, a net decrease of $49 million from the 2024-25 forecast. The decrease reflects differences in anticipated program delivery costs rather than benefit reductions. Client benefits remain unchanged, and disabled Albertans on AISH remain above the benchmark income the federal government is encouraging provinces to meet.
Alberta Disability Assistance Program
The new Alberta Disability Assistance Program, launching in 2026, represents a significant policy reform. It will enable people with disabilities to work without facing the steep benefit clawbacks that currently discourage employment. Income assistance and medical benefits are maintained while employment supports are expanded. AISH will continue to focus on those unable to work. Funding to prepare for the program launch is included in the AISH allocation.
Disability Services
Other disability services are budgeted at $1,710 million, an $86 million increase from 2024-25. Grants under the Persons with Developmental Disabilities program increase by $73 million, Family Support for Children with Disabilities expense increases by $9 million, and program support is up $4 million. These increases are driven by caseload growth.
Skilled Trades Programs
Through Advanced Education, $135 million per year is allocated for skilled trades programs, with another $271 million over the following two years. This includes apprenticeship delivery, trades grants, and adult learning initiatives. The investment targets the labour shortages in construction, health care, and technology that constrain Alberta's economic growth.
Skills and Training Programs
Through Jobs, Economy and Trade, $193 million over three years funds skills and training programs including workplace training, reskilling for displaced workers, and programs aligned with priority economic sectors.
Career Education
A three-year commitment of $102 million through the Education ministry supports K-12 career education programs, building the workforce development pipeline at the earliest stage.
Alberta is Calling Moving Bonus
An additional $11 million for the Alberta is Calling Moving Bonus program attracts talent from other provinces, addressing labour supply in sectors that remain tight despite overall employment softening.
Coal Workforce Transition
The Coal Workforce Transition Program receives $11 million through TIER funding in Jobs, Economy and Trade, supporting workers displaced by the phase-out of coal-fired electricity generation.
Funding Changes
| Category | 2024-25 Forecast | 2025-26 Estimate | Change |
|---|---|---|---|
| Employment and Income Support | $997M | $1,255M | +$258M (+26%) |
| AISH | $1,690M | $1,641M | -$49M (-2.9%) |
| Disability Services | $1,624M | $1,710M | +$86M (+5.3%) |
| Alberta at Work Initiative | - | - | -$15M |
Source: Fiscal Plan 2025-28, Expense, pp. 76, 79-80, 86.
The $258 million increase in income support is the largest single expenditure increase related to labour market conditions in the budget. The AISH decrease is a delivery cost adjustment, not a benefit reduction.
Capital Investment
Direct capital investment in workforce development is limited. The budget does not include a dedicated workforce infrastructure capital program. Relevant capital investments include:
- Post-secondary facilities for trades training: NAIT Advanced Skills Centre ($41 million), Olds College expansion ($50 million), SAIT Campus Centre ($30 million), Northwestern Polytechnic Skilled Trades Expansion ($1 million), and the Trades and Apprenticeship Promotional Plan Exploration Centre ($1 million)
- Child Care IT Capital and Space Creation: $18 million over three years (supporting workforce participation through child care access)
The skilled trades capital investments are captured in the Advanced Education capital plan ($1,529 million total over three years) and are detailed in the post-secondary sector analysis.
Risks
Rising Unemployment (High). The forecast of 7.4% unemployment represents a deteriorating labour market. Employment growth decelerating from 3.1% to 1.9%, with goods-producing industries facing the steepest declines, means more Albertans drawing on income support and fewer contributing to the tax base. If the tariff scenario worsens beyond the budget's baseline assumptions, unemployment could exceed projections.
Tariff-Driven Job Losses (High). U.S. tariffs are expected to weigh on manufacturing, construction, and trade-dependent sectors. The $38 million added to income support specifically for tariff impacts may prove insufficient if retaliatory measures escalate or tariffs are applied at rates higher than the assumed 15%. Alberta exported approximately $32 billion in manufacturing goods to the U.S. in 2024.
Income Support Demand Escalation (High). The 26% increase already reflects unanticipated population growth and tariff preparation. If economic conditions deteriorate beyond baseline assumptions, income support costs could escalate further, putting pressure on the fiscal plan. The budget projects flat spending in 2026-27 and a decline in 2027-28, which assumes economic recovery that is not guaranteed.
Collective Bargaining Outcomes (High). With $33.4 billion in total public sector compensation and collective bargaining underway across multiple sectors (health, education, public service), the financial outcome of negotiations will have a significant impact on government expenditure. The $4 billion contingency is partly allocated for this purpose, but substantial wage increases could consume a large portion of fiscal flexibility.
Labour Force Participation Decline (Medium). High unemployment is expected to discourage some workers from seeking employment, keeping the participation rate muted at around 69%. An aging population reinforces this trend. Lower participation means a smaller effective labour supply even as the population grows.
AISH Transition Risk (Medium). The Alberta Disability Assistance Program launching in 2026 introduces administrative transition risk. While benefits for existing AISH recipients remain unchanged, the new program's implementation must be carefully managed to avoid disruption for vulnerable Albertans.
Opportunities
Skilled Trades Investment Addressing Shortages. The $135 million annual investment in skilled trades is among the most clearly justified spending in the budget. Alberta faces documented shortages of tradespeople needed for the $26 billion capital plan (housing, health facilities, schools, roads, broadband). Expanding apprenticeship capacity creates direct links between training investment and economic output.
Alberta Disability Assistance Program. This reform has the potential to meaningfully expand the labour force by removing the disincentive for people with disabilities to work. Currently, AISH recipients face significant benefit reductions when they earn employment income, creating a poverty trap. The new program addresses this by maintaining benefits while providing employment supports, an approach that other jurisdictions are watching closely.
Population Growth Providing Workforce. Despite short-term labour market softening, continued population growth of 2.5% provides a larger workforce to support economic recovery when conditions improve. Alberta's population has grown by more than 200,000 in the past year, adding workers across age groups and skill levels.
Career Education Pipeline. The $102 million over three years for K-12 career education introduces workforce development at an earlier stage, connecting students to trades and technical careers before post-secondary. This long-term investment builds awareness and interest in career pathways that align with Alberta's economic needs.
Interest Rate Relief. Bank of Canada rate cuts to 3% will ease borrowing costs for businesses, potentially supporting hiring and business expansion as economic conditions stabilize. Lower rates also reduce mortgage stress for workers, supporting household financial stability.
What's Missing
Budget 2025 does not include a dedicated tariff adjustment or displaced worker program beyond the $38 million added to income support. There is no comprehensive workforce retraining strategy for workers displaced from manufacturing or trade-dependent sectors. Immigration and credential recognition reforms, which affect workforce supply, receive no specific budget allocation beyond the Immigration and Multiculturalism ministry's $42 million operating budget. A provincial minimum wage review or adjustment is not mentioned. Gig economy and non-standard worker protections are not addressed. Worker safety enforcement funding is not specifically highlighted. The intersection of AI and automation with workforce displacement receives no programmatic response.
Net Assessment
The labour and workforce sector faces the most challenging conditions in the budget, and the fiscal response reflects this. The 26% increase in Employment and Income Support is a significant commitment to maintaining the social safety net during an anticipated economic downturn driven by tariffs and weakening global demand. The $135 million annual skilled trades investment and $193 million in skills training provide meaningful upside for workers seeking to acquire in-demand capabilities.
The Alberta Disability Assistance Program represents genuine policy innovation that could expand labour force participation among a population historically excluded from employment by benefit design.
However, the assessment is negative overall because the macroeconomic conditions are the dominant factor. Rising unemployment, tariff uncertainty, weakening business investment, and decelerating employment growth create an environment where even significant budget increases are largely reactive, funding the consequences of economic stress rather than preventing it. The $38 million added for tariff impacts is a fraction of the potential cost if the trade conflict escalates.
The collective bargaining variable adds another layer of uncertainty. With $33.4 billion in public sector compensation and negotiations underway, the outcome will significantly shape whether the budget's expenditure projections hold. The labour market is where the tariff scenario, population growth, and fiscal constraint converge most acutely, making this one of the most consequential sectors to watch over the plan period.