2025 Summer Update – Sunshine, Slowdowns and Shifting Expectations

As someone who drives downtown every day to the office, I always enjoy my 35-45 minute drive to/from Navan (go Grads!). Before anyone asks why the East versus West, we never have to drive directly into that sun, and that is why we went East! Anyway, my drive gives me time for reflection, a chance to sing along to some Britpop classics, or simply open the sunroof and enjoy the groans of frustration with my fellow commuters. Come July, that journey is less than 20 minutes and a clear reminder of how Ottawa enjoys one of the most dramatic work-life balances of any city on this planet. 

You would be forgiven for not believing that, however, given the ongoing tussle between employers and employees around productivity and being back in the office. The fact of the matter is, if you work in Ottawa, you probably do fewer hours a week than any other employee in a G7 capital and have significantly more flexibility and rewards. Ottawa is an incredible place to live, to work, and to play, yet we can’t have any of those without the work part. I see this lack of perspective as the largest singular threat to our local economy as we look to the horizon and the disruptions we have coming. 

Unemployment is up over 6% here in Ottawa, and we are about to see the largest reduction of federal workers ever in the NCR. Our institutions are already making significant cuts, and rumour has it, the worst of those are yet to be announced. It seems, though, this reality is not appreciated, given the number of labour disputes, complaints, and entitlements we are seeing right now from our employee base. If we can’t find a healthy balance between employer needs and employee wants, we stand to lose even more corporate roles from our city, as the large national and international firms that service the government consider their employment numbers in the region. 

As Ottawa’s search firm, we are privileged to work across a variety of industries in the city and continue to see some specific realities in the local labour market: 

• Compensation Plateau: Base compensation expectations and offers are flatlining and even down in a lot of senior roles from a year ago.
• Bonus Over Base: Shifting to more bonus-based models to protect against economic headwinds.
• Applicant Surge: Applicant volumes are skyrocketing, including a significant spike in national and international interest in Ottawa-based roles, causing more pressure on local resources with higher-than-market compensation expectations.
• Consultants Returning: Consultants seeking a move back into full-time permanent work as flexible opportunities dry up.
• Proximity Preference: Employers are deliberately hiring people who are close to their office, even if the return-to-office mandate is not fully implemented. These are tied to plans to increase time on-site, generally for most employers.
• Performance Pressure: Less patience from employers when it comes to employee productivity levels, demonstrating a belief that they can replace someone now if they have to.

As a summer update, you may have been hoping for more sunshine and roses, but we are in a period where we all, us included, need to do more to lift up our city. Charities and foundations are struggling to meet the demands on them and need your support. We are doing our part with the upcoming Sunset Social and continue to support as many causes as we can. Special shout-out to Brenda for her efforts with The Mission and their recent partnership with vertical farming company Growcer! 

In addition, we all share the burden of economic development for our city, and I urge you to take a look at the work Sueling and her team at Ottawa Board of Trade(OBOT) are doing (check it out at www.ottawabot.ca). In particular, the pillar partner program gives your business the chance to support some impressive work on city building, energy, defense, and downtown revitalization. 

What We Are Watching 

• Talent Absorption: When there is a strong supply of talent, employers have the benefit of choice and the comfort of knowing they can hire slow but fire fast. When you consider that large swathes of the talent now entering the labour market will be coming from public service or institutional environments, it will invariably create challenges. People will be asked to adjust quickly to new work styles, likely for a lower compensation package with fewer perks, higher expectations around performance, with less clarity in their role and function. Since a lot of the companies hiring will be slow to medium-sized businesses, they are likely underrepresented in HR and so don’t have the most sophisticated onboarding and integration programs. This means that even the most experienced people will be faced with issues absorbing talent into their organization. Unfortunately, in this economy, patience is in short supply with most businesses, meaning a large emphasis on adjustment will fall to the employee. 
• Defense & Security: While our traditional tech sector stagnates in Ottawa, we have a massive competitive advantage for the spending levels announced by Carney’s government. We are the meeting point for the defense industry and the Crown and must capitalize on this opportunity. We have established businesses like Calian doubling down on their defense sector and emerging businesses securing significant contracts through the ITB and SMB requirements built into major procurement projects. Ottawa can become Canada’s defense hub, and it is great to see the work Invest Ottawa and OBOT is putting into this. 
• Manufacturing: As a region, Eastern Ontario has maintained some terrific manufacturing businesses, with many seeing a bump in demand given the political situation in the US. We have had the chance to handle several senior leadership roles across a number of sectors and, like defense, believe that manufacturing could be a key ingredient in our region’s prosperity. From the highly technical work to precision parts, there are firms from Petawawa to Plantagenet and down to Prescott all poised for growth. 

Our Outlook

We have continued to say that we felt it would get worse before it gets better, with the Feds being the last hammer to fall before a recovery can happen. The sooner the workforce adjustments at the Federal level are done, the better from our perspective for everyone in the city. Ottawa as a whole can then focus on rebounding and becoming a more efficient and productive city with multiple sectors driving our economy, rather than the current overreliance on tourism and technology.

The challenges in the medium term caused by the loss of international students will certainly be felt as we fight to attract emerging talent without ties to the City, but until unemployment peaks and then drops back down to a healthy 5%, that issue won’t garner much attention. 2025 will continue to be a mixed year with strength in defense and manufacturing, but continued turmoil for tech, professional services, and the public service. Non-profits will continue to be financially constrained but likely benefit from the volume of talent entering the labour force. 

Our early impressions of 2026 will be a recruitment market driven by employers struggling to identify talent due to the sheer volume of candidates. The new job posting legislation will also come into effect in the New Year, causing some employers to avoid direct advertising of roles and rely instead on direct targeting of talent themselves, or through third parties.