Federal budget 2025: Mercer’s response 

On November 4, 2025, the federal government releases “Budget 2025: Canada Strong” 

The 2025 federal budget arrives at a pivotal time for Canada’s economy. With growth slowing and productivity challenges mounting, the government has shifted focus from policy ambition to project execution. This year’s federal budget introduces important measures to mobilize private capital, modernize the workforce, and sustain confidence in Canada’s long-term competitiveness.

Institutional investments to realize nation-building projects

The budget should be a positive driver for long-term growth. The federal government’s commitment to increasing capital spending is encouraging—not only should this boost short-term activity, but it should also strengthen Canada’s productivity over time.

Institutional investors have faced pressure to invest more domestically but have awaited clear opportunities. Budget 2025 represents a step in the right direction, with the $51-billion Build Communities Strong Fund and a $10-billion increase to the Canada Infrastructure Bank’s capital envelope creating viable pathways for private and pension capital. New opportunities in Canadian airports, ports, and Arctic and energy-related infrastructure could further broaden the real-asset landscape.

These measures align with Mercer’s position that mechanisms to attract institutional investment into domestic infrastructure and real assets should be incentive-driven, not the result of government regulation. As highlighted in the 2025 Mercer CFA Institute Global Pension Index, incentive-based approaches encourage capital deployment while enabling institutional investors to prioritize their fiduciary duties when making investment decisions.

Workforce optimization, productivity and AI

The proposed creation of an Office of Digital Transformation and new procurement measures for made-in-Canada sovereign artificial intelligence (AI) tools signal a broader shift toward efficiency, reskilling, and responsible AI adoption across the public sector. This mirrors the challenges and opportunities facing private employers as they modernize their own workforces.

Mercer’s research and advisory services in workforce transformation, AI-readiness, and organizational design show that technology value is maximized when paired with investments in people and how they work. Beyond specific skills development, Canadian employees must cultivate a digital mindset built on continuous learning and adaptability. Our recent insight on the digital employee experience explores how organizations can optimize human performance through technology.

Support for youth employment and workforce readiness

Mercer welcomes renewed investments under the Youth Employment and Skills Strategy, which aim to prepare the next generation of leaders for an evolving economy. With youth unemployment elevated, it is essential that young Canadians keep learning new skills enabling them to be agile and evolve as the demands of the workforce keep changing.

Developing a skilled, future-ready workforce is both a national priority and a strategic workforce challenge. To this end, Mercer partners with employers to design career, learning, and rewards programs that build long-term capability. Our latest Global Talent Trends Report shows that employee upskilling is the number one priority for organizations looking to improve productivity.

Awaiting clarity on pharmacare and dental care

Budget 2025 provides no new funding for National Pharmacare or the Canadian Dental Care Plan, though previously earmarked funds remain committed. Mercer is pleased to see continued support for uninsured individuals but notes that with no clear additional funding or public program development, private plan sponsors will continue to feel pressure to close gaps in health accessibility and affordability. Limited progress in public funding underscores the need to ensure private benefit programs are strategically focused and sustainably managed. A recent insight from Mercer outlined how employers can close the gaps in benefits to provide better support to employees.

The road ahead

This budget reflects a pragmatic shift toward implementation—mobilizing capital, improving productivity, and strengthening Canada’s human capital. We’re encouraged by the signal this sends, but execution will be critical. As organizations navigate these transitions, Mercer will continue to provide guidance on investment strategy, workforce transformation, and employee wellbeing to help clients thrive in Canada’s evolving economic landscape.