Alberta’s government tabled a budget Feb. 26 that commits nearly $38 billion to public sector compensation and pledges to hire thousands of new teachers, nurses and support workers over the next three years, even as the province projects a $9.4-billion deficit driven by falling oil revenues and rapid population growth.
Despite the shortfall, the government says it will not cut programs or raise personal income taxes, choosing instead to absorb the fiscal hit while protecting front-line services.
“Competitive wages aren’t just about labour relations,” said Nate Horner, Alberta’s Minister of Finance and President of Treasury Board. “They are about service delivery.”
Public sector compensation
The budget sets aside just under $38 billion in 2026-27 for public sector compensation — roughly 54 per cent of the total operating budget. That envelope covers workers in health care, education, post-secondary institutions and the broader public service, including more than 250,000 nurses, teachers and paramedics.
The government says competitive wages are a service-delivery issue, not merely a labour-relations one. No specific wage increases were announced, but the compensation figure represents an increase of roughly $3.4 billion from the prior-year operating expense forecast.
Workforce hiring targets
School boards will receive funding to hire at least 3,000 new teachers and 1,500 new educational assistants over three years to address record enrolment growth. More than 80,000 students joined the Alberta education system in the past three years alone.
In health care, the budget includes $6.9 billion in operating expense for physician compensation — a 6.5 per cent increase from the prior year — along with $87 million over three years to support nurse practitioners. The government also plans to expand cancer care capacity by hiring more oncologists.
Skills training and workforce development
For private-sector employers, the budget allocates $115 million in 2026-27 for skills and trades training programs. Career and Employment Services receives $246 million, including an $80-million increase, to help more people find and keep work.
Apprenticeship enrolment in skilled trades has reached a record high of more than 78,000, according to the budget documents. The Apprenticeship Learning Grant receives $96 million to support growing demand for training seats.
Post-secondary operations get $2.2 billion in 2026-27, up $115 million from the prior year, with an additional $148 million over three years to expand seats in high-demand fields including engineering, health care and education.
Child care
The budget continues to fund affordable child care at $2.1 billion in 2026-27. The government frames the spending as a workforce participation measure, saying subsidized child care allows more parents to pursue training, education and employment.
Mental health and addiction supports
Budget 2026 commits $2 billion to mental health and addiction services, including $1.7 billion for Recovery Alberta. The budget also provides $30 million toward expanding mental health classrooms and clinical supports for students with complex needs, and $26 million to fund 90 additional beds within the mental health and addiction system.
These investments may reduce long-term workplace impacts from untreated mental health and substance use conditions, which are among the leading drivers of absenteeism and disability claims in Canada.
Youth employment
The budget sets aside $20 million over three years for a Youth Employment Incentive designed to connect young Albertans to job opportunities. No further details on employer eligibility or incentive structure were included in the budget documents released Feb. 26.
Economic outlook and labour market
Alberta’s real GDP growth is forecast to slow to 1.8 per cent in 2026, down from an estimated 2.2 per cent in 2025, largely due to U.S. tariffs and lower oil prices. Population growth is expected to ease sharply to 1.1 per cent in 2026, down from 2.5 per cent in 2025 and a record 4.7 per cent in 2024.
The budget says slower population growth will ease pressure on the labour market and make it easier for Albertans to find work. Inflation is forecast to remain near two per cent. The government also plans a provincial referendum on Oct. 19, 2026, asking Albertans how they want the province to manage population growth to keep services sustainable.
