PSAC strike could be a ‘trendsetter’ for wages this year, experts say. Here’s why

Click to play video: 'Federal workers’ strike reignites remote work debate'
Federal workers’ strike reignites remote work debate
WATCH: Federal workers’ strike reignites remote work debate – Apr 20, 2023

The head of the union representing public sector workers who are striking for better wages and working conditions couldn’t have been clearer in his message to Canadians earlier this week: The union is not just fighting for public servants, it’s fighting for you.

“When the federal government represses its wages for its own employees, what they’re doing is repressing wages for workers right across the country: unionized workers, non-unionized workers, private sector, public sector,” Chris Aylward, national president of the Public Service Alliance of Canada (PSAC), said in a speech Monday.

“We’re asking the government to come to the table and set that bar for all working people in this country to make sure that no workers get left behind.”

Click to play video: 'Treasury board president says PSAC must be ready to compromise: ‘We cannot write a blank cheque’'
Treasury board president says PSAC must be ready to compromise: ‘We cannot write a blank cheque’

But how much will negotiations between Ottawa and public servants ultimately impact other Canadian workers, many of whom are struggling to make ends meet after a year of rampant inflation and rising interest rates?

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Some experts say the ongoing labour dispute could indeed set the tone for negotiations in your own workplace, especially for those looking for more flexibility in their job.

Here’s what to know.

Will the strike have an impact beyond the public sector and unions?

Thousands of public-service workers began their strike Wednesday morning after the federal government and the PSAC, representing some 155,000 federal workers up for bargaining, couldn’t reach a deal in negotiations that began almost two years ago.

Armine Yalnizyan, an economist and Atkinson Fellow for the Future of Workers, tells Global News that it’s likely labour leaders, employers and workers alike are keeping a close eye on how negotiations between PSAC and the federal government resolve.

“This is definitely a trendsetter set of negotiations,” she tells Global News.

These very public wage negotiations come as inflation cooled to 4.3 per cent in March, but only after a year of elevated price pressures that saw the rising cost of living peak at 8.1 per cent last June. Average hourly wages last month rose 5.3 per cent year-over-year, but for most of the past year, pay hikes regularly lagged inflation.

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PSAC has pushed for a 13.5 per cent retroactive increase in wages over three years, with the union saying the rate of inflation was 13.8 per cent over the same period. The Treasury Board has countered with a proposal for wage increases of nine per cent over three years.

Click to play video: 'PSAC strike: Trudeau government facing political headache'
PSAC strike: Trudeau government facing political headache

Union militancy, which includes labour disputes, strike votes and strikes, has been more common amid persistently high inflation, said Larry Savage, a professor in the labour studies department at Brock University.

And it can be contagious, he said, especially if a strike manages to deliver higher wages and better working conditions.

“A successful strike by PSAC members can have a domino effect,” he told The Canadian Press this week.

He said the striking workers have been without a contract for around two years, meaning as inflation climbed, they saw zero increases in their wages.

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“I think this clearly signals that they’re fed up, and now they’re turning up the heat.”

Many public servants are seeking raises not only in hopes of keeping pace with the rising cost of living, but to catch up with what they say are years of being underpaid.

Yalnizyan says workers at the Canada Revenue Agency (CRA), whose union’s ask is comparatively larger than that of PSAC’s, have particularly seen their wage growth lag behind.

She says that the resolution to this strike will be “very telling” for how much bargaining power Canadians in the private sector can expect to have today after a year of high inflation.

“If we cannot preserve the purchasing power of people that earn $20 an hour in the public sector, we have no hope for fairness in the private sector, I would think,” she says.

Michael French, national director at recruitment firm Robert Half, agrees that now is a great time to ask for a raise as many employers are desperate to hang onto their talent in a competitive job market.

The country’s unemployment rate has held steady at 5.0 per cent, just above record lows, through the first quarter of 2023.

“If you are someone who does need to ask for a raise, I would tell you there is no better time than now to do it,” he says.

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“Don’t be afraid to say, ‘Prices have gone up across the board, wages have gone up. It’s about time — maybe I need to have an adjustment as well.’”

Don't be afraid to ask for more than wages

Beyond wages, PSAC is also looking to secure protections for teleworking agreements for its workers in the post-pandemic environment.

Yalnizyan says this element is a novel one for labour negotiations that Canadians who are keen on flexibility in their working arrangements might want to watch closely.

There are financial elements to remote work protections, she notes — saving money on commuting, coffees and lunches among them — but what might matter just as much to some workers is the control over when and how they work.

“The outcome will have something to do with not only money but time and autonomy over your time,” Yalnizyan says. “And I think that’s going to be a growing story in the labour market.”

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Click to play video: 'Union won’t compromise on wage demands ‘to get remote work,’ Aylward says'
Union won’t compromise on wage demands ‘to get remote work,’ Aylward says

French notes that for workers who have pushed for a raise and been told there’s simply no money for it in their organization, asks for flexibility like this can be folded into negotiations.

A Robert Half survey from February found that flexibility in working conditions, such as non-traditional working hours and remote or hybrid options, can be worth a trade-off of as much as 16 per cent of a worker’s starting salary.

“You may see some companies or some organizations that just don’t have more money to spend and that seem to start pulling out different tools you have in your toolbox,” he says.

“Well, what else is available? Can I get an extra week of vacation? Is there some flexibility I can get? … There are other things to ask for.”

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Will higher wages push up inflation?

An ask for higher wages just as inflation is coming down pushes back against some messaging from the Bank of Canada.

The central bank raised its benchmark interest rate rapidly over the past year to tame price pressures but has lately adopted a pause while it waits to see if inflation will continue to decline as the economy slows.

One possible thorn in the central bank’s efforts to restore inflation to its two per cent target has been services inflation, which is underpinned by the wages paid in these sectors.

Bank of Canada governor Tiff Macklem earned the ire of some labour leaders last summer when he told a group of business owners not to bake high inflation into their long-term wage contracts, an effort to control inflation expectations within the private sector.

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While he said he would leave wage negotiations to employees and their employers, Macklem received backlash from union leadership who saw his comments as undercutting workers’ ability to bid up their wages.

When the Bank of Canada announced it would hold rates steady last week, Macklem said that wage growth still needs to “moderate” before inflation is back under control.

Click to play video: 'Canadian job market beginning to cool, Bank of Canada governor says'
Canadian job market beginning to cool, Bank of Canada governor says

Without an associated increase in productivity, wage growth sees businesses pass on their higher labour costs through to their prices, in turn fuelling inflation, he told the Senate committee on banking and the economy on Thursday.

“We want an economy where wages are going up, where productivity is going up. Productivity growth pays for wage increases,” he said.

“This is a really big moment for testing the assertion by the Bank of Canada, which we have heard since the summer: Don’t try and catch up to rising costs, because if you do, you’ll bake in inflation,” Yalnizyan says.

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But given that Canada’s low unemployment rate and the high demand for workers, she argues now is the best time for workers to push up their wages despite what the central bank has argued.

“Wages normally grow in these kinds of conditions when labour markets are so tight,” Yalnizyan says.

“So the Bank of Canada saying your wages shouldn’t grow is a little bit tone deaf for the market conditions we are in.”

— with files from Global News’ Kyle Benning, Aaron D’Andrea and The Canadian Press

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