ANALYSIS: PSAC Strikes at Ideal Time, but Can Ottawa Afford Union’s Demands?

PSAC workers and supporters walk a picket line outside a Service Canada office in Halifax on April 24, 2023. The Canadian Press/Darren Calabrese

News Analysis

Job action by the Public Service Alliance of Canada (PSAC) has come at an opportune time for the union, but some analysts and private sector advocates insist that neither the Treasury Board nor taxpayers can afford generous public pay hikes.

More than 155,000 federal public servants represented by PSAC have been on strike since April 19, affecting everything from passport processing to Employment Insurance claims, tax returns, and the agriculture sector.

David Leis, vice-president of the Frontier Centre for Public Policy, says PSAC chose an ideal time for job action against a vulnerable government, as it is a minority government beholden to NDP support, and also it can’t afford to have Canada Revenue Agency employees on strike given that it’s tax season.

“This union has picked a very good time to strike because they know who they’re dealing with,” he said in an interview.

In past decades, Leis was involved in negotiations with the Canadian Union of Public Employees and the Ontario Public Service Union, given his previous roles as a senior executive in the public service and with a large polytechnic institute. He is concerned the Liberal government has too many incentives to give in to PSAC.

“This will be a painful process because the Trudeau government has relied on the steady support, electorally, from people from these unions. They have exploded the size of the federal civil service. In fact, this is where over half the job growth in Canada in the last five years has been from,” Leis said.

“But from a political legitimacy point of view, this is a very difficult thing to assert before the public.”

Philip Cross, senior fellow at the Macdonald-Laurier Institute and a former chief financial analyst for Statistics Canada, says there are important economic reasons for the government to say no to PSAC.

“They’re sensitive to setting a precedent that will be very difficult for private-sector employers to follow. This is one of the biggest, maybe the most highly visible negotiation we’ve had since inflation turned up,” he told The Epoch Times.

“The government is signatory to an accord with the Bank of Canada to maintain inflation at 2 percent. If they start granting wages well above 2 percent, that’s going to set a very bad precedent, and it’s going to make the Bank of Canada’s job much harder.”

Negotiating Advantage

Cross is the third generation in his family to work in the civil service. He said that in his father’s time, public employees accepted lower pay in exchange for better benefits. He believes Ottawa should put pension changes on the table to gain concessions.

“I worked in the government 36 years. I know what motivates people, and for a lot of people it’s all about their pension. The rank and file would give anything to keep the current system, so the fact that government never uses that basically shows that this is civil servants negotiating with civil servants,” he said.

Dan Kelly, president of the Canadian Federation for Independent Business (CFIB), says PSAC workers are absorbing a higher cost of living, but so are those who pay their salary.

“I totally get it that the public sector is looking to see some wage growth, given the inflationary pressures that all Canadians are facing. But the challenge is that the money to pay for that comes from taxpaying Canadians who are often working with far less than the civil servant had to begin with,” Kelly said.

His organization is concerned about public service pay hikes impacting labour costs in the private sector as well, raising costs for small businesses.

The Epoch Times reached out to PSAC for comment but didn’t receive a reply.

The union has cited inflation as justification for its wage demands, saying on its website that its aim is “to protect workers from the rising cost of living and ensure PSAC members and their families don’t fall behind.”

In an open letter on April 24, Treasury Board President Mona Fortier said that of PSAC’s “over 570 demands,” an agreement has been reached on all but four of them: wage increases; making the option to work from home a negotiated right for some employees; a ban on contracting out; and a requirement that, in the event of workforce downsizing, decisions concerning which employees to retain would be based on seniority.

PSAC is demanding a raise of 13.5 percent over three years for workers, while the government is offering 9 percent over that period.

‘Mountains of Debt’

A recent survey by the CFIB found owners of its member businesses work 54 hours a week on average, and 59 hours weekly where labour shortages exist. Kelly said businesses need federal workers back on the job with wages taxpayers can afford.

“Only half of small businesses right now are back to normal sales. Most businesses are facing mountains of debt that they took on to survive COVID. The average is about $100,000 in additional debt,” Kelly said.

Steve Ambler, professor of economics at the University of Quebec at Montreal, said he sees no justification for the government hiring 31,000 more bureaucrats during the pandemic. He believes the government should institute a hiring freeze and restrain wage growth.

“The government’s negotiators should hammer home the Fraser Institute’s point about an 8.5 percent wage differential compared to the private sector. They should also dig up some statistics on how many applications there are for each newly created civil service job,” Ambler said.

“I’m willing to bet a lot of money that they could easily find applicants willing to work for a lot less. And the public sector union should be willing to make concessions to boost productivity.”

Krystle Wittevrongel, senior policy analyst at the Montreal Economic Institute, says burgeoning pay for bureaucrats and more of them don’t seem to be reflected in proportionately better services. Meanwhile, the dollars at stake boggle the mind.

“Everyday people can’t comprehend the value of debt and deficits that we have because the number is so high. It doesn’t make sense to a lot of people to say 1.8 trillion in gross debt. They’re like, I don’t even know what a trillion looks like,” Wittevrongel said in an interview.

“Over 30 percent of the federal public service is making over $100,000 a year, compared to about 10 percent of everyday Canadians. So there’s a disconnect.”