The workers united
PSAC has said their strike is partially about setting a higher standard for all workers. Banks and business orgs are worried that might actually work.
“Wage hikes of this size also put pressure on the private sector to do the same — making the shortage of labour an even bigger challenge for small businesses.” - Dan Kelly, CFIB (Source: Financial Post)
“A very tight labour market risks seeing public sector wage gains being copied in other parts of the public and private sectors and flowing through toward higher-for-longer core inflation.” Derek Holt, Scotiabank
Two groups representing about 159,000 federal government workers have set up around 250 picket lines across Canada in one of the largest strike actions we’ve seen in a couple decades. One of the sticking points is wages - the federal government’s latest offer amounts to a 5% real wage cut - but also the right to remote work.
The public narrative that I’ve seen in media coverage has been largely about whether or not workers “deserve” to maintain real wages, and a common refrain is why these public sector workers have the audacity to ask for 13.5% over 3 years - 2021, 2022, and 2023. This would only be at or just below inflation, depending what inflation turns out to be this year.
But even more concerning to me is that bankers and business groups (quotes at the top of this article) are leaning into pre-existing wage-price spiral narratives to fear-monger about public sector wage increases. But their real fears slip out - they’re worried that their employees will say, “hey, yeah, I deserve a raise too!”. Unions often argue that when they win gains at the bargaining table, it filters out to other unionized and non-unionized workers too. Since this is good news for all workers, critics need a new line of argument to suggest that it’s a bad thing.
I wrote about this earlier, but these fears about worker’s wages prolonging inflation are misplaced. First, wealthy nations now import so much ‘stuff’ from global supply chains, domestic workers wages are currently a smaller fraction of domestic prices than they have been historically. This is more commonly understood, and you will see economists focusing more on service sector wages to counter this point. But analysis of inflationary periods shows that nominal wages normally lag inflation, and when they catch up, the impact is not inflationary. Those wage gains can come out of temporarily expanded profit margins, they don’t have to mean broad-based price increases.
Another line of argument that I’ve seen is that ‘no one else is getting that much’. This came up when I had the chance to talk about the strike and broader context of workers’ wages with Merella Fernandez on the CTV News Channel show “Top 3 Tonight” (It’s the first segment at the link). The tl;dw summary is that these workers are asking for their wages to keep pace with inflation, and I think that’s a reasonable ask for ALL workers.
At the top of the show, they highlighted that the average wage adjustment for collective agreements settled in 2022 was a measly 2.5%. I’d like to provide some more context for that here.
The Labour Program at ESDC collects information on collective agreements for bargaining units with more than 500 employees. The data shows what wage adjustments these bargaining units were able to get, which can be useful to identify trends. Keep in mind, that by the time an agreement is finalized, negotiations may have been underway for a year or more, and it can be difficult to adjust wage demands when bargaining is already underway.
This is exactly what we see in the 2022 data. While the average is low, when we break it down to quarterly data, we see that it wasn’t really until the end of 2022 that collective agreements started to show a pick-up in wage adjustments - from an average of 1.8% in the third quarter to an average of 4.3% in the forth quarter. There has only been one agreement recorded in the ESDC data so far for this year, but I would expect to see much higher wage increases for collective agreements finalized this year.
You can also see that the number of agreements finalized, and workers covered by them, varies a great deal from year to year. Major collective agreements finalized in 2022 only covered about 5% of all unionized workers, much lower than the 10-year average of 16%. A reasonable story might be that a bunch of agreements are taking longer to settle because workers are fighting for higher wages that will keep pace with inflation.
PSAC workers on the picket lines are setting the tone for other agreements and broader wage gains, and I’m grateful to them for it. If you agree, you can find a picket line near you here: Workers Can’t Wait
I shared this with my old boomer dad to counter the crap he gets from the newspapers.
http://frogfind.com/read.php?a=https://socialeconomics.substack.com/p/the-workers-united
FrogFind is supposed to be a mechanism for loading plain text on older computers but I find it also works on older people who just cannot handle a link to a busy tiktok account or blog site.