Should employers be worried about the federal strike?

It’s being labelled as one of Canada’s biggest strikes, involving at least 250 picket lines across the country, and 155,000 members of the Public Service Alliance of Canada (PSAC).

The negotiations concern two main groups of federal workers — 120,000 workers reporting to the Treasury Board and about 35,000 reporting to the Canada Revenue Agency.

And the two main areas of contention – wage increases amid high inflation and the right to work from home – are ones that many organizations across the country are grappling with these days.

So many employers are watching the developments with interest — but will the federal strike have a ripple effect on other workforce negotiations across the country, be they union or non-union?

It depends on who you ask.

‘Just one more data point’

“I think it's significant for the public service; I'm not sure how significant it is beyond that,” says Jock Climie, a partner at Emond Harnden in Ottawa.

“This particular bargaining unit has always set the pattern for the entire public service — that doesn't mean that they always dictate how other bargaining tables go.”

Previously, the Professional Institute of the Public Service of Canada (PIPSC) made a deal before PSAC, so apparently the latter is keen to step to the table, he says, and “battle for pre-eminence in terms of who’s going to lead the pattern.”

From a federal public service standpoint, it's a very important strike, says Climie, but if you’re a provincial bargaining unit or a bargaining unit in a private company, there are so many different other factors at play, and this strike “is not likely to be anything other than just one more data point.”

What two parties do at a bargaining table is not like case law, where it’s jurisprudence that employers are expected to follow, he says. “It doesn't work that way in collective bargaining.”

When parties come to the bargaining table, they may point to other bargaining tables that have reached deals in similar circumstances as a persuasive metric, says Climie, “but it’s not like ‘Oh, well, if this happens here, that must happen over there.’”

‘Sending an important signal’

But Ian Lee says this strike is significant because it involves the largest employer in Canada, and the Treasury Board is responsible for all wage negotiations of the core public service.

“It is a trendsetter… in the positive and negative sense of the word. They're so enormous, they have over 500,000 employees, that's core and non-core,” says the associate professor of management at the Sprott School of Business at Carleton University in Ottawa.

The strike is also highlighting two very big issues facing Canadian society today: the war on inflation and the debate about remote work, he says.

“This sends a very important signal to provincial governments, municipal governments, and of course, the entire private sector: ‘It's your duty to hold the line and not grant inflationary wage increases.’”

And if the government “blesses” remote work in an agreement, “it will set an important precedent and a signal to provincial, municipal employers, as well as the private sector,” he says.

“If the government actually institutionalizes it some in some way, shape or form — whether in the collective agreement or in a side protocol to the collective agreement… that's going to be that's why this strike is so significant.”

‘Big bang event’

It’s the biggest legal strike in Canadian history, in negotiating with the country's biggest employer, says Armine Yalnizyan, an economist and Atkinson Fellow on the Future of Workers in Toronto, so “it is a big deal in every sense of the word.”

“It's a big bang event — it's the first big collective agreement in what will be a cascade of collective agreements coming due in the wake of the hottest inflation we have seen in 40 years. So, you know that all eyes are on this deal.”

The federal government is setting a tone for collective bargaining in other jurisdictions, she says, and “it is setting a tone for other public sector employers, and it is basically setting a tone for why it is doing what it is doing economy wide.”

It’s an amazing time in history, says Yalnizyan, “because the backdrop to all of this is the lowest unemployment rates we have seen in half a century. So normally, you would think workers have got great bargaining power. And combine that with the actual loss of purchasing power because of inflation, and the willingness to strike over that.”

‘Tug of war’ over remote work

Obviously, there's more emphasis on remote work these days but it’s not necessarily a new bargaining issue — it is often among several proposals from unions that drop off the table “relatively quickly,” says Climie.

“It's just that with the pandemic, now, all of a sudden, unions are thinking that it should become a right rather than a privilege.

“And employers everywhere, as far as I know, are sticking to their guns… generally speaking, employers are loath to give away what is seen as a fundamental management right.”

If Ottawa ends up staying firm on remote work for PSAC members, another employer bargaining with a municipal union, for example, could cite this in its resistance to including work from home in any agreements; on the other hand, if the federal government does provide concessions around remote work, another employer could have 15 reasons why “That might work for the feds but it doesn’t work for us,” he says.

As an alternative, employers may agree to a work-from-home policy that is separate from the collective agreement “as a means of trying to encourage the union to pull that off the table,” says Climie. “That's a tug of war that happens.”

‘It’s going to legitimize working from home’

It’s possible almost half of the people in the Public Service of Canada are knowledge workers and able to work from home, says Lee, citing this growing trend across the private sector in North America.

“This has consequences; remote work has many tentacles — it's not just about work-family balance, it's also about you have more money in your pocket, it's also about productivity.”

It’s likely that Ottawa will compromise on remote work, he says, “and I think we will all be studying the entrails of the agreement to see how they structure this understanding on remote work: Who qualifies? How do you define it? How do you measure the productivity of the workers?

“And who should be allowed to work from home? And how do you monitor it? How do you evaluate it? How do you track it? And how do you compensate?”

And once the government backs down on the issue, “it's going to legitimize working from home to those companies who are still resistant, because people are going to say to them inside their own company: ‘Well, look, the government of Canada has just settled on this,’” says Lee.

‘Brand new discussion’

The remote work part is interesting, because this is the first time it has come into collective bargaining as, basically, a monetary measure, says Yalnizyan, citing cost savings such as not commuting and not buying lunch or clothes for work.

“Time, literally, is money, and that's a brand new discussion in these contract agreements.”

The federal strike is also putting a spotlight on how employer monitor workers, she says: “What kind of surveillance do you have over what it is you're doing? It's about productivity. Are you getting the job done better now than you were before?”

However, it’s important to remember remote work isn’t possible for all the striking workers, says Yalnizyan.

“We are talking about people working at grain elevators, working at ports, working on railways… security guards… food inspectors,” she says.

“It's a concern for the union, because they are representing 150,000 people, not all of whom have the same working conditions. So money, like some kind of inflation protection is something that is common to everybody — remote work is not.”

‘Ability to pay’

As for the push for wage increases, this is not an issue that’s going to be greatly influenced by the federal strike because of the historic inflationary increases and the cost of living already going on, says Climie.

“This is literally one data point. It's not like, ‘Oh, because it's PSAC and it’s a strike and it’s the federal government, it's more important than every other data point.’”

And “ability to pay” is a big consideration, he says.

“If you're in the private sector or the public sector, if you're not flush with cash, it doesn't matter what inflation is doing, you can't afford [these increases].”

The government also knows that every percentage point it pays to this union is then multiplied by every federal public servant, says Climie.

“If the government was to give 4.5 per cent, they're not going to get away with giving another federal public servant group three per cent. So when they're looking at the cost of this, they're not just looking at the 150,000 PSAC employees, they’re looking at the entire public service and doing the math. They won't agree to a raise until they feel they can afford it across the board.”

‘Uncharted waters’

We've been hearing since the summer that workers shouldn't ask for wages to match higher inflation. But a lot of these striking workers make the average wage or less, says Yalnizyan.

“The average [annual] wage in Canada in 2022 was roughly $60,000 and most of these workers are earning between $50,000 and $60,000… and that person, unless you've got a second income in the house, has been bitten hard by inflation.”

It’s hard to know what will happen with the federal strike and wage increases, she says.

“We are really in uncharted waters. This is a government that has been saying since 2015 that they are there to support the middle class and those working hard to get into it — this would be that group of people. And yet they are saying, ‘No, you must do worse because of our fight against inflation.’ And their proposed number of nine per cent over three years guarantees that people making, say, $50,000 a year will be struggling with basic food and shelter choices… especially in big cities.”

While these public sector workers do enjoy generous benefits and job security, says Yalnizyan, “this particular set of workers isn't making a whole bunch of money. They aren't the fat cats.”

As for how long this strike will last, that’s a tough call. And Climie says he won’t be surprised if we see lots of strikes, unfortunately.

“I'm hoping that's not the case because I just don't think it does anybody any good, to see people on the picket lines — we've just come out of this pandemic, the last thing we need is no a labour disruption, but it appears we're into it.”