Federal civil servants, longshoremen at the ports of British Columbia, Metro grocery store employees in the Greater Toronto Area and now public sector employees in Quebec: strikes have been taking place across the country since the beginning of the year.
Each time, fears arise that these labor disputes could undermine the Canadian economy. Scarecrow or real threat? Overview of a question without easy answers.
size and duration
In many cases, economists initially focus on the direct impact of a strike on domestic production and consumption.
Douglas Porter, chief economist at the Bank of Montreal (BMO), presents the example of the 155,000 federal employees who left their jobs last April. In one analysis, he argued that 0.6% of Canada’s workforce was on strike, which could lead to a 1% drop in GDP.
In the interview, he explains that civil servants’ salaries often provide a good approximation of their contribution to the economy. The economic damage would basically be very similar [à leur] Salary, estimates Mr. Porter.
In addition to reducing production, Mario Seccareccia, professor emeritus at the University of Ottawa’s Department of Economics, highlights the impact strikes can have on consumption.
Open in full screen mode
Members of the Public Service Alliance of Canada went on strike for 13 days. Ultimately, they achieved cumulative salary increases of 12.6% over four years. (archive photo)
Photo: Radio-Canada / Maxim Allain
He notes that Ottawa retailers’ sales likely declined during the strike in April. Striking employees can also reduce costs.
These so-called direct effects on the economy increase the longer the strikes last, claim the experts interviewed.
Since the federal workers’ strike ultimately only lasted about two weeks, Mr. Porter, for example, revised his assessment of the economic impact significantly downwards. We assume that this has caused GDP to fall by a tenth of a percent, he argues.
For Jimmy Jean, vice-president and chief economist of Mouvement Desjardins, the duration of public sector strikes in Quebec will be the most important factor in their impact on the economy.
At the moment there are people who [sont] Telecommuting that can handle it. But if it lasts longer, it leads to greater impairments in work productivity, he explains.
Losses are often recoverable
According to BMO’s Mr. Porter, several sectors are able to make up for lost production in the months following a labor dispute.
As a result, he expects the recent strike by auto workers in the U.S. to have little impact on the industry’s performance this year.
Open in full screen mode
Instead, the United Auto Workers launched a simultaneous strike this year at the three auto giants Ford, General Motors and Stellantis. (archive photo)
Photo: Portal / Michael Swensen
[Les constructeurs automobiles] is expected to sell almost the same number of vehicles in North America this year. Even if [ces grèves] are heavily publicized and have a significant immediate economic impact, the losses could be recovered in the coming weeks, he estimates.
However, this backlog, which is often relieved by overtime, is not always possible. According to Porter, this would be particularly the case in public sector strikes.
Sectors more sensitive than others
Economists also fear the multiplier effect of strikes.
There are sectors that are more strategic than others. If you have a strike [l’épicerie] In the area it is probably not very important, except for a quarter, explains Mr. Seccareccia.
Thus, the impact of the labor dispute at 27 Metro Grocery stores in the Greater Toronto Area was likely concentrated on the company itself, which reported a loss of $36.3 million, and on its suppliers.
According to Mr. Jean, this multiplier effect is particularly felt in labor disputes affecting key suppliers to an industry and transportation infrastructure, as was the case with the British Columbia port strike and the St. Lawrence Seaway employees.
Open in full screen mode
During the St. Lawrence Seaway strike, ships were stopped for several days. (archive photo)
Photo: Radio-Canada / Patrick Morrell
These labor disputes, which are particularly damaging to the economy, can even damage Canada’s reputation abroad.
ICI Ontario Newsletter
Subscribe to the ICI Ontario newsletter.
Strikes under the microscope of multinational corporations
Before opening a factory in a new region, companies also examine the stability of labor relations there.
If an economy is known for a lot of industrial action, that’s probably not a positive thing, says the BMO economist.
Open in full screen mode
Some automakers whose employees are not unionized have given them wage increases equivalent to those negotiated by the UAW. (archive photo)
Photo: Bloomberg / Norm Betts
If [les entreprises] Production must be continuous and not affected by this type of interruption. [elles] will go somewhere else, he illustrates.
However, the retired professor points out that strikes are much rarer today than in the 1970s.
The number of hours missed due to a labor dispute was 20 times higher in 1976 than in 2021.
Start of the widget. Skip widget?
End of widget. Return to the top of the widget?
The high inflation of the last few months has reversed this downward trend. Already in September, 2023 was the year with the most days off due to labor disputes in the last decade.
Start of the widget. Skip widget?
End of widget. Return to the top of the widget?
However, these strikes, driven by workers’ desire for better working conditions and higher wages, would not only have a damaging impact on the economy.
A contribution to the economic structure
According to Porter, the country’s economic health depends in part on a certain balance between the power of employers and employees.
Perhaps one could argue that the pendulum swung a little too far away from unions in the 1990s and 2000s, he notes.
During this period, the wealth of entrepreneurs grew faster than that of workers, notes Mr. Jean. The strikes, which gave certain unionized employees significant raises this year, contributed to some realignment, he said.