Of 91 industries tracked by StatsCan, not one has had their wages eroded more by inflation than federal public sector workers

David MacdonaldWhat were you doing in 2007? Maybe you were one of the people who lined up to get the very first iPhone. Maybe you were jamming out to Beyonce’s Irreplaceable or watching The Dark Knight at a movie theatre.

The odds are good that you’re making more money now than you were then. For most Canadians, that’s the case – even when we take inflation into account, most professions are doing better than they were in 2007.

Not federal public sector workers. For federal public servants – around 155,000 of whom are currently on strike for higher wages – inflation has eaten away at their wages so heavily that their purchasing power is the same as it was in October 2007.

Statistics Canada keeps track of wages by industry, breaking down the Canadian economy into a total of 91 industries. Of those 91 industries, not one – not a single one – has had their wages eroded further by inflation than federal public sector workers.

Inflation Public sector workers
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Striking public sector workers haven’t had a contract since 2021, so they’re also bargaining for back pay. In 2021, inflation ran at 3.4 per cent, but the feds’ starting offer was only 1.5 per cent. In 2022, inflation was 6.8 per cent; the feds initially offered only three per cent.

That means the government was initially offering to cut workers’ pay by 1.1 per cent in 2021 and by 3.8 per cent in 2022, after inflation. Since the boss is offering to cut workers’ pay, it’s no wonder that members of the Public Service Alliance of Canada went on strike on April 19.

Yet, as workers try to get pay raises simply to catch up with price increases, economists start blaming workers for driving inflation – as if workers asking for higher wages are the reason why Canadians’ grocery bills have gone up.

That assertion is, of course, absurd and false. Every extra dollar you spend because of inflation-related price increases goes straight to corporate profits. In fact, 47 cents of every inflation dollar has ended up in corporate profits in four industries: oil, gas and mining extraction, oil refining, real estate, and banking. If anything, workers are actually holding inflation back because workers’ wages are falling behind it.

The price increases we’ve seen over the past two years are locked in now – on average, prices don’t ever go down except in a serious economic crisis. Policymakers are not aiming for price reductions; they’re aiming for slower price increases. There’s going to be no relief from higher prices – the only relief will be in higher wages.

That’s exactly what striking federal workers are aiming for – they’re aiming for wages that are, at the very least, close to the rate of inflation so that they aren’t taking a pay cut every year. It’s no wonder that the majority of Canadians support the workers’ wage demands.

Win or lose, the results of the strike are going to set an important precedent for workers across the country. A victory for federal public sector workers will pressure all other employers to implement similar wage gains – and a loss means that other employers are likely to shoot for lower pay increases.

This might be the biggest inflation strike so far, but it won’t be the last. More workers will be fighting for higher wages because that’s what needs to happen as the cost of living rises. What happens here will set the stage for what happens to a lot more workers afterwards.

Let’s remember that the next time some columnist tries to tell us that we should be mad at workers for asking for wage increases that match inflation – because they mean you too.

David Macdonald is a senior economist at the Canadian Centre for Policy Alternatives (CCPA).

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