Ottawa should reject unrealistic union demands as federal strike looms

According to the Public Service Alliance of Canada (PSAC), the main union representing federal employees, with collective bargaining stalled, more than 40 per cent of the federal workforce could soon walk off the job. But in light of the union’s unrealistic demands, and the current premium government workers already enjoy, the federal government must reject these demands.

PSAC represents 155,000 federal workers—at the Canada Revenue Agency (CRA), Service Canada, Veterans Affairs, etc.—who are now in a legal strike position. The union’s demands, which vary depending on the type of worker, include a 47 per cent increase in compensation (wages and benefits) over three years for some workers and a 30 per cent increase over three years for workers at the CRA. Again, research indicates these demands are patently unrealistic.

Consider workforce data from Statistics Canada, which (after controlling for various factors such as education, occupation and tenure) shows that government workers (at all levels) across Canada were paid 8.5 per cent more, on average, than their private-sector counterparts in 2021 (the latest year of available comparable data).

The difference when it comes to non-wage benefits is also stark. Government workers in Canada, on average, retire 2.4 years earlier than their private-sector counterparts and enjoy much greater job security. They also receive more time off for personal reasons (14.9 days per year) than private-sector workers (9.8 days). And 86.6 per cent of government workers are covered by registered pension plans compared to 22.9 per cent of private-sector workers.

If the federal government bows to union demands, it will simply increase these benefit gaps and worsen its already weak fiscal position. The federal deficit this year is projected to exceed $40 billion and federal debt is set to rise by more than $130 billion over the next five years.

Moreover, according to Canada’s Parliamentary Budget Officer (PBO), the federal government already allocates 40 per cent of its program spending to compensation—its single largest cost. In other words, it will be nearly impossible to balance the budget and shore up Canada’s fiscal position while handing out generous wages and benefits to an already highly compensated federal workforce.

Further analysis from the PBO suggests that even accepting PSAC’s lower wage demand (4.5 per cent) would add nearly $20 billion to the federal budget over five years. Federal spending on wages has already increased by $60 billion (or 31 per cent) since the start of the pandemic.

Lastly, in contrast to the private sector, in the government sector poor performance often spurs demands for greater compensation. Recent examples of poor performance in Ottawa include long waits for health care for veterans, tri-partisan concerns over “suspect science” at the Department of Fisheries and Oceans, and lengthy waits for passports and other items at Service Canada.

Indeed, recent polling suggests nearly half of Canadians are unsatisfied with services provided by the federal government, with one in five reporting they are very unsatisfied. Of course, there may be many reasons for these problems, but most Canadians likely find it hard to understand why government workers should receive a massive raise. In the real world, poor performance and unhappy customers would not trigger pay raises but rather an examination of why more workers with higher pay seem to generate the same or worse results.

As labour negotiations continue to unfold in Ottawa, the research is clear—the federal government must reject unrealistic union demands and better align compensation with the private sector to repair Canada’s finances.