Workers in Canada are on the march for the first time in ages. In March and April, average pay increases secured in new collective bargaining agreements averaged 3.1 percent, the highest in nearly fifteen years. That is not enough to keep up with inflation in Canada, which is now sitting at 7.7 percent — the highest it has been since 1983 — but it is a sign that the labor movement is reviving.

Another promising development has been organizing victories in retail, a sector of the Canadian economy which has been traditionally unorganized. This is especially important because it is largely thanks to high public-sector unionization that Canada’s union density is any higher than that of the United States. As in the states, private-sector union coverage has been declining for decades. These recent successes in retail unionization may well augur a reversal of fortune for private-sector organizing.

However, there are troubles ahead. Worker confidence to fight for higher pay or organize is bolstered by a tight labor market. March’s 5.3 percent unemployment rate is the lowest on record since Statistics Canada began tracking it in 1976. But with inflation at its highest level in nearly forty years, there are calls for the Bank of Canada to raise interest rates above 3 percent from the current 1.5 percent. Not only will this threaten workers with unemployment but it will also put more pressure on those who are heavily indebted to not rock the boat in their workplaces.

Workers in Canada did enjoy some wage gains during the COVID-19 pandemic, but prior to Russia’s invasion of Ukraine. These gains are now lagging behind the inflation rate, for which, despite what some economists say, wage gains bear little responsibility. The current inflation has almost no connection to wages and labor costs — it is a result of profit-price inflation, not wage-price inflation.

The Public Service Alliance of Canada (PSAC), representing workers in the federal public sector, has been attempting to win a 4.5 percent pay increase per year over three years in their current negotiations. The federal government has resisted this demand and the two sides are at an impasse. Federal public-sector workers winning a major pay increase would reverberate across the entire Canadian economy for workers. However, attaining such pay increases is harder than just negotiating.

In the early 1980s, in order to get inflation and budget deficits under control, the federal government, led by Pierre Trudeau, legislated wage settlements that completely undermined the process of free collective bargaining for public-sector workers. Since then, Canadian governments at both the federal and provincial levels have continued to implement such legislation. The rationale is always the same — the threat of imminent economic crisis, even under far less adverse economic circumstances. The continuing use of this kind of legislation led Leo Panitch and Donald Swartz to coin the term permanent exceptionalism.

Despite favorable rulings from the Supreme Court of Canada recognizing the right to free collective bargaining, governments continue to pass such wage settlements. Challenges brought to these settlements often take years to wind their way through the courts.

Bill 124 recently became an election issue in Ontario because it limits provincial public-sector employees to pay raises of only 1 percent per year. This ceiling continued to hold even through the pandemic, affecting many health care workers. With inflation biting and the Canadian economy teetering on recession, legislated wage settlements are a real threat. The most effective way for the labor movement to counter them is to build a large front — including regular people outside the labor movement — by calling for the defense of public services.

To fight what is increasingly looking like a recession that is being deliberately triggered to discipline labor, Canadian workers should draw public attention to the massive profits accruing to big business. In Canada’s oil and gas sector, profits are surging thanks to high energy prices triggered by the war in Ukraine. There is real pressure on food prices because of the conflict, but this should be put in context — in 2021, Canadian grocery store profits hit $7.3 billion in pretax profits, doubling their 2020 take. Clearly, companies are taking part in pandemic profiteering. Highlighting these machinations shouldn’t be too hard — Canadians are already wary of big grocery stores after a bread price-fixing scandal in 2018 made national headlines.

These factors can create an opening for polices like an excess profits tax, which the New Democratic Party (NDP) is calling for. Because Justin Trudeau and the Liberals have a minority government, they are relying on the NDP to allow them to finish their term, which ends in 2025. If the NDP, as Canada’s social democratic party, wishes to revive its fortunes, it must resist the pressure to respond to economic woes through orthodoxy and present an alternative strategy that puts workers first. The profits of big business ought to be taxed in order to offer some relief to consumers and to protect jobs from a recession initiated by an interest rate hike.

The current moment for the labor movement contains both potential and danger. Unions in Canada are beginning to go on the offensive, but the specter of the 1970s and 1980s hangs overhead. To their credit, unions in Canada throughout the 1980s gained notoriety for holding the line on concessions, while many unions in the United States capitulated. But by the 1990s, neoliberal restructuring finally hit Canada at full force, leading to manufacturing job loss and austerity. At that point, unions finally began accepting bargaining concessions. This history is important. If unions act in a conciliatory manner, inflation and recession will again lead to job losses and austerity.

Union militancy is necessary going forward. The response to this current moment may very well shape the future of the Canadian labor movement.