Real Wage Cuts

According to Statistics Canada, in 2019, Canada saw 128 work stoppages. In 2021, that rose to 186, and it has remained elevated through 2022. A look at total person-days “lost” to disputes shows an increase from 1,212,938 in 2019 to 1,323,637 in 2021. That number has risen again to at least 1,897,867 days in 2022. Primary industries, construction, wholesale and retail, education, health and social services, and other sectors have all reported increases in disputes during this period. It isn’t hard to see why.

Last month, Canada’s inflation rate stood at 6.9 percent. Over the past year, food has seen double-digit price increases, forcing more and more working people to cut back, skip meals, and depend on food banks. Heating costs have also jumped. Yet wages, on average, have risen by just 5 percent over the past year.

Averages, however, can be deceiving. Compared with 2020, last year’s wages in manufacturing, construction, health care, and education were effectively stagnant. This year, as CBC News observed, “the wage gains seen earlier in the pandemic are starting to slow.” According to Desjardin economist Royce Mendes, the last quarter was “the lowest growth in wages and salaries since the second quarter of 2020, when compensation declined sharply.”

Stale Crumbs From the Master’s Table

Across the country and across multiple sectors, workers have been forced to strike to keep up with the cost of living. In transportation and shipping, workers have been pushed to accept pay cuts. As winter ended, CN Rail offered its signal and communications workers a wage increase of just 2 percent per year, despite booming profits. In British Columbia, Seaspan offered its one thousand tugboat captains and other crew, unionized with the Canadian Merchant Service Guild, just 2 percent. And in Quebec, workers at the Old Port of Montreal faced an offer of 0 percent this year and just 1.25 percent for next year before they walked off the job.

Matters have been no better for those employed by Canada’s grocery sector, even after years of massive pandemic profits. In Quebec last spring, Sobeys warehouse workers walked out to fight a new round of so-called wage increases that did not keep pay ahead of inflation. In Toronto, later in the spring, Metro warehouse workers represented by Unifor Local 414 likewise struck against an offer that amounted to a cut in real pay. In April, when inflation was 6.8 percent, before rising to 8.1 percent later in the year, Metro offered its grocery workers a 6 percent wage increase — a raise that amounted to a cut. And over the summer, Loblaws’ lowest-paid Superstore workers in Richmond, after a monthslong standoff over wages in what UFCW local president Dan Goodman called “inflationary times,” finally reached an agreement with the grocery giant.

In primary and secondary manufacturing, the picture is much the same. In Northern Ontario, Algoma Steel has bitterly fought calls for cost-of-living adjustments, instead offering its workers an average of roughly 3.5 percent per year and warning that “a strike of any duration would dramatically reduce or eliminate profit sharing altogether for this year.” Stelco’s wage offer in Hamilton, Ontario, is reportedly even less generous than Algoma’s. And in Quebec, ArcelorMittal’s offer early this year was also below inflation.

Canada’s public-sector employers have been no kinder than their private-sector counterparts. In Ontario, all public-sector workers — including nurses, bus drivers, and firefighters — have had their annual wage growth capped at just 1 percent by the Doug Ford government’s Bill 124. The legislation was deemed an overreach and struck down by the province’s supreme court, a decision the Ford government plans to appeal.

In Manitoba, public-sector workers have also faced across-the-board wage cuts for years. And further west, British Columbia’s NDP government offered the British Columbia Government Employees Union a paltry increase of just 1.5 percent.

Belt-Tightening for Workers

In the face of these hardships for working Canadians, the federal government nonetheless appears to be pivoting to austerity. In a leaked memo, Deputy Prime Minister Chrystia Freeland advised the rest of cabinet that any new spending on social programs would have to be financed by “internal reallocations” — also known as cuts.

Amid a momentary budget surplus, Freeland told a Bay Street audience that the government will plow ahead with a renewed policy of “fiscal restraint.” It appears that the government is intent on this course of action no matter how much poorer it makes ordinary workers. “We cannot compensate every single Canadian for all of the costs of inflation,” Freeland said.

For workers in the private sector, new legislation to curb strikes may also be on the horizon. In Ottawa, two parliamentary committees — and transportation — have warned that strike action poses a threat to key industries. In the words of the transportation committee: “The Minister of Labour should urgently convene a council of experts to develop a new collaborative labor relations paradigm that would reduce the likelihood of strikes, threat of strikes, or lockouts that risk the operation or fluidity of the national transportation supply chain.”

Recently, the Ontario government, in an effort to impose real wage cuts, sought to abrogate education workers’ right to bargain collectively via the ill-fated Bill 28, thereby overriding their constitutional rights. In the face of threats of a general strike, the government backed down on the legislation, but wage cuts remain on the table.

After a short-lived recovery from the recession of 2020 — the worst in the country’s history — fueled by massive corporate bailouts and money printing, Canada appears to be headed for yet another recession. Last month, the Royal Bank of Canada warned that “cracks are forming in Canada’s economy.” Anticipating future central bank rate hikes, it warned that the next few months may see “a potentially larger decline in household consumption and a deeper recession.” Other analysts, from TD to the Bank of Canada, have even raised the specter of stagflation.

Part of this slowdown is deliberate policy. For months, the Bank of Canada has warned of the dreaded “wage-price spiral.” This insight is based on the proposition that wage growth is the cause of spiking prices — conveniently ignoring booming corporate profits.

Bank of Canada governor Tiff Macklem has explicitly warned about new “unmoored” demands for wage increases and insisted that bosses push against calls for wage adjustments to match inflation. “Don’t build that into longer term contracts. Don’t build that into wage contracts,” he has said of inflation.

Over the past year, the central bank has rapidly propelled interest rates from almost zero last February to 3.5 percent. The governor has threatened further increases, telling a business audience that curbing “demand” is not going to be “without some pain.”

In the face of crisis, bankers and other elites may, as usual, scapegoat worker profligacy. But the coming slump also reflects decreasing consumer spending relative to increasing inventories, exacerbated by inflation, heavy debt loads, and the long hangover of the 2020 recession.

The imminent recession will doubtlessly see the country’s business class batten down the hatches. Canada’s bosses appear intent on making workers pay for yet another crisis. If they follow through with this plan, there will indeed be a “labor Armageddon” — and it will be fully warranted.