Even before more than 100,000 federal workers went on strike with their initial demand for annual wage hikes of 4.5 per cent for three years, public- and private-sector unions had been scoring the highest wage increases they’ve seen in more than a decade.
It’s not been enough to keep pace with soaring inflation, but the gap is closing, and could make the Bank of Canada’s job of taming out-of-control price increases harder.
The average annual pay increase in 10 major public- and private-sector union settlements signed between December and February was 3.1 per cent, government data show.
That’s still well below where inflation has been, meaning workers have experienced wage cuts in real terms.
Still, inflation is cooling. The Bank of Canada forecasts inflation to ease to 3 per cent by midyear – which would see it drop below the level of recently settled wage agreements – before falling back to 2 per cent in 2024. Some economists, such as Scotiabank’s Derek Holt, have warned elevated wage deals could “flow through toward higher-for-longer core inflation” if they inspire other unions to aim for similar pay increases.
The cohort of unionized workers with multiyear deals above the bank’s target inflation rate of 2 per cent is certainly growing. Over the past year nearly 30 agreements were signed covering 145,000 workers in which annual wage increases were greater than 3 per cent.
As for the Public Service Alliance of Canada, the union representing striking federal workers, it said this week it has compromised on the wage demand for its 150,000 members, though PSAC hasn’t made its latest wage demand public.
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