It did not take long for others to jump onto the PSAC strike result bandwagon. Not surprisingly, it started with legislators. Those in Quebec just voted themselves a 30 per cent salary increase.

We apologize, but this video has failed to load.

Try refreshing your browser, or
tap here to see other videos from our team.

Howard Levitt: Government's capitalution on PSAC strike will cast a long shadow over private sector Back to video

We apologize, but this video has failed to load.

Try refreshing your browser, or
tap here to see other videos from our team.

Play Video

Interestingly, between 2019 and 2022, according to Statistics Canada, union workers’ wages increased nine per cent compared to non-union workers wages at 14 per cent. Not particularly surprising as unionized workers are often locked in to long-term contracts and therefore could not command the high wage increases required by private employers to attract workers, given the labour shortage we have experienced since emerging from COVID.

What is little known, however, is that the reason for that labour shortage is not fewer available employees but the government sucking up all available ones. A Fraser Institute study released last fall found a shocking 87 per cent of jobs created since the onset of COVID had come in the public sector, leaving few employees for the private sector to fight over.

The government has been hiring away employees from potential productive employment by offering draconian high wages, benefits others can only marvel at, shorter work weeks, shorter work years, more time off, ironclad job security, earlier retirement and gold-plated pensions that the private sector has no chance of competing with.

The defined-benefit pensions (almost unknown now in the private sector), which are inflation-adjusted, allow public sector workers to retire and earn a healthy income that is not much less than what they had earned and often for more years than they actually worked. All of this paid for by the tax dollars of employees who perform the same type of work at lower wages and without many of these benefits.

The PSAC strike has exacerbated this. While the government promised not to succumb to union demands, it played a shell game, providing a different term, a two-year retroactive increase and a significant “signing bonus” to disguise what it gave way. It effectively capitulated, giving the union largely what it demanded.

As the country’s largest and most prominent employer, the government’s PSAC wage increases will be the benchmark for all unionized employees. In turn, private sector non-union employers will now have to, somehow, compete with the public sector to recruit and retain workers. All of this will exacerbate our already heightened inflationary cycle.

Rather than complaining about public sector increases, some ask, isn’t the goal to ensure that the private sector workers obtain the same?

That question is a chimera, a hoax, advanced by union leadership knowing its utter falsity. Unlike the public sector, which can simply print more money, the private sector is restrained by market discipline. A private sector employer cannot increase its pricing to match wage increases because, in an era of international markets, it will quickly be driven out of business by competitors happy to undercut it. If it increases wages without concomitant price increases, it will go out of business. Just look what happened when our major historic industries had to increase pricing to match higher unionized wages. One industry after another — steel, farm implement manufacturing, auto and more — became largely extinct here.

The result, a more imperilled economy and ultimately more joblessness as employers either will be unable to compete for employees or be unable to maintain their profit margins, so will choose to locate elsewhere.

The other insidious aspect of the PSAC settlement is its institutionalization of working from home. As I have noted previously, the impact of “working” from home has been a public sector that largely did not work, at least not very productively, while continuing to draw their wages and even receive wage increases while a large portion of the private sector was laid off.

After receiving complaints during COVID about the lack of access to public services, the federal government, in particular, went on a hiring spree, sucking up all available employees. The result: We still could not get passports, collect EI or find anyone available to serve us as we interminably waited on government phone lines for someone, anyone, to answer our simplest questions.

One productivity study of the Canadian workforce by Aternity Inc. during the pandemic found that employees working from home, on average, were 22 per cent less productive per hour worked and, more worrisome, that the longer employees worked from home, the greater this productivity gap grew.

That makes sense since once employees realize that they can get away with taking their dog for a walk, homeschooling their children or other non-work activity, without consequence, the time they devote to those activities will inevitably increase. But there will now be an inexorable drive by other unions to also obtain work-from-home rights. Private sector employers will have to match that to have any prospect of attracting or retaining employees.

Unions though are short-sighted, and any employee harbouring dreams of working until retirement from their living room, should watch what they wish for.

It will eventually dawn on smart employers, who believe they are “getting by” with their $90,000 mid-manager or $45,000 clerk performing their jobs away from the office, what employers of IT and call-centre workers have long realized. Instead of paying those employees $90,000, or $45,000 respectively, they can recruit in India, Poland or (name your country) at $20,000 and $6,000 respectively. The entire world will become their recruiting ground as Canadian employees lose jobs in droves, degrading our tax base and labour market and bringing down wages for everyone.

Preventing employers from contracting out their labour abroad will become the new main bargaining demand of Canadian unions. But when employers realize that they can get by just as easily at one third of the wage cost, they will take a strike for that. And that might be the real message from the current trends, of which the PSAC strike results is a harbinger.

Howard Levitt is senior partner of Levitt Sheikh, employment and labour lawyers with offices in Toronto and Hamilton. He practices employment law in eight provinces. He is the author of six books including the Law of Dismissal in Canada.