As Public Service Alliance of Canada (PSAC) workers hit the picket line, their fight for higher wages could disrupt more than just your spring travel plans.
Driving the news: The federal worker strike could result in up to $200 million in lost economic output per day, according to a report by Scotiabank economist Derek Holt. If the strike goes on for a month, Holt believes the country’s nominal GDP could drop by up to 1%.
The strike impacts the economy in ways that aren’t immediately obvious, too.
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Small businesses could see day-to-day operations impacted due to delays in employment insurance processing, passport approvals, and tax filings.
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Grain exports could be delayed due to striking grain inspectors, and farms could face labour shortages with no one around to process temporary workers.
- Holt also warns the private sector could be pressured into matching any wage gains public sector workers win through the negotiations, potentially worsening inflation.
Yes, but: PSAC’s goal is not to cripple the economy. Workers are striking only as a last resort, looking to beat back wage stagnation and catch up to the increased cost of living.
Why it matters: A raft of institutions, from RBC to Deloitte, already predict a mild recession will hit Canada in the coming months. An additional dip in GDP from a prolonged strike could worsen what’s already coming.—QH