The federal strike’s economic impact

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.

  • Small businesses could see day-to-day operations impacted due to delays in employment insurance processing, passport approvals, and tax filings.  
     
  • 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