Unions win big across Canada as bargaining collides with inflation

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As Canadians continue to grapple with the spectre of prolonged inflation, unions across the country have begun to win higher-than-average wage increases for workers in recent months, a Globe and Mail analysis of internal union data and publicly available figures shows.

After a two-year COVID-19-related delay in negotiating new and renewed collective agreements, thousands of bargaining units across the country – in the private and public sectors – are now in discussions with employers, or will enter talks by the end of the year. And there is early evidence unions have secured some significant gains in wages, clinching the largest increases in years.

In Ontario, according to data from the Ministry of Labour, Immigration, Training and Skills Development, 650 collective agreements have been ratified by union members so far in 2022. The average annual wage increase in those settlements (which encompass bargaining units with 150 or more members) already hovers at 2.8 per cent. In 2021, that same figure was 1.2 per cent, and in 2020, it was 1.4 per cent. More than 2,000 settlements were ratified in both those years.

More specifically, unionized private-sector workers in Ontario (in bargaining units with 150 people or more) have seen an average annual wage increase of 4.1 per cent in 2022, according to the data. That figure has not gone above 3 per cent in the past decade.

A leading factor for bigger increases were settlements in the construction trades sector. Electricians represented by the International Brotherhood of Electrical Workers Construction Council of Ontario, for example, obtained an 8.6-per-cent wage increase over three years. The Iron Workers union in Ontario negotiated a 9-per-cent raise over three years, with a 0.5-per-cent premium for Toronto workers in the third year of their contract.

“Bargaining is a long, sometimes years-long process, but we have seen some massive successes in the private and public sector lately,” said Mark Hancock, the national president of the Canadian Union of Public Employees, the country’s largest union, representing 700,000 public-sector workers. “A pattern of achieving wage increases that are on pace with high inflation has been established, and that is going to have a positive impact on future negotiations,” he told The Globe.

The most up-to-date federal government data on settlements between unions and employers countrywide shows that in March, April and June, 2022, average wage increases surpassed 2.5 per cent for unionized workers in bargaining units with 500 or more employees. Increases that large in negotiated wages across three months have not been seen in more than a decade.

Economists and union researchers caution that official government data may not capture the full picture of wage increases, due in part to lag times in compiling and reporting information from new and renewed collective agreements. But they agree there is some indication wages are ticking upward more than they have in decades, and the trend will continue.

“We have seen unions secure some big increases in wages in new contracts. But it will take time for the current surge in inflation to be fully reflected in union wage negotiations,” said Jim Stanford, a veteran labour economist and director of the Vancouver-based Centre for Future Work.

“Even if inflation comes down in the coming year, which is likely, wage discussions will still be affected for at least another two to three years, because workers who didn’t have a chance to bargain this year, will still want compensation for the loss in purchasing power they experienced,” Mr. Stanford added.

This week, the B.C. General Employees Union negotiated a historic double-digit wage hike of approximately 14 per cent over three years for 33,000 public-sector workers who were on strike. The union had rejected an 11-per-cent offer from the provincial government, saying it did not recognize the true cost of inflation, which is currently running at a four-decade high annual rate of 7.6 per cent nationwide.

The deal follows a similar agreement reached between British Columbia and 60,000 hospital employees through the Hospital Employees’ Union, a CUPE affiliate, last week. Hospital workers will see their wages go up by 25 cents an hour plus 3.24 per cent in 2022, and by 5.5 per to 6.7 per cent in 2023.

CUPE has close to 4,000 bargaining units across the country: 1,966 are currently in negotiations, and 358 are expected to start bargaining before the end of the year. In 2020, according to data obtained from the union, the average wage increase bargained was approximately 1.62 per cent. In 2021, that number was 1.61 per cent. Mr. Hancock expects the 2022 figure to be significantly higher, even just based on the union’s recent wins in B.C.

“There are 300,000 public-sector workers in B.C. whose agreements need to be negotiated, including nurses, education workers and social security workers. I bet those other deals will come in fast, and very similar to what BCGEU secured,” the union leader said.

The Public Service Alliance of Canada, which represents 230,000 public-sector workers, currently has five out of its eight bargaining teams (representing approximately 130,000 employees) at an impasse with the federal government over wages, according to union president Chris Aylward.

“The union’s negotiated wage increases have always kept pace with inflation, but inflation has never been this high in a long time. So we are hoping to secure sizable salary increases, and if not, we are prepared to take the necessary action,” he told The Globe.

Other examples of outsized wage increases negotiated by private-sector unions this year include hundreds of full-time Sobeys warehouse workers in Ontario, represented by Unifor, who obtained a wage increase of 19.5 per cent over four years, and a 13- to 17-per-cent pay increase over three years for newly unionized WestJet Airlines Ltd. workers in Calgary and Vancouver.

But the prospect of a greater number of workers obtaining higher wages has caused some economists, and the Bank of Canada, to raise concern over the phenomenon of a wage-price spiral, in which wages and prices push each other higher, creating even more inflation.

“We are seeing early evidence that wage settlements are coming in higher than we are used to. There’s proof on the ground now,” said Robert Kavcic, an economist with the Bank of Montreal. “So if you’re a business, and you’ve conceded to raising wages at a percentage well above the usual, it is probably going to impact your pricing.”

Mr. Kavcic also noted that because many businesses across the country are still grappling with a labour shortage, they are not in a particularly strong bargaining position. “They don’t have much of a choice right now but to allow wage increases,” he said.

The latest data from Statistics Canada does show that average hourly wages are on the rise. Wages for unionized and non-unionized employees rose by 5.4 per cent on a year-over-year basis to $31.33 in August, compared with 5.2 per cent in both June and July.

Bea Bruske, president of the Canadian Labour Congress – who has publicly criticized Bank of Canada Governor Tiff Macklem for telling businesses to hold the line on increasing wages because of the spectre of a wage-price spiral – told The Globe wage increases are still nowhere close to what they should be, and brushed aside the idea of a wage-price spiral.

“It is really disgusting to hear some people blame the worker. Why aren’t we hearing dire warnings from Bay Street about the dangers of a ‘profit-price spiral’?” she said, referring to the debate among economists on whether record corporate profits over the past two years have driven inflation.

Ms. Bruske noted that even though unions have seen marked successes in recent negotiations, many public- sector workers – those in Ontario and Manitoba, for example – are still subject to wage suppression legislation. Bill 124 in Ontario limits annual wage increases for a broad swath of public employees to 1 per cent, and is currently being challenged in court.

“While I’m cautiously optimistic with the wins I’m seeing, we have a lot of challenges ahead,” she said. “I am concerned that if public-sector unions are stymied, or if we continue to see regressive legislation that holds workers back, that small window of opportunity we have right now to fight for higher wages will be lost.”