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Picketers march on Parliament Hill after more than 155,000 public sector union workers with the Public Service Alliance of Canada began a strike, in Ottawa on April 19.BLAIR GABLE/Reuters

A nationwide strike of more than 150,000 federal public servants has ground some critical services to a halt, even as both the union and the government remain at the bargaining table.

The strike of government workers represented by the Public Service Alliance of Canada began early Wednesday morning, setting off one of the largest labour actions in Canadian history as a resurgent labour movement points to elevated inflation to gain higher wages.

Across the country, workers congregated around hundreds of picket lines that had been set up in the past 24 hours, chanting slogans in support of their union’s demands for wage hikes that match inflation.

Only 47,000 of the federal employees have been deemed essential by the union and the government, meaning that they continued their jobs as usual. The strike has caused significant delays in a variety of public services – passport and immigration processing, tax filings submitted by mail, and an overall increase of waiting times on the phone and at Service Canada centres.

“This is the first day of labour disruptions. We continue to be very optimistic we’re going to be able to see this resolved where it needs to: at the bargaining table,” Prime Minister Justin Trudeau said during Question Period Wednesday afternoon.

Approximately 35,000 Canada Revenue Agency workers are on strike, but the department said it would not postpone a tax deadline of May 1 because electronic tax submissions, which are processed automatically, would not be affected by the labour action.

Canadians who urgently need a passport for vacations, however, would be out of luck during the strike, according to Karina Gould, the Minister of Families, Children and Social Development. Passport applications and the subsequent delivery of new or renewed passports will only be processed for Canadians experiencing humanitarian or emergency situations and Canadians residing abroad.

More than 155,000 federal government workers are on strike. These services will be affected

The government defines emergency situations as those who depend on travel for their income security, those who have to travel for medical reasons, or those who experience a family illness or death.

“I’m very hopeful that bargaining will continue because, unfortunately, as legislated and as outlined with the union, if someone has a family vacation planned, it’s not considered to be an essential service,” Ms. Gould said in response to a reporter’s question.

Wages are central to the dispute between the government and PSAC workers, who range from firefighters to port workers to maintenance staff and administrative personnel. Indeed, that posturing comes on the heels of a surge in consumer prices over the past two years, which saw the annual rate of consumer price index inflation reach a four-decade high of 8.1 per-cent last June. The rate of inflation has since fallen to 4.3 per cent in March, and the Bank of Canada expects it to drop to around 3 per cent by this summer.

Over this period, wage growth has lagged inflation, eroding the purchasing power of workers. This fact, combined with low unemployment and high demand for workers, has given unions significant leverage.

Last year, unionized workers in the public sector had wage gains averaging 3.8 per cent annually, according to government data, a significant bump from previous years. In Ontario in 2022, private sector unions alone (led mostly by construction unions) negotiated wage increases averaging almost 4 per cent, again a substantial jump from prior years.

“Even though union demands on wages seem like a lot on the surface, they are simply not willing, in this economic climate, to accept settlements that result in a loss of purchasing power for their members,” said Robert Hickey, an employment relations professor at Queen’s University’s Smith School of Business.

PSAC has maintained, from the start of negotiations in June, 2021, that it wants a 13.5-per-cent wage hike for 120,000 Treasury Board workers spread over the period of three years because that figure matches cumulative inflation since 2021. The government and CRA workers, represented by the Union of Taxation Employees, an arm of PSAC, are even further apart on the wage front, with the union asking for a 22.5-per-cent wage hike.

The government initially came to the table with an offer of just over 6 per cent, but has since increased its position to 9 per cent over three years for both bargaining groups. Ottawa’s stand is that it has offered the union a fair and competitive deal, especially if the union factors in the financial cost of other demands such as increased premiums for shift work and pension changes. The government’s calculation is that those cumulative demands amount to an overall wage hike of between 25 per cent and 47 per cent.

Earlier in the day, Chris Aylward, president of the Public Service Alliance of Canada, said that the government’s wage offer was still insufficient, and that Ottawa should “keep up or keep in line with the rate of inflation.”

“When the government represses wages of its own employees, what it’s doing is repressing wages for all workers right across the country,” Mr. Aylward said. The union, however, emphasized that it would remain in talks with the government for as long as it took to reach a deal.

The strike is taking place at a delicate moment in the campaign, led by the Bank of Canada, to bring inflation back under control. The inflation crisis wasn’t caused by workers demanding higher compensation. However, the rapid pace of wage growth has become a stumbling block to wrestling inflation down.

Since last summer, average hourly wages in Canada have been increasing by around 5 per cent year-over-year, a speed that Bank of Canada officials have said is “not compatible” with inflation returning to the bank’s 2-per-cent target unless worker productivity increases significantly.

“I’ve been saying it to businesses, I’ve been saying it to workers, to governments, to Canadians, anybody who wants to listen – you should plan on inflation coming down,” Bank of Canada Governor Tiff Macklem said in a parliamentary committee appearance on Tuesday. “And so whatever kind of contract you’re signing, you should be thinking that inflation is coming down.”

Remote work is also a central concern for the union, as it seeks to entrench language around telecommuting into future collective agreements, which would give its members the ability to grieve a situation where they feel they have been unfairly asked to return to the office. The Treasury Board’s current mandate is that federal public servants work from the office at least twice a week.

The Liberals will find themselves treading a delicate political line if the strike persists – on the one hand, it might be tough to justify an extravagant salary bump for public servants in the face of a cost of living crisis most Canadians are dealing with. On the other hand, the government’s alliance with the NDP has effectively positioned it as a pro-worker party.

NDP Leader Jagmeet Singh has already latched on to this conundrum, challenging Mr. Trudeau at Question Period Wednesday to rule out bringing in back-to-work legislation, a query the Prime Minister did not directly answer. Mr. Singh has repeatedly said his party would not vote in favour of back-to-work legislation.

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