Inflation pressures have been tough on workers for months, and as the Bank of Canada hikes up interest rates as a response, members of the Public Service Alliance of Canada (PSAC) are concerned about a potential looming recession.
According to an August publication by l’Institut de recherche et d’informations socioéconomique (IRIS), higher interest rates are not the solution, investing in the public sector is.
PSAC said the findings of the IRIS’ research reinforces their demands for higher wages for public service workers. The report said that indexing public sector wages will help maintain a strong middle class.
The IRIS report found that money invested in the public sector reaped higher returns for the Canadian economy. For every dollar spent in the public sector, $1.09 to $1.28 is added to the country’s GDP, compared to returns of $0.93 to $1.10 from private sector investments.
Based on these figures, the report reframed public sector investment as income instead of expenses, supporting the case for indexed wages for workers.
Despite calls for indexed wages, which have spread to many workplaces across Canada, the Bank of Canada has said they are concerned about a “wage-price spiral” being set off when wages match inflation.
“This is a situation where companies pay higher wages and pass those costs on through prices,” a Bank of Canada spokesperson has previously explained in an email to rabble.ca. “This raises workers’ cost of living and they seek further wage increases to compensate. If that cycle repeats itself, prices continue to rise and workers constantly strive to keep up.”
The IRIS report outlined that indexed wages are unlikely to exacerbate inflation because wages are only a small part of what determines prices.
“Cost-of-living adjustments to wages have no amplifying effect on inflation, as wages are only one factor in product pricing,” the report reads, “alongside raw materials and components, capital financing, profit margins and productivity.”
Chris Aylward, PSAC’s national president, said that while wages have stagnated, companies are posting record profits. This claim has been backed by another IRIS report. Instead of putting inflation on the backs of workers, the report says it is important to hold corporations accountable as they use high levels of inflation to up prices and bring in profits.
Aylward said that putting this money into compensation for workers will ensure that the money goes back into the economy, instead of into the pockets of a wealthy few.
“What workers are doing is, with every extra dollar they have in their pocket, they’re going out and actually spending that in the community,” Aylward said in an interview with rabble.ca.
PSAC is in the process of mediation with the Treasury Board as they continue to bargain for a fair contract for more than 165,000 federal public service workers. With the next meetings on the horizon, Aylward said the IRIS findings serve as a reminder of why PSAC is fighting for the wage increases they want. He says he hopes that, in light of these findings, future negotiations will not take on the same shape as they did when PSAC declared an impasse.
“The reactions that we’ve seen so far from the Treasury Board have been nothing but disrespectful,” Aylward said. “There’s total disrespect for their employees by saying no to everything that we have on the table.”
Aylward said that to address inflation, the government must tax the rich rather than offer subpar wage increases to workers.
“If workers don’t start standing up and pushing back, we’re just gonna keep falling further and further behind,” Aylward said. “We can’t allow that to happen when corporations, financial institutions and oil and gas industries are making record profits. If the government truly wants to fight inflation, then they need to pay all workers fairly.”
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