Letter from Ottawa: Strikes and other storm clouds are on the horizon for Canada’s public service

By on 17/04/2023 | Updated on 18/04/2023
A photograph of Parliament Hill in Ottawa. Photo by Wladyslaw Sojka (www.sojka.photo) and reproduced under Creative Commons.
Photo by Wladyslaw Sojka (www.sojka.photo) and reproduced under Creative Commons.

From possible strike action by public servants to renewed discussion about the size of the state, the Canadian government is facing a number of questions this spring, says Michael Wernick

Spring has taken its time to arrive in most of Canada this year. An April ice storm knocked out electricity to more than a million customers in Montreal and surrounding areas, creating flashbacks to a similar event in late 1998. However, arrive it has, and with it familiar and comforting rites, notably the ice hockey playoffs.

For the public service, spring typically means the annual Budget delivered by the finance minister. Departments and agencies wait to see how their pitches for attention and resources fared. The recent Budget will be implemented although the Liberal government does not command a majority in the House of Commons. It has secured a political pact with the smaller New Democrats (social democrats) that should keep them in office until autumn 2025, provided they deliver some of the priorities of their junior partner.

With the ability to plan for two more budgets before the next election, the government took a middle of the road approach, bolstering spending in some areas but offering a nod to critics who advocate tighter fiscal management through a very modest tapping of the brakes on government operations. Just enough to say they are concerned and doing something but not enough to trigger layoffs and closures.

In some ways, normal service has resumed after three pandemic years. Emergency programmes have lapsed and some of the older priorities that had been eclipsed by the public health and economic impacts of COVID-19 have returned to the foreground. The public service has helped the government slalom through a series of tricky policy issues, including health care funding, asylum flows at the American border, and keeping up with the Biden administration’s aggressive green economy agenda and ensuring suppliers located in Canada stay “inside the tent” from the American perspective.

The public service has grappled with “return to work” issues as organisations that had adapted to remote work during the pandemic are requiring employees to go to their physical workplaces for two or three days per week, a decision that was not popular in some quarters. Of course, large parts of the public service never had the option of remote work and must have watched the grumbling of their colleagues with bemusement.

Read more: Canadian public service will not return to pre-COVID headcount

And yet, 2023 is also a new reality, not 2019. The Russian attack on Ukraine was deeply meaningful to Canada, despite the distance, as 1.4 million Canadians have Ukrainian roots, the largest diaspora from that embattled country other than Poland and Russia. There is no ambivalence or political division in Canada about which side we are on. More than 640,000 Ukrainians have been issued special travel permits to come to Canada and about 200,000 have arrived.

The other new reality, shared with so many other countries, has been the return of inflation. In 2022 the rate spiked at 8%, rippling through energy and food prices in particular. Interest rates revived from years close to zero, presenting many Canadians with unpleasant increases in the costs of credit lines, car loans and home mortgages. The inflation rate has since subsided to about 6%, which is enough to present real challenges.

One of these is to create demand for wage increases by public sector workers, about three quarters of whom are union members. The “front line” workers in health care, schools and seniors residences that were celebrated during the pandemic mostly work for local entities under provincial jurisdiction. Signs of labour shortage are popping up everywhere.

The federal workforce happens to be in the midst of a full cycle of collective bargaining, as agreements reached in 2018 have begun to expire. The mood is sour, coming on top of squabbles about “return to work” policies, and unions last week secured strike mandates.

Read more: 9% three-year pay rise recommended for Canadian public servants – as strike ballot gets underway

With action now likely to take place from Wednesday, it looks like the unions and the government are set for a fight neither of them really wants.

The government is holding firm for now, as meeting the union demands would add a hefty line item to future spending projections and divert resources from other uses, and one can construct dramatic scenarios where a highly disruptive season of strikes creates a backlash that plays into the hands of the opposition Conservatives. Or one where the government is backed into a corner and has to resort to back to work legislation, causing a rupture in its alliance with the social democrats and an early election.

I took the risk of saying on the record that I think settlements remain the most likely outcome although it may take some industrial actions to get there. The union leaders must know they have no reservoir of public goodwill to draw upon. Only a fifth of private sector workers in Canada are unionised and the public sector has always had an image problem of enjoying job security, pensions and other perks that most Canadians do not. Furthermore, there have been a spate of service related issues that have drawn attention and fed a narrative of weakening state capacity. Both sides know that any serious inconveniencing of Canadians through strike action is likely to generate swift backlash, egged on by the conservative media. So they are both motivated to settle.

In the background, there has been an unusual amount of attention to the size of the federal public service and a bit of discussion of where it is headed after a long period of growth. The last serious and mindful contraction was the 2012 Budget of the Harper government, designed to unwind the stimulus brought in after the global financial crisis. No one has articulated a target for the future size of the public service. To return to pre-pandemic levels would mean staff reductions of about 50,000 and to return to the levels at the end of the Harper government about 80,000. That on a base of about 335,000.

Public servants have now been through a long decade of growth and its management cadre has lost muscle memory about layoff procedures, seniority rules, early departure incentives, and even about managing budgets that flatline or shrink. For that matter, our current crop of politicians have yet to face up to the politics of cutting programmes, winding down institutions, closing facilities and seeing job losses in their communities. One in five Canadians works in the public sector writ large and any contraction has far reaching effects. But politicians prefer the antiseptic and vague language of “efficiencies”.

The current budget fudges the issue. It sets a goal of a 3% reduction in operating budgets but doesn’t specify any “stop doing this” list. It is content to let public servants hope that retirements and churn will spare them any unpleasantness. The unions are content to let people hope that the wage increases they are seeking won’t impact future staffing levels. However, one can see dark clouds on the horizon. With the obvious caveat that a lot can happen in two years, it seems that the Canadian public service is headed for choppy waters.

Join Michael Wernick at the launch event for the Responsive Government Survey 2023: success in the era of permacrisis on 9 May. The event will set out exclusive research on how global governments are responding to a series of unprecedented crises from high inflation and budgetary pressures to recovering from the coronavirus pandemic.

Want to write for GGF? We are always looking to hear from public and civil servants on the latest developments in their organisation – please get in touch below or email [email protected]

About Michael Wernick

Michael Wernick’s distinguished 38-year career as one of the key leaders of Canada’s world-class federal public service culminated in serving from 2016 to 2019 as the 23rd clerk of the Privy Council and secretary to Cabinet. With 28 years as an executive in the federal public service, including 17 years in the community of deputy ministers, and three as clerk, Wernick is one of Canada’s most experienced and influential public sector leaders. He appeared frequently at parliamentary committees, participated in dozens of intergovernmental and international meetings, and spoke at many conferences. Wernick worked closely with three prime ministers and seven ministers and attended close to 300 meetings of Cabinet and its committees. He was the key public servant at the Privy Council Office during three changes of prime minister. In October 2021, UBC Press released Wernick’s book Governing Canada: A Guide to the Tradecraft of Politics and Wernick undertook an extensive series of media interviews, podcasts and webinars to discuss this well-received practical handbook for Canada’s political leaders and those who aspire to understand them. As a senior strategic advisor to MNP Inc and the Jarislowsky Chair at University of Ottawa, Wernick now provides advisory services and mentorship to emerging leaders and to new generations of students.

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