Building a stronger public service and providing workers with cost-of-living wage increases benefits local economies and helps fight the impacts of inflation driven by many of Canada’s wealthiest corporations, according to new publications from l’Institut de recherche et d’informations socioéconomique.

The socio-economic briefs reinforce the Public Service Alliance of Canada’s bargaining demand for fair wages for more than 165,000 federal public service workers in negotiations with the federal government.

PSAC declared impasse in negotiations in May after the government offered workers wage increases averaging 1.7% per year that falls well short of record-high inflation.

“Hard-working public service workers are falling behind as wages fail to keep up with the soaring cost of living,” said Chris Aylward, PSAC national president. “That’s why we’re fighting for fair contracts for our members – because it supports their communities and raises the bar for all workers across Canada.”

Public sector jobs act like a safety net when inflation soars by supporting good, stable jobs and keeping our economy healthy. For every dollar spent in the public sector, between $1.09 and $1.28 is added to the Canadian economy, IRIS reports.

Public sector wages and inflation

Debunking what some bank economists have warned, IRIS explained that cost of living increases for public sector workers have no direct impact on inflation.

In fact, creating new public sector jobs, preserving existing ones, and indexing their wages to meet rising costs is an effective way to counter inflation without hurting workers’ purchasing power through interest rate hikes by the Bank of Canada.

IRIS also found price hikes by Canada’s largest corporations are driving inflation, resulting in record profits of $91 billion for wealthy corporations during the pandemic and increasingly unaffordable prices for consumers.

“If the government is serious about tackling the impact of inflation on Canadians, they would make Canada’s wealthiest pay their fair share of taxes rather than nickel and dime workers at the bargaining table,” said Aylward.

Together, wage increases for workers and eliminating price-gouging by Canada’s wealthiest corporations are the best ways to fight inflation, the brief finds.

Potential job action

PSAC will continue to negotiate for wage increases that keep up with the rising cost of living for federal public service workers when the union and the federal government meet during Public Interest Commission hearings this fall.

If an agreement cannot be reached, PSAC is prepared to take job action to secure a contract that protects workers from skyrocketing inflation.

“Taking strike action is always a last resort, but if we need to go on strike to get the contract federal public service workers deserve, that’s exactly what we’ll do,” said Aylward.