Canada lands May Day deal to end strike by federal workers

Canada's government struck a deal with 120,000 federal workers on Monday, effectively ending the country's largest public-sector strike ever that had crippled services from passport renewals to immigration for almost two weeks.

While most strikers returned to work on Monday, more than 35,000 revenue agency workers who also walked out on April 19 are still negotiating, the Public Service Alliance of Canada (PSAC) union said.

That deadlock will continue to slow the processing of annual tax returns. Those union members who got an agreement will vote on whether to accept the deal "in coming days", PSAC said.

"This May Day we're celebrating a huge win, on the heels of one the largest strikes in Canadian history," PSAC said on Twitter, referring to International Workers' Day, which is celebrated on May 1.

The deal will be a relief for Liberal Prime Minister Justin Trudeau, who has often won the support of unions and union members in his three election wins, according to pollsters.

Union leadership will cast the deal as "an honourable compromise," said Michael Wernick, Canada's former top bureaucrat who is now a professor at the University of Ottawa. The union members "couldn't have got everything they wanted."

PSAC said it had secured a total wage increase of 12.6% over four years, having turned down an offer of 9% over three years when it called the strike. The deal includes a one-off payment of C$2,500 ($1,845).

The union got a "good deal" on wages, said labour lawyer Rich Appiah, and it "will be used as a precedent in other negotiations."

The Treasury Board, which is the employer, still has about two-dozen other public-sector contracts to negotiate, said the board's president, Mona Fortier.

The deal "is reasonable" and "fair for Canadians," Fortier said. "I have another 23 more deals to work on now."

INFLATION AND REMOTE WORK

The wage agreement will make it harder for the central bank to bring inflation back to its 2% target, said Derek Holt, head of Capital Markets Economics at Scotiabank. Inflation was 4.3% in March, down from a peak of 8.1% last year.

"This deal will complicate the Bank of Canada's inflation fight," Holt said. There is evidence collective agreements "can ripple through other wage agreements and buoy core inflation for longer."

Last month the Bank of Canada left its key overnight interest rate on hold at 4.50%, but struck a hawkish tone as the risk of a recession diminished.

The deal fell short of getting work from home enshrined into the collective bargaining agreement. PSAC had been in talks to renew its contract since 2021, and this is the first agreement done since the COVID-19 pandemic hit and forced millions to work remotely.

Now many federal employees say they work better from home and do not want to return to the office. There is a letter of intent to address remote work requests individually and in writing. However, the manager will have the last say.

Were remote work in the collective agreement, it would mean negotiating with the union on the issue "as two equal players, as opposed to the federal government making a decision" on whether to allow remote work or not, said Lori Turnbull, director of the School of Public Administration at Dalhousie University.

"Other public sector unions would have wanted the same" had remote work been part of the collective agreement, Turnbull said.

The Treasury Board said that working up to three days a week from home would be allowed - as was the case before the strike - and panels will be created to help managers address employee concerns.

($1 = 1.3547 Canadian dollars)