Whatever pay raise federal public servants get, layoffs could be next

Whether the union representing more than 150,000 striking federal workers gets everything it wants or has to make concessions, the cumulative wage increases will add billions to government spending at a time when public appetite for large deficits is waning.

Faced with diminishing political capital, the federal Liberal government will be under immense pressure to control spending, observers say — including by cutting the public service.

And if layoff decisions are made based on seniority — a topic that's come up during current negotiations — those hired during the COVID-19 pandemic could be the first to go.

The Treasury Board's own initial costing of the union's demand of a yearly pay raise of 4.5 per cent — cumulatively 13.5 per cent over three years, but actually higher when compounded for the bulk of striking workers — pegged the amount at more than $3 billion in extra spending per year.

This figure, however, neglects the fact that Canada Revenue Agency workers are demanding significantly more. 

It also doesn't take into account the knock-on effect those proposed pay bumps could have on other bargaining units negotiating new contracts. 

The Public Service Alliance of Canada (PSAC) workers on strike represent a large percentage of the federal public service, so the deal they forge will be "a benchmark settlement," said Kevin Page, a former parliamentary budget officer who now heads the Institute of Fiscal Studies and Democracy at the University of Ottawa.

"All other bargaining groups are going to look at this. And it will effectively become a floor in their negotiations," he said. 

There are already signs the various bargaining units, each representing a different pocket of workers engaged in their own negotiations, are in lockstep.

Earlier this week, one unit representing more than 8,000 Canada Border Services Agency workers said it was slated to go back to the negotiating table on Tuesday.

But it won't as long as the current strike continues, the group said in a news release. 

"It's clear the ongoing generational labour actions by PSAC members will lay the foundation for future gains for all Canadian workers," the group said. 

Across Canada, the federal public service has grown by some 30,000 jobs over the past two years, bringing the total cost of personnel spending to roughly $60.7 billion in the last fiscal year, according to a report released earlier this month by the Office of the Parliamentary Budget Officer (PBO).

That's $14.4 billion more than the pre-pandemic fiscal year of 2019-2020.