Key to mending broken labour relations is fixing inflation, RBC economists say

A new report from Canada's largest bank shows that high inflation is driving workers to strike for higher wages, and claims it could become more strained than labor relations in Canada.

According to a report published by RBC Economics on September 20, uncompleted workdays due to work stoppages increased by 49% in 2022 compared to the ten-year average before the outbreak of the coronavirus.

Conflicts between employers and workers have not abated in 2023, and so far we have seen strikes by federal workers, B.C. Ports workers, auto workers, department store workers and TVO workers, entering their fifth week of strike action on September 21st.

Reducing inflation can be the key to restoring peace in business relations.

High inflation in Canada has had a great impact on labor movements and has encouraged them to protest for higher wages. A new report from Canada's largest bank, RBC, shows that recent wage increases have reached their highest level yet. This issue may be due to the concern of labor unions about the doubling of the inflation rate and its effect on the purchasing power of workers. According to data from Employment and Social Development Canada, the rate of wage growth rose to 7.1 per cent in July, the highest rate for a first-year adjustment since the late 1990s.

However, unions have alleged that employers have locked up millions of dollars in long-term investments or exploited potential profits instead of paying workers fair wages. For example, the Canadian Broadcasting Corporation has announced that the Ontario Public Broadcasting Corporation invested $17 million in five-year long-term certificates of deposit last year, exceeding the appropriate amount for long-term investments.

Labor disputes have also increased in the country and reports indicate that negotiations between labor unions and employers are progressing with difficulty. As the economy weakens, the ability of employers to accept stronger demands from labor unions decreases and it becomes more difficult to pass on operating costs to customers.

Finally, the report asserts that taming inflation and restoring balance to the labor market could be the key to returning peace to Canada's labor relations.

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