Crossing the Line: The Strike’s Impact on Ottawa–Gatineau’s Economy

Yesterday marked the beginning of strike action for 155,000 federal public service employees across Canada, the first nation-wide federal service strike since 2004. Wage increases were a key sticking point in negotiations, and latest indications are that an agreement between the federal government and the Public Service Alliance of Canada may take time.

By and large, the economic impact of the work stoppage will be felt in Ottawa–Gatineau, where we estimate that, excluding essential workers, as many as 43,400 of the 155,000 employees on strike reside. Utilizing our forecasting model of Canada’s major cities, we are able to present the following insights:

  1. Household income in Ottawa–Gatineau will decrease by $44 million per week, representing 5 per cent of total wages and salaries in the CMA. This figure is alarming, but not surprising given that the employees on strike account for about 7 per cent of all jobs in the city. Our estimates assume that 10,000 federal workers in Ottawa–Gatineau are deemed essential and will still receive regular pay. We have also assumed strike pay of $375 per week. Overall, a weeklong strike would take less than 0.1 percentage points out of Ottawa–Gatineau’s annual economic growth.
  2. A prolonged work stoppage would take its toll on Ottawa–Gatineau’s economy. Strike pay does little to supplement the lost income of many households, especially those that have more than one member affected by the strike. A prolonged strike will have knock-on effects across many other sectors. Consumer-facing businesses such as restaurants and retailers would be impacted the most. Even prior to the strike, the Ottawa–Gatineau economy was forecast to post weak growth this year as inflation and high interest rates take a toll on consumer spending.
  3. The strike will have broader impacts Canada-wide. The strike will impact delivery of services across Canada—for instance, tax returns may be delayed this year. About 30,000 of the 155,000 workers are deemed essential and will be allowed to cross picket lines to deliver services. If there are disruptions to airports, ports, border crossings, or the rollout of pensions or other payments, the economic impacts could be greater.