Federal public servants who went on strike for higher wage increases announced a tentative deal Monday: they’re getting 12.6-per-cent raises by 2024, chasing the pace of rising prices. 

“During a period of record-high inflation and soaring corporate profits, workers were told to accept less—but our members came together and fought for better,” Public Service Alliance of Canada’s (PSAC) national president Chris Aylward said in a statement. “This agreement delivers important gains for our members that will set the bar for all workers in Canada.” 

Whether they vote to approve the increases or keep striking, the PSAC members’ successful strike sets the stage not only for other public sector workers, but for everybody.

A strong public sector is one of the best tools we have to prevent wealth from endlessly accumulating among the corporate elite and ultra-wealthy investors. It creates stable jobs with decent pay, drives economic growth, accelerates action toward gender equality and creates resilience in regions experiencing economic distress.

PSAC’s push for higher wages and fair working conditions will have ripple effects across the country. Here’s why. 

The public sector is how we redistribute wealth to the majority

Canada’s tax system is not nearly as progressive as it could be. But it still (mostly) taxes the ultra-rich at higher rates than the working class and poor.

So when tax money is used to create stable, unionized, decent-paying jobs, that’s money taken disproportionately from the top that flows into working class communities.

Public sector workers then spend that money in their communities, fueling economic development and other local jobs. They pay municipal taxes, which helps to fund local services. Studies show communities with unionized jobs are healthier overall. Decent pay and vacation benefits also mean workers have time for civic engagement and capacity to donate to local organizations and causes at above-average rates.

A look at countries with a large public sector confirms this. The five Organisation for Economic Co-operation and Development (OECD) countries with the highest proportion of government jobs also have some of the lowest rates of inequality. Those with smaller portions of government workers tend to have higher levels of inequality (with the exception of the Netherlands, which taxes the wealthy at high rates).

Countries with higher proportions of people employed by government tend to have the lowest rates of wealth inequality. Graph: The Breach Data: OECD

Unionization—which is much higher in the public sector—typically raises wages by 15 to 20 per cent. That in turn raises expectations for workers in nonunion positions. When unions are present in a sector, nonunion wages also increase substantially.  

Economic growth currently relies on public sector work

Even the business press and a right wing think tank have admitted it: the public sector is driving a post-lockdown economic recovery. A report released in September 2022 found that almost 87 per cent of jobs created since the pandemic were in the public sector.

While Canadian billionaires sit on piles of wealth that evoke Scrooge McDuck’s vault, refusing to invest in job creation, the working class must rely on modest public sector growth to stave off a recession.

One of the best ways to boost that economic recovery would be to tax the wealthy (or just ensure they pay their taxes) and pay public sector workers decent wages. Creating additional jobs by reversing cuts to the workforces in areas like health care, which are suffering from poor pay and grueling work conditions, would create even more benefits.

Sometimes, the private sector does create jobs—but only when investors think there’s money to be made. The public sector can create jobs for the sole purpose of benefiting the public.

Corporate profits and giant piles of wealth could be taxed at a much higher rate, but the fact is that the ultra-rich mostly avoid paying the taxes they owe. 

This irony is not lost on the thousands of Canada Revenue Agency workers currently on picket lines. Nor has it escaped the public, who are largely aware that much more could be done to ensure tax revenues are collected fairly.

Public-sector workers are seen on strike in Montreal. Credit: Kate Addison

Gender equality is boosted by a unionized public sector

Regularly portrayed as crucial economic engines by establishment media, extraction industries like oil, forestry and mining have workforces that are overwhelmingly male-dominated. Under 20 per cent of employees in mining, quarrying, and oil and gas extraction are women, and women’s representation among executives in the oil industry has dropped in recent years to 13 per cent. 

The public sector provides something of a counterbalance to this dynamic, particularly in rural areas. About 56 per cent of federal public sector workers are women, while the number of women in executive positions has increased to just over half—up eight per cent from a decade ago.

Unions like PSAC have led the charge for pay equity for decades. In 1999, PSAC won a landmark lawsuit that resulted in $3 billion in compensation to long-underpaid federal employees, mostly women. And many of the laws and reports the federal government has produced on pay equity over the years were prompted by campaigning and legal action by unionized public sector workers.

Anchoring rural and regional economies

While public services redistribute wealth from the top to the bottom, they also play a key role in regional distribution. While private sector employment tends to pool in a few big cities, public sector jobs serve as an economic anchor in the country’s regions.

Besides a large concentration in Ottawa, federal public sector jobs are distributed relatively evenly across all provinces and territories.

Especially in rural areas, the stable, unionized jobs provided by the public sector can make a crucial difference for local economies. When communities depend on industries subject to boom and bust cycles—like mining, forestry, and oil—public sector spending can be a source of resilience.

When commodity prices fall, a collapse in jobs can wipe out the economic base of rural communities built on extractive industries. The public sector can ensure one pool of workers remains employed and continues to spend money. 

While private sector employers lay off hundreds when markets get bumpy, data shows that public sector jobs protected by unionization remain relatively constant. 

The wages spent by unionized workers in smaller communities can circulate several times, fuelling local employment and economic development. 

The number of full-time employees working for the Canada Revenue Agency by region shows that public-sector work is spread across the country. Map: The Breach Data: CRA

Reconsidering public sector work

This reality flies in the face of right-wing caricatures that seek to divide workers based on perceived privileges. The corporate-funded Fraser Institute tries to slag public workers by complaining that they get paid more, retire earlier and get more days off, implying that the workers are mooching off others. 

The truth is that public sector jobs set a higher standard for everyone and stabilize the economy. A larger public sector would create even more benefits.

Public sector workers add to everyone’s quality of life when they’re on the clock, too, contributing to safety, health, and governance of the communities they work in. (And when they don’t, it’s usually because of bad policy).

As our economy and society is forced to rapidly adapt to climate change, the public sector will play a key role. It can be an engine of transformation, and a mobilized and informed public sector workforce will be a crucial counterweight to corporate power grabs and price gouging.

All workers deserve decent pay and benefits for their work. But there’s even more at stake in this fight. Stability, economic fairness, and equal opportunity for a good life are strongly linked to the state of our public sector.

The activities of public sector workers—and their economic and political power—is the source of most of the things that people value about living in Canada.

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