Economy, bargaining and the vital role of public services

Pierre Ducasse | CUPE Communications

An interview with CUPE economist, Angella MacEwen

Angella MacEwen is CUPE’s senior economist. Focusing on the impacts of the economy and social policy on workers, she shares with us her thoughts about the repercussions the pandemic will have on collective bargaining and the economy.

At the time of this interview, we are still in the pandemic crisis. We have not yet experienced all its repercussions. How do you think this event will impact the economy in the short and medium term?

The immediate impact has been intense. About one million workers were unemployed before the coronavirus. In the first week of Canada’s effort to slow the spread, at least another one million workers applied for Employment Insurance – and we will likely see more layoffs throughout April. Unemployment is estimated to triple.

Economists think that we are already in a recession, and because we don’t know how long public health measures will be in place, we don’t know how long it will last. The record low price of oil is going to make the recession worse for oil-producing provinces. The policies that the federal government is putting into place are meant to bridge workers and businesses through this crisis. The stronger that bridge is, the faster the recovery will be once the pandemic passes.

Interest rates in Canada and the United States have been cut to 0.25 per cent, and many central banks are taking action to support the economy to prevent the kind of fiscal crisis we saw in 2008. Lower interest rates mean that federal and provincial governments can borrow at record low costs. The benefit of government spending to support the economy now will pay off in the medium and long term.

What about bargaining? What will the challenges be and how do we prepare?

Many provinces were already pursuing wage restraints. The pandemic response means that provincial governments will have less revenue coming in and have increased spending requirements, so we should expect that to continue.

This pandemic has affected different sectors in drastically different ways, from airlines to child care workers. Each sector will probably have some important lessons learned that they can bring forward into their next round of bargaining. This will include language around job protections and wage supports if workers have to quarantine; health and safety protections for workers; and plans for bringing shuttered public services back online.

Pensions are another issue. The stock market has declined dramatically, and interest rates are at record lows. Workers that don’t have defined benefit pension plans may be faced with the prospect of postponing retirement, as we saw after the 2008 financial crisis. Defined benefit pension plans will be under strain again to be sure, but in the long run, our economy should recover, and pension plans along with them. So, stepping up to fiercely defend our pensions will be key.

What do you think of the response of the federal government so far? Are we leaving at-risk workers and vulnerable people behind?

So far, the government has recognized the scale of the problem. The initial response was to make sure that workers who had to stay home and couldn’t work would have income support and job-protected leave, and to make sure that essential workers had the equipment and protocols that they needed to stay safe.

The result has been a series of announcements of plans targeted to specific kinds of workers and sectors. Targeted plans inevitably have gaps, because they aren’t universal approaches. To be fair, the government has been flexible in acknowledging these gaps and trying to address them with new programs or by adapting the initial announcements. Government plans, however, are still leaving some people out, including those who were already unemployed; those receiving inadequate supports from social assistance programs; students; seniors who have seen their retirement savings fall; or workers that have lost most of their income, but not all of it. Rather than targeting, it would have been simpler and faster to offer a universal benefit. Fewer people would have been left out.

What should we learn from this crisis?

We have been reminded of the importance of public sector workers. We miss our librarians and recreation workers, but we also realize how much we rely on child care workers and education assistants, cleaners, hospital and long-term care workers, social workers, energy workers, and transit workers. And I know I’m missing many! We also need to talk about the risks that low-wage workers (like grocery store workers and delivery people) are being asked to take, and recognize the importance of their work even after the pandemic passes.

The pandemic has also highlighted inequality in our society. For instance, higher wage workers are more likely to have paid sick leave and the ability to work from home. For low-wage workers, that is much less likely. Precarious workers have become more precarious, as the first people to be laid off were temporary, part-time and contract workers.

We have also seen that we are not prepared enough for this kind of situation. We don’t have enough masks for all health care workers, let alone other workers who must keep working. We don’t have income support programs in place that can respond quickly to large numbers of people who need financial support. We have to be better prepared for other crises that we have yet to face.

I want to emphasize again how important and valuable the public sector and public sector workers are in times of crisis like this. These are the workers who take care of us, who keep the lights on, who keep the water running, and who clean our schools and hospitals for those who have to keep working. When we get through the pandemic, these are the workers who will be so valuable in returning our communities to a healthy and more equitable future.