A Vicious Circle
Canada this year faces bleak economic prospects: inflation is running at an 11.1% annual rate, production growth seems likely to be zero, and unemployment is expected to rise from the current 7.2% to 10%. One major reason for all this is a peculiarly vicious circle: to keep up with inflation, workers have been demanding huge wage settlements that fuel further inflation. Strikes have also disrupted production enough to increase unemployment more than the recession alone would have done.
In 1974 Canada lost a total of 9.3 million man-days of work as a result of strikes. Among the 24 industrialized, non-Communist nations belonging to the Organization for Economic Cooperation and Development, only Italy had a poorer record. This year the trouble is likely to be even worse. All together, 1.5 million workers will be affected by contract negotiations this year, twice as many as in 1974. While the Canadian economy was booming and profits were high, as was still the case during 1973 and early 1974, private and government employers generally gave in to labor's demands for higher pay. Now that Canada's economy is clearly slumping, bosses will be more frequently inclined to say no. Already this year, nurses, schoolteachers, dockworkers, airport firemen, traffic controllers and runway maintenance crews have walked off their jobs.
During the last quarter of 1974, Canadian wage boosts averaged 17.2%, more than twice the typical American raise during the same period. Pacts signed so far in 1975 have provided increases ranging from 29% to 80% over the next two years or so. The increases have forced up the price of some exports and consequently reduced their competitiveness in foreign markets--a serious matter for a nation that depends on exports for 30% of its gross national product. And the walkouts have been crimping the economy directly. Last fall, for example, grain handlers on the west coast around Vancouver struck for seven weeks. They returned only after the Canadian Parliament imposed a settlement and after Japan and China had shifted some orders for grain--Canada's most important export--to the U.S. and elsewhere. The national postal system was weakened so badly by periodic rotating work stoppages last year that some mail sent in November is only now being delivered. Sorters in Montreal post offices continue to stage wildcat strikes in hopes of winning a gargantuan 71% pay increase and halting automation.
On Schedule? Currently, walkouts are threatening Canada's plans to serve as host for the 1976 Olympics, scheduled to be held in Montreal. Strikes and stoppages have so slowed construction of a new 70,000-seat stadium and other Olympic facilities as to raise a question of whether they can be ready in time. Last week, while the International Olympic Committee, meeting in Lausanne, Switzerland, received assurances from Montreal Mayor Jean Drapeau that the games would be held on schedule, construction workers in Quebec and at the Olympic construction site struck yet again, this time mainly to protest a blunt, 603-page report on corruption and crime in four Quebec Federation of Labor unions. The Quebec government had already voted to replace tainted leaders with government-appointed trustees.
Federal response to the labor troubles has been ineffective. "This country has done nothing to give anybody the impression that restraint was really necessary," says Carl Beigie, a member of TIME Canada's Board of Economists. Finance Minister John Turner has proposed a "consensus approach" of voluntary wage controls, but it has been turned down by the Canadian Labor Congress. Compulsory wage and price controls were rejected wholeheartedly in last summer's election by the victorious Liberal Party campaigners. In any event, the government has not set a good example: last month both houses of Parliament voted to raise their salaries by 33 1/3%.
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