Nation's capital could see economic effects of PSAC strike

There are worries over how the local economy will fare as public servants walked off the job Tuesday, while the Ottawa-Gatineau region is in the midst of recovering from the pandemic.

Friday marks the third day of the national strike for more than 155,000 employees in the Public Service Alliance of Canada (PSAC). The union estimates there are tens of thousands of employees on strike locally.

Jasmine El Adnani owns Presse Café on Queen Street in downtown Ottawa. She said the strike has already forced her to lay off employees. 

"We were not making enough money yesterday so I was worried," she said Friday. "I have to make sure to help my business survive."

Previous strikes have been relatively short-lived. But with federal workers making up about five per cent of local wages, when their income drops, so will their spending.

"Strikes that are short usually have very little repercussion on the economy, but because the public service is such a large part of the Ottawa-Gatineau economy, even a week-long strike would start to have some repercussions," said Pedro Antunes, chief economist at the Conference Board of Canada.

"Restaurants and food services, for instance, will probably be the first to feel it," he said.

That drop in spending is something local businesses that have relied on federal workers for years are wary about.

"There is a worrying concern if this [strike] does last long," said Michelle Groulx, executive director of the Ottawa Coalition of Business Improvement Areas.

Some downtown businesses are seeing a slight uptick in customers, depending on their proximity to pickets.

"People are on the lines," she said. "Popping in to get coffee and some refreshments is always good and it does help serve those local businesses who have been struggling for a while."

Remote work

What has hurt businesses most, she said, is remote work.

She wants to see a clear plan for a balanced workforce throughout the city in case another strike or pandemic occurs.

"Having a more diverse downtown means that businesses won't suffer no matter what the decision is," she said.

There are other worries beyond the short-term effects on businesses and the economy from a drop in spending, she said.

Since non-essential Canada Revenue Agency employees are among those who have walked off the job, she worries there could be delays for small business or startups in getting rebates or tax credits they rely on for cash flow.

National repercussions

Locally, Antunes said even a week-long strike could eat a tenth of a per cent into the region's economic growth. And as that growth is expected to hover around 1.3 per cent for the year, it could be wiped out within a few months.

Nationally, he doesn't believe there will be as much of an economic effect from the strike.

However, in a note sent earlier this week by Derek Holt, vice-president and head of capital markets economics at Scotiabank, he suggested the national gross domestic product could drop 0.2 per cent if the strike lasts one month.