Lockout or strike could have consequences for Trudeau’s political ambitions
Canada’s largest railroad companies, Canadian Pacific Kansas City (CPKC) and Canadian National Railway (CN), have issued an ultimatum. They are threatening a lockout — a work stoppage — on August 22 unless their dispute with the Teamsters Canada union is resolved. In response, the union has announced its intention to stage a national strike on that date.
The problem is this: if there is a lockout, the workers are not paid for that day, but if there is a strike, the employers are obligated to pay. But for passengers, shippers, receivers, and others, it’s a lose-lose situation. They will lose time, money or, more likely, both. Of course, this will cause widespread frustration among the public, and in the meantime, the general election is fast approaching, in which Trudeau’s party has a good chance of losing power.
But let’s get back to the conflict between the railroads and the union.
Labour movements in Canada are strictly regulated. The union must hold a vote on a proposed strike, and the company must hold a vote on a lockout. If the majority votes in favor, under the supervision of the union council, they can either take to the streets or walk off the job after 72 hours.
Since 1993, ten agreements have been concluded between the union and the companies to regulate the working conditions of railway workers. The last one expired on December 31, 2023, but was extended until the parties sign a new agreement.
Last June, the Federal Court found Canadian Pacific (now Canadian Pacific Kansas City) guilty of violating the rights of employees who worked overtime in 2018–2019, when the country was hit by an eight-day strike.
The company promised to appeal, and in February 2024, CN and CPKC asked the federal minister of labour to appoint a mediator to negotiate a new collective agreement for conductors, engineers and depot workers. However, even under these conditions, no agreement has been reached: negotiations have stalled.
As usual, there is a contradiction between economic and social issues: companies need labor resources, while those resources and the union that protects their rights need decent working conditions.
What do the rail companies want? CN is trying to address the labor shortage by requiring workers to adopt a rotating shift system. This means that engineers, track workers, dispatchers and other employees would have to leave their permanent jobs for several months each year to fill labor gaps in remote areas of Canada, probably while maintaining their regular pay. However, the climatic conditions in some areas of Canada are quite harsh.
Teamsters Canada opposes the rotating shift system because of the inconvenience it causes workers, forcing them to live away from their families, etc. The difficulty of agreeing on such a proposal is further complicated by the need to convince the union to extend the work day to all provinces west of Ontario.
Meanwhile, the CPKC is seeking to reduce the rest periods for railway workers. Teamsters Canada argues, not without reason, that these provisions are critical to safety and that the CPKC’s demands will lead to an increase in accidents on the railways.
In May 2023, new regulations came into effect, limiting the maximum shift length for workers to 12 hours (down from 16). The minimum rest period between shifts was also increased to 10 hours at home and 12 hours away from home, compared to the previous 6 and 8 hours, respectively. It seems that the railway companies are not ready to agree to such a working regime.
Notably, just prior to the lockout warning, the Canadian Industrial Relations Board ruled that CN and CPKC would not have to maintain operations in the event of a strike or lockout because (caution!) «railway communications are not considered critical under the Canadian Labour Code».
The decision seems odd, to say the least. Given the peculiarities of Canadian geography, the country’s vast territory and low population density, a shutdown could disrupt supply chains across the country. Annually, $277 billion (C$380 billion) worth of goods are transported by rail. Canada is not the only country that could suffer after August 22. Seventy-five per cent of exported goods go to the United States and Mexico, which are linked to Canada by the USMCA free trade agreement.
The decision by the Labour Relations Board has caused panic among national companies. Fertilizer Canada, for example, said that the threat of a work stoppage has already begun to affect fertilizer shipments, adding that it expects further delays in rail service. The company’s statement said the unfolding situation could have disastrous consequences for agriculture and food security.
In a letter signed by nearly 100 business groups and industry associations, the Canadian Business Council urged the federal government to intervene immediately. «In addition to the overall damage to the economy and jobs, a national walkout will result in higher prices for essential goods at a time when Canadians are struggling with affordability», the letter said. The Canadian Manufacturers and Exporters Association estimates that the planned action will cost businesses $200,000 per day.
These problems come at a bad time for Justin Trudeau. According to Statistics Canada, 2,800 jobs were cut in July. Although unemployment remains at 6.4 per cent, the agency is concerned about employment difficulties for young people aged 18 to 24, especially immigrant children. And while the Bank of Canada’s July Monetary Policy Report showed signs of a slow economic recovery — falling inflation and accelerating economic growth — it is unlikely to be enough to win back the support of voters in the upcoming 2025 election.
Trudeau’s rival from the Conservative Party, Pierre Poilievre, is trying to focus on the representatives of the working class, declaring the need to impose tariffs on Chinese electric vehicles, parts, steel and aluminum — similar to the U.S. — to protect domestic industry. Trudeau, in turn, accused the Conservative leader of not caring about workers’ interests and of wanting to destroy Canada’s auto industry by cutting investment in electric vehicles.
Canadian voters will have to decide next year how effective financial investments in electric vehicles and the introduction of tariffs on Chinese goods will be. But with each passing month, the picture for Trudeau becomes more troubling. If the unions and the railways cannot reach an agreement in time, Canada could face a complete shutdown, undermining the federal government’s efforts to revive the economy and dealing another blow to the Liberal Party’s reputation.