BJK Financial Group Blog

The Canada Post strike, unfolding during a planned but inconvenient time—the holiday season,  is more than a labour issue, it’s a pivotal moment that could affect how businesses approach shipping logistics in the future, consumers and the Canadian economy at large. As strikes continue to disrupt mail and parcel deliveries, businesses are adapting by switching to other carriers, this is the main cause of economic consequences. 

Situation Break Down: 

For those unfamiliar with the cause of the strike, Canada Post is facing labour action from the Canadian Union of Postal Workers (CUPW), which is advocating for better wages and working conditions. This ongoing strike, now in its fourth week (at the time of writing), has disrupted businesses in their most crucial season, forcing many to rely on more expensive carriers like FedEx, Purolator or UPS.  As businesses invest in these alternatives to keep their operations going, they risk permanently shifting away from Canada Post to avoid future inconveniences and uncertainty to support their customer satisfaction rate. This is especially true for smaller businesses that don’t have the capacity to absorb the costs brought by the strike. Moreover, the strike timing couldn’t be worse. As online shopping grows in popularity holiday shopping businesses and consumers are more adamant to navigate these delays, using the alternative shipping solutions. 

Why this happened:

This Postal Strike isn’t the first one for Canada Post, back in 2018 this also happened because of similar unresolved issues regarding wages, benefits and working conditions. Now the main dilemma is the wage increases for the workers to keep up with rising inflation also including but not limited to : better group benefits such as more paid medical leave, improved protections against technological changes, paid meal/ rest periods and higher short-term disability payments. Global News tells us that “The Canadian Union of Postal Workers (CUPW) described the decision to strike as a “difficult” one, made after more than a year of negotiations with the employer.” On the other hand, Canada Post is navigating significant financial challenges, having incurred losses of $3 billion since 2018, with $490 million reported in the first half of 2024 alone. The corporation has proposed wage increases of 11.5% over four years, additional paid leave, and a shift to a seven-day delivery model as part of its strategy to grow its parcel business and address operational inefficiencies. However, CUPW argues that these proposals do not adequately address workers’ concerns or the risks of potential layoffs. 

Canada Post’s Role in the Economy: 

The Canada Post strike has cost the small- and medium-sized business sector at least $765 million or $76.6 million each business day. At this rate, if the strike is not immediately resolved, it will have cost the sector over $1 billion as of December the 4th, warns the Canadian Federation of Independent Business (CFIB). With companies switching to other corporations this would also up the costs for consumers. This postal service supports major economic functions like delivering government payments, business invoices alongside online retail shipments. In addition to financial losses, rural and remote communities often lack alternative shipping options making Canada Post’s availability essential. 

What’s Next? 

As seen previously, a solution for this issue in 2018 has been to get back the to work legislation. This is when the government passes a law to stop a strike and forces workers to return to their jobs while negotiations continue. It’s usually done to avoid big disruptions, like in mail delivery or public services, but some people think it’s unfair since it weakens the union’s power. This option has always been only used as a last resort and as of right now this has not been one of the main considered solutions. Canada Post has also threatened lockouts to push government intervention which could lead to binding arbitration, this is where unlike previous negotiation the decisions made through negotiation are legally enforceable and can’t be appealed. Enforced solutions were used during the 2011 strike and during the one in 2018 by Prime Minister Justin Trudeau. This time however the Liberal minority government might not be able to impose the back to work legislation as they did with the railway shut down this past august. As a minority they would need the support of at least another party to pass any legislation. The New Democratic Party, specifically Matthew Green (NDP’s labour critic) said: “There is not a scenario where we’ll be supporting the back-to-work- legislation.” Finally, the progress of negotiations can change on a day-to-day basis and these decisions will determine the final consequences for Canada Post, its workers, businesses and consumers.