A Roadmap to Recovery Business Strategies in the USA and Canada

And there is more to come. The United Auto Workers, along with their Canadian counterparts in Unifor, have voted decisively in favor of a strike if an agreement is not reached shortly.This may not be all that shocking. Last year, inflation reached levels not seen since the 1980s, and it did so at a faster rate than at any other time since 1950. Rising prices mean wages and salaries can buy less than previously, reducing the real worth of pay. While inflation has slowed somewhat, affordability issues persist. In a recent research for The Hub, I found that prices are more than 6% higher than they would have been if inflation had remained on target. Workers will naturally work hard to regain their lost purchasing power. With tight labor markets, they frequently have the ability to demand exactly that.Indeed, recent collective agreements have resulted in significant increases in wage settlements. The average yearly salary rise among the 26 major settlements negotiated in the first half of this year was roughly three percent. That is more than double the typical 1.5 percent annual increments agreed upon previous to the pandemic, but it remains below inflation. We may expect this trend to continue. The Bank of Canada surveyed business leaders, and they expect pay rises to average around 4.5 percent in the following year.

However, as more contracts expire and broader economic. 

conditions worsen, many companies may find it increasingly difficult to fulfill rising pay expectations. This might result in further strikes, job stoppages, and disruptions across the economy.We have seen this before. Historically, the frequency and magnitude of work stoppages correlated quite closely with general inflation. Beginning in the late 1960s, inflation gradually increased. By the 1970s, it had risen to ten percent at times and remained uncomfortably high until the early 1990s. Strikes and other labor issues have substantially increased. Work stoppages increased from less than 500,000 days per quarter in the early 1960s to more than four million days per quarter by 1974. Such disruptions had considerable economic costs. In 1976, over 12 million work days were lost. That's potentially 80 to 90 million hours where workers received no pay and corporations produced no output—equivalent to approximately two to three percent of all hours worked in the economy.Today, the scenario is less gloomy, with disruptions accounting for roughly 0.5 percent of total work hours. However, even a slight rise might have a negative impact on Canada's already sluggish economic development.However, there are some reasons to be optimistic. Strikes increased in the 1970s and early 1980s for reasons other than growing inflation. It was also owing to uncertainties about future inflation levels. Some, such as former Bank of Canada governor David Dodge, have claimed that many pay demands at the time were intended to protect against unanticipated spikes in inflation throughout the course of the employment contract. Uncertainty was thus a driving force behind escalating wage demands and subsequent strikes.

Nowadays, things are different. The Bank of Canada.

along with central banks throughout the world, is vigorously working to return inflation to a clearly stated objective of two percent. Some may doubt their ability to achieve, but overall inflation forecasts are substantially more stable than they were a half-century ago. Over the next five years, Canadian consumers expect inflation to average around three percent per year. Business owners have similar expectations. With less uncertainty about future inflation, it may be easier to negotiate and agree on more gradual changes to worker compensation and conditions. If the Bank of Canada can successfully and consistently return to normal inflation rates soon, its reputation may rise, making negotiations easierThe saintly editors at The Hub have consented to use one of my two monthly articles for the site as a monthly transatlantic journal. For readers unfamiliar with the format, which is more typical in British journalism, the diary is a collection of brief articles, some on a common theme, others not. In my case, they have one thing in common: they are either too insignificant to warrant a whole piece, or I can't be bothered to come up with anything other than a knee-jerk reaction or a flip comment. This is August.With apologies to Eliot, August is the cruelest month. 

It arrives so unceremoniously that you barely notice. 

the calendar has turned. Fall is still so far away and out of mind that the months blend into one unending summer. Then, just as you've exhaled and relaxed, September arrives, casting a lengthy shadow over your days. After that, the evenings have a sharpness that was not present before. In much of Canada, the first two, or at most three, weeks of August are considered summer. After that, it's just a matter of counting down the days until Labor Day and the return of responsibility. August is a con.I spent the majority of the month in Victoria, at a house just a few minutes away from my childhood home. I once attempted to write about this neighborhood, notably the tangle of alleys connecting the houses. I was not pleased with the outcome—too precious; too contrived—so I never published it, but the August heat has brought me back to the cool shade of the Oak Bay alleys. In that unpublished work, I argued that traveling by lanes means seeing the world from an unexpected perspective, either behind or within it. Children play unsupervised in the backs of houses, and private washing is left to hang. Lanes are remnants of an ancient way of life in which the distinction between public and private was blurred, everyone knew everyone's business, and no one arrived or went unnoticed.