union member looking at grocery bill after grocery trip

Can Unions Help Protect Members Against Inflation?

Rising gas prices. Higher utility costs. Increased rents and mortgages. Skyrocketing grocery bills. Vacation packages that are out of reach. Sound familiar?

Today, everyone is struggling with the rising costs of living: including labour union members.

In Alberta, inflation relief has been offered through provincial programs: including a halt on provincial gasoline taxes and a program for families with children. Yet those measures only go so far.

Can belonging to a union offer additional protection? Let’s take a closer look.

What exactly is inflation?

Inflation happens when the price of goods and services rises over time. It is normal. Typically, inflation will increase by 2-3% per year. However, these aren’t typical times. We are in a period of hyperinflation.

The Canadian inflation rate recently peaked at 8.4% in June 2022. Today, it is sitting closer to 6%, which is still well above average.

A primary way inflation is impacting union members is through the erosion of real wages. Real wages are the wages workers receive adjusted for inflation. When prices for goods and services increase, the purchasing power of a worker’s wages decreases.

What causes inflation?

Inflation can be caused by a wide range of factors. Generally, it is not one thing alone but a combination of price hikes that impact the cost of living for the average person. Factors can include:

  • Increased demand for certain goods and services (for example, real estate or automobiles)
  • Higher demand for natural resources and manufactured goods (eg. steel or microprocessors)
  • Elevated production costs (such as higher gas and fertilizer prices for farmers)
  • Rising utility costs
  • Taxes and government policy
  • The list goes on!

How does inflation work?

The simplest way to explain it is through an example.

If your salary stays the same (no raises this year), and inflation rises by 4% – your cost of living will increase.

Or, to use real numbers, if you spent $10,000 on groceries when inflation was at 2% – and it is now at 6% – you would be paying an extra 4% (or $400) for those same groceries this year.

This means you have less money to cover other expenses or to spend on things that bring you joy, like holidays or new clothing. When inflation puts pressure on our bank accounts, most of us have to be more careful about our spending.

The impacts of inflation on Alberta workers.

The reality is that very few workers are getting wage increases that match the rapid rise in inflation.

Rising operating costs are also putting many (but certainly not all) employers in a challenging position. This can lead the company to consider layoffs or reduced hours for workers. For some, it is a matter of keeping the doors open. For others, it is to protect profits.

What can be done to address these challenges?

One solution is for unions to negotiate for cost-of-living adjustments in their collective bargaining agreements. Cost-of-living adjustments (COLA) are automatic adjustments made to wages based on the inflation rate.

These adjustments help ensure that workers’ wages keep up with the rising cost of living.

In extraordinary times like these, a typical cost of living adjustment will likely fall short of runaway inflation. However, every little bit does help.

Another solution is to work with employers to find ways to reduce costs and improve efficiency, which can help to soften the impact of inflation on workers and protect jobs.

What role can government play?

There are broader policy changes that can be made to address inflation. For example, the federal government can implement policies to control the rate of inflation, such as interest rate adjustments or fiscal policies.

Governments at all levels can also work to reduce inequality through policies like progressive taxation and social welfare programs – so all workers are able to meet their basic needs.

In Alberta, Inflation Relief may be in sight.

The good news? Experts expect inflation is returning to normal levels. Alberta economist Trevor Tombe predicts the inflation rate will fall to around 3% by the end of 2023.

Contact Teamsters 987 to discuss your options.

If you live and work in Alberta and are concerned about the impact of inflation on your wages and cost of living, contact Teamsters 987 today. We are committed to fighting for fair wages, safe working conditions, and other benefits for our members. Together, we can work to ensure that all workers in Alberta can thrive in the face of inflationary pressures.

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