Corporate earnings after tax have reached a historically high proportion of the Canadian economy’s total output. (Photo: The Canadian Press)
OTTAWA – Record labor shortages and rising wages may seem like good news for workers, but union leaders say workers aren’t really benefiting from corporate gains amid rising inflation.
Canadian Labor Congress president Pia Prosk says workers are feeling the effects of the rising cost of living on their finances.
Canada’s annual inflation rate was 7.6% in July, while wages rose 5.2% over the same period.
Meanwhile, Bea Bruske says companies in sectors like oil and gas have posted record profits.
She says that addressing this imbalance is one of the priorities of the labor movement in the future.
“It’s about making sure we actually respond to the affordability crunch by tackling inflation and asking governments to look at the huge profits that many employers are making right now,” Bee said.
The New Democratic Party has urged the federal government to extend the windfall tax, which already applies to financial institutions, to also include oil and gas companies and large retailers.
But some economists worry that these taxes will scare off business investment.
According to an analysis by David MacDonald, chief economist at the Canadian Center for Policy Alternatives, after-tax corporate earnings reached a historically high proportion of the Canadian economy’s total output in the second quarter of this year.
In contrast, David MacDonald has found that workers’ compensation as a share of GDP is trending downward, dropping to its lowest level since 2006.
“Obviously we’re making record profits and a record proportion of our economy is going to corporate profits after taxes rather than workers’ wages,” MacDonald said.
The economist says the current windfall tax is “very limited” and suggests extending it to the entire business sector.
Some companies have undoubtedly been affected by the COVID-19 pandemic, says Sean McKinney, president of the Ottawa Local Labor Council, but seeing high profits for some companies has been disappointing for workers.
“This upsets workers in general because, again, justice does not exist,” said Sean McKinney.