Canada Post strike highlights labour struggle over gig economy and precarious work

The Canada Post strike has entered its second week, with no resolution in sight yet. Though a federal mediator is attempting to broker a settlement between the Crown corporation and the Canadian Union of Postal Workers, reports suggest the parties remain far apart.

The strike began on Nov. 15 after Canada Post workers failed to reach an agreement with their employer. The union is seeking wage increases, secure pensions and safe working conditions, but the strike is about much more than just the pay and benefits of postal workers.

Rather, the issue animating this dispute is the growth of gig work and other forms of precarious labour across the private delivery sector, and consequently, the sustainability of Canada Post in the face of this low-cost competition.

The strike raises important questions about how Canada should respond to the growth of the gig economy, at Canada Post and across the broader economy.

Financial challenges at Canada Post

Canada Post is experiencing considerable financial strain. The crown corporation has registered losses of roughly $3 billion since 2018. It lost $748 million in 2023 and reported an additional $315 million drop in the most recent quarter.

However, management and the union disagree about the causes of Canada Post’s financial woes, as well as how to resolve them.

In the company’s 2023 annual report, Canada Post president and CEO Doug Ettinger called for “greater flexibility in how we deliver, how and when the service is provided, and how we cover the cost of providing the service.”

Describing its current business model as “unsustainable,” the company is seeking to reduce labour costs by introducing more part-time and temporary jobs to allow delivery services on weekends.

In contrast, the Canadian Union of Postal Workers has pointed to Canada Post’s past investment decisions as a source of current financial strain. The union argues the company over-invested in response to a surge in parcel delivery demand, leaving it incapable of sustaining business relationships with key customers, such as Amazon.

The postal worker union is opposed to what it calls the “gigification” of work at Canada Post. Instead, the union proposes expanding Canada Post’s mandate to include additional services and open new revenue streams, such as postal banking.

What the company and union do seem to agree on is the pressure low-cost delivery competitors are exerting on Canada Post. When it comes to resolving this issue, however, there is little agreement.

Low-cost competition and gig work

With demand for its mail services falling, parcel delivery now accounts for a larger portion of Canada Post’s business. But the latter sector is increasingly dominated by low-cost firms that engage workers through subcontracting and other forms of precarious employment. These firms have cut into the postal service’s market share.

Large e-commerce firms, such as Amazon, do not employ their delivery drivers directly. Instead, they rely on an ecosystem of “delivery service partners” working solely with Amazon. Competition for contracts and strict price-setting rules compel these delivery firms to compete by keeping pay and other labour costs low.

Many private delivery firms classify their workers as “independent contractors,” paying them by the delivery rather than by the hour and evading work regulations like overtime pay, and maximum daily and weekly work rules.

While companies engaging gig workers can drive down their labour expenses, the costs are displaced onto society more broadly.

Research from Canada and the United States suggests gig companies avoid paying millions of dollars in payroll taxes and workers’ compensation premiums. This not only deprives workers of protections, but also drains revenues from vital social benefit programs, such as unemployment insurance.

Workers themselves also bear costs. Independent contractor workers are unable to unionize and collectively bargain. Instead of company vehicles, many contractors use their own, personally covering gas, maintenance and repair expenses. Health and safety regulations are virtually non-existent and compensation is limited for workers injured on the job.

Delivery firms utilizing such work arrangements compete with Canada Post largely on the basis of low labour costs sustained by denying workers access to benefits and protections.

Governments failed to regulate gig economy

A recent study from Statistics Canada found that 871,000 people had a job consistent with characteristics of the gig economy, while another 1.5 million engaged in gig work of some type during the study’s reference period. These figures have grown steadily over the last several years.

Labour scholars have long warned that allowing gig and platform work to expand would undermine labour standards and regulations. Left unchecked, poorly paid and precarious forms of work generate a race to the bottom.

Because governments across the country have permitted various forms of poorly regulated gig work to spread, many unionized workers now find themselves in pitched battles with employers seeking concessions in the name of competition.

The Canadian Union of Postal Workers itself is affiliated with Gig Workers United, a group seeking to organize gig workers and advocating for worker-friendly policy changes.

Had governments responded to the gig economy by guaranteeing employment status to all workers, reforming labour laws to facilitate greater access to unionization and cracking down on employee misclassification, fewer union members would likely be facing pressure to lower their standards and expectations.

By introducing only minimal reforms, as Ontario and British Columbia have done, governments set the stage for labour strife between union members trying to defend their relatively better pay and working conditions, and employers squeezed by unfair competition.

Whether the Canadian Union of Postal Workers is able to win its demand and protect members’ past gains remains to be seen. But until governments address the proliferation of gig work through meaningful regulation, we are likely to see similar disputes.