Air Canada is preparing for a potential shutdown of most operations next week as contract talks with its pilots’ union near an impasse. People look on as an Air Canada plane takes off at Trudeau Airport in Montreal, on June 11, 2023.Graham Hughes/The Canadian Press
Ashley Nunes is a senior research associate at Harvard Law School and teaches economic policy at Harvard College.
National carrier Air Canada AC-T, and its low-cost subsidiary Rouge, are set to halt operations as C-suite and union execs bicker over wages.
Air Canada’s pilots want to close the salary gap with their higher-earning American peers. Canadian aviators make up to $352,000, with their last 10-year contracts having 2-per-cent annual raises. American peers not only earn more but have, since 2023, secured hefty salary hikes of up to 34 per cent over four years.
While reiterating that “there is still time to reach an agreement with our pilot group,” the airline has called the wage expectations of the Air Line Pilots Association “inflexible.”
I don’t exactly agree. These expectations by Air Canada pilots aren’t inflexible. What they are is economically illiterate.
Arguing that workers in one country should earn the same as workers performing similar work in another country reflects a belief that salaries are (or at least should be) based on solely the value of labour provided: An Air Canada pilot flying passengers from Toronto to Chicago should earn the same as a United Airlines pilot flying passengers on the same route.
“We’re flying the same passengers in the same airspace on some of the very same routes, and those pilots are being compensated dramatically more than us,” one union exec noted. What the airline should do – according to the union – is purge expectations that its pilots continue to accept “below-market compensation.”
At least one flier agrees. “When you’re sitting beside a plane that’s on the tarmac and it’s a United flight, for instance, and flying to the same city as you are, and that pilot sitting in the front gets twice as much money as you do, I don’t think that’s fair,” the jetsetter noted.
But wages represent more than the value of labour alone. Your salary also reflects (among other things) the cost of living when you are not at work, the perks your organization offers and the benefits the government offers.
On each of these points, Americans fare worse. The cost of living in the United States is generally higher than it is in Canada, organizational perks – think job security and severance pay, to name a few – pale in comparison with what Canadians are used to and American health care is – to put it mildly – a mess. Without anything akin to Canada’s universal health care system, nearly 80 million Americans have medical bills they can’t afford and one in 12 Americans report losing their homes in part because of these debts. Put simply, Americans, be they bartenders, burger flippers or pilots, need to earn more because the expenses they incur are far heftier.
Pressing for wage hikes is understandable. Why earn less when you can earn more. Arguing that wages haven’t kept up with inflation is also reasonable. Why? Because they clearly haven’t. Data from Statistics Canada show that many Canadians have seen their “real wages” – how much we earn after accounting for inflation – have dropped. Maybe Air Canada pilots should indeed be paid more than their paltry top end of $352,000.
But arguing that workers in one country should earn as much as workers performing the same work in another defies economic logic. While union execs argue that a pay hike is about fairness and equity, what they are really asking for is a better deal than their American counterparts. A deal that – given cost of living differences between the Canada and the U.S. – allows Canadian pilots to earn more than their southern neighbours, while spending less.
So much for equity.
In the meantime, it is the passengers who suffer. If both parties don’t reach an agreement, a shutdown could ensue. By some estimates, a three-day strike by Air Canada’s 5,200 pilots risks the cancellation of more than 2,000 flights, disrupting the travel plans of over 300,000 passengers. The airline has called this scenario “increasingly likely.”
All packed up, no place to go. Those seven words could soon describe the plight of thousands of fliers across Canada.
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Publish date : 2024-09-10 08:40:00
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