Toronto Real Estate Construction Grinds To A Halt As Union Battles Over Inflation

North America’s busiest construction hole is seeing work grind to a halt this week. LiUNA Union Local 183‘s residential construction members voted to strike last night. The local represents a significant share of Greater Toronto’s residential tradespeople. As cost of living talks broke down, the union’s members entered a legal strike position.

North America’s Largest Construction Union Is Going On Strike

LiUNA Local 183 is North America’s largest construction union and located in Toronto. It represents 15,000 workers across 30-or-so trades, including high-rise formation and framing. Not every construction site has these unionized workers, but it’s a good bet the large ones do.

Toronto Construction Trades Began Striking Last Night

Local 183 entered a legal strike position last night, while negotiations broke down. This will grind most large projects in Greater Toronto to a halt but not all. Late stage projects entering the finishing stages might be able to get by with fewer delays. Early-stage projects won’t be so lucky, especially in the high-rise sector. 

Since the negotiation involves several trades, there’s no universal hike negotiated. Statistics Canada (Stat Can) data shows Toronto’s union construction wages have lagged. The latest data available is November 2021, and it shows the average wage climbing 2.21% from a year before. Even back then, headline inflation was 4.7% — more than double the growth. With CPI hitting 6.7% in March, a 31-year high, it’s going to be tough for employers to absorb anything close to that. 

Toronto Construction Strike Won’t Last Very Long

Fears of a prolonged residential construction strike are definitely overblown. Builders are under significant pressure to complete building with inflation and rates climbing. They aren’t in the habit of risking project failure over a few extra dollars.

At the same time, the union is also under pressure due to Ontario’s limit on homebuilder strikes. The Labour Relations Act effectively limits the strike to around six weeks. After that point the workers can be mandated back to work and arbitration ordered. The province estimates the average strike lasts about four weeks, so six is a decent buffer.

At the start of this year, RBC’s CEO urged the Bank of Canada (BoC) to begin aggressively hiking rates. He warned once inflation begins to trickle into wages, there’s no going back since we don’t roll back wages. The BoC didn’t get the urgency of the warning, delaying action for another few months — not even getting serious until April. Now the central bank is self-admittedly behind the curve while inflation fallout trickles into wages.