Why Carney’s economic overhaul is clashing with Canada’s unions

Toronto, Canada: As Canadian Prime Minister Mark Carney races to make the country less dependent on the United States, attract billions in new investment and get major projects built faster, his economic overhaul is running into resistance from a group that says it wants many of the same things: organised labour.

The latest clash, over the right to strike, comes after months of mounting pressure on Ottawa from Washington, DC.

US President Donald Trump, since taking up a second term in office last year, has imposed steep tariffs on Canadian goods and weakened trade agreements – perilous moves as Canada has historically sent close to 80 percent of its exports to its southern neighbour. He has repeatedly piled on with the tariff threats to make Canada the 51st US state.

Canada has responded with retaliatory tariffs, while a broader movement to “Buy Canadian” has taken hold. The hockey-inspired “elbows up” — meaning a readiness to defend against an opponent — has become a national rallying cry.

With trade talks stalled since August, Carney has moved with urgency to shore up the economy and invite new investments. Last month, he announced Bill C-39, known as the Building Canada Strong Act, promising to bring “speed, certainty and predictability” to investors.

Along with measures to speed up approvals for major projects, the bill would also give Ottawa clearer powers to intervene in legal strikes and lockouts in federally regulated workplaces — a provision that has put Carney on a collision course with unions.

Canada’s largest unions have come together against the changes. The largest, the Canadian Union of Public Employees (CUPE), had its national executive go as far as voting to defy the bill’s proposed limits on the right to strike if it passes Parliament without amendments.

CUPE National President Mark Hancock credited Carney’s handling of Trump and said the union’s 800,000 members, who work everywhere from hospitals to schools to municipal services, want to be part of “Team Canada”.

“But at what cost?” he said in an interview with Al Jazeera.

A fight over the right to strike

The controversy centres on Section 107 of the Canada Labour Code, which already gives the Labour Minister broad powers to step into disputes if needed to maintain “industrial peace”, end work stoppages and force the two sides into a binding arbitration.

Beginning in 2024, Ottawa used the provision eight times to intervene in disputes involving airlines, Canada’s two largest railways, three major ports and Canada Post and again during the Air Canada dispute in 2025 when flight attendants went on strike.

Unions have challenged the use of that law in court and had hoped the proposed C-39 would restrict, if not repeal, that clause while businesses wanted it strengthened.

The bill does neither. Instead, it introduces two conditions that the government would have to fulfil first before turning to Section 107.

Before stepping in, the government would have to appoint a special mediator, wait for a public report and consider whether a work stoppage is hurting the “national interest”.

Once a strike or lockout is underway, the minister could direct the Canada Industrial Relations Board to get operations running again and impose a binding process, such as arbitration.

The government says those steps put clearer guardrails around a power that already exists, and Carney has said the bill “absolutely reinforces the right to strike”, according to the Canadian Broadcasting Corporation.

Unions have rejected this defence, pointing out that the meaning of “national interest” would ultimately be decided by the minister. They also argue that the prospect of government intervention is bound to change what happens at the bargaining table.

“The political lesson that employers will draw from it is simple,” Larry Savage, a professor of labour studies at Brock University, told Al Jazeera. “Hold out long enough, emphasise the economic damage, and then Ottawa will remove the union’s leverage for you.”

Disruption, Savage said, is precisely what gives a strike its power. “Every effective strike is disruptive,” he said.

Unions say they have already seen employers expect Ottawa to intervene.

Teamsters Canada alleges the Canadian National Railway (CN) and the Canadian Pacific Kansas City (CPKC) railroad companies were counting on Ottawa to step in when they locked out thousands of workers in 2024. Section 107 was invoked within hours.

“Companies have gotten used to the idea that if there is a labour dispute, they can just wait for the government to intervene,” Christopher Monette, Teamsters Canada’s director of public affairs, told Al Jazeera.

CUPE said it saw a similar dynamic at Air Canada in August 2025. Hancock said bargaining stalled after more than 10,000 Air Canada flight attendants voted overwhelmingly to strike because the airline was “expecting the government of Canada to step in and end the strike” — an account Air Canada disputed.

Less than 12 hours after workers walked out, Ottawa invoked Section 107. Air Canada CEO Michael Rousseau later told BNN Bloomberg the airline had expected the provision to be enforced and did not expect a strike.

“That was why they didn’t have a strategy on how to deal with the strike,” Hancock said.

Building Canada faster

The fight over the right to strike is also part of a much bigger argument taking shape around Carney’s economic agenda: Who gets a say in how Canada should change, and how quickly, in the name of making itself less vulnerable to the US?

Critics accuse Carney of using the economic threat from the US to push through changes that go well beyond responding to Trump’s trade war.

New Democratic Party leader Avi Lewis has accused him of using the “fear and disorientation around the trade war to push through a series of unpopular measures that he did not run on, has no mandate for and would never get away with under normal circumstances”.

That tension was on display in Toronto just a week before C-39 was introduced. Inside Canada’s first national investment summit, hundreds of global investors met with government officials and executives as Carney pitched a country ready to build.

Outside, hundreds of protesters marched through downtown towards the summit’s opening gala under the banner “The Many vs The Money”. The rally brought together labour, Indigenous, environmental and migrant-rights groups, with signs and speeches taking aim at everything from fossil fuel and military projects to AI and the use of public money to attract private investment.

For unions, C-39 has sharpened that debate, pitting the government’s promise of greater certainty for investors against workers’ ability to exert pressure through strikes.

But Jim Stanford, an economist and director of the Vancouver-based Centre for Future Work, questions how much of an economic threat strikes actually pose.

While work stoppages can be costly for individual companies, Stanford said, “It is very, very rare that you would see a noticeable and sustained impact on GDP, employment or incomes.”

Production and transportation are often delayed rather than permanently lost, he added, with businesses catching up once work resumes.

Stanford also questioned the idea that strikes are driving away investment, noting that more than 95 percent of collective bargaining ends without a work stoppage and saying there is “no empirical evidence whatsoever” that strikes have reduced investment.

“This is more of the government giving some icing on the cake for business. It’s not that this has to happen or else our investment won’t work,” he said.

There is also an economic cost to weakening the right to strike, Stanford argued. Workers need bargaining power to win higher wages, which can support consumer spending, productivity and worker retention.

“It may seem like labour peace is a good thing, but if it means that a worker’s share of the pie shrinks, then this actually hurts the economy.”

For labour leaders, that’s where Carney’s economic push goes too far.

“Canada’s unions are part of Team Canada. We have our elbows up,” Canadian Labour Congress President Bea Bruske said in a statement. “But we can’t have our elbows up against Trump with our hands tied at the bargaining table.”

Savage said the government’s “Team Canada” rhetoric risks treating workers’ bargaining power as a national liability.

“I don’t think Canada becomes stronger by telling workers in ports or railways or airlines that their rights have to be surrendered whenever employers invoke competitiveness or the national interest,” he said.