Mark Carney swept into office promising nothing less than an economic reboot. His government’s nation-building agenda—new trade corridors, ports, nuclear power, and pipelines—recalls the grand projects of Canada’s postwar era. An initial round of projects has been referred to the Major Projects Office for fast tracking. The intent is clear: boosting public investment in infrastructure, catalyzing private capital, and diversifying exports to reduce reliance on the U.S. 

However, capital, political will, and legislation alone cannot deliver this transformation. A central piece of this reboot has been overlooked: labour. Without a credible labour relations framework, large-scale infrastructure projects could grind to a halt before they begin.

Federally regulated private industries, including banking, telecommunications, transportation, and pipelines, are the kinetic pillars of Canada’s economy. They generate more than $543 billion annually and employ 2.14 million Canadians at above-average compensation. They move the goods, people, capital, energy, and information that bind the country together and connect us to the world. Nearly every other sector of the economy depends on their service reliability.

And yet reliability is precisely what is slipping. Over the past two years, Canada has endured nearly 62 transportation work stoppages, eroding investor confidence, driving up costs, disrupting the economy, and fraying public trust. Equally troubling, a recent dispute saw a union openly defy directives from Ottawa and rulings from the Canada Industrial Relations Board (CIRB). That precedent leaves the government with few policy tools to resolve disputes before they escalate. 

Meanwhile, labour unrest looms. Between now and Christmas, dozens of collective agreements in federally regulated sectors will be up for renewal—28 in the critical transportation industry alone. Outdated negotiation processes risk project-crippling strikes and delays as the country embarks on its largest economic transformation since WWII. The stakes are high. The Carney government has pledged $130-billion in federal spending for these nation-building projects. The aim is to catalyze some $500-billion in total (public and private) investment for modernization and expansion. At the same time, Canadian workers will need new skills, competitive compensation and other support necessary to match the Carney government’s ambitious agenda and prosper in the 21st-century economy. 

The core obstacle is an outdated collective bargaining framework, rooted in the post-war era, ill-suited for a globalized, technology-intensive economy. The reforms implemented since the last major overhaul of the Canada Labour Code in 1996 have been reactive and piecemeal, driven by short-term politics rather than consensus among labour, employers, and the government. Recent well-intentioned but unilateral changes introduced by the previous government, without any meaningful consultations with employers, such as the addition of 10 paid sick days per year (2022) and banning replacement workers (2024), have resulted in rigidity and cost for employers without creating a coherent, future-proof system. 

This top-down approach creates significant operational challenges, forcing businesses into reactive measures instead of strategic planning. This fosters worker mistrust, burdens employers with high costs that stifle investment and job creation. It also inconveniences the public with higher prices and service stoppages. Labour instability is also a major headwind against a backdrop of declining productivity and GDP per capita, and U.S. protectionism. A more collaborative process is needed to restore confidence in Canada’s labour relations system.

What should Ottawa do? First, acknowledge the urgency. Labour reform may be politically fraught, but it’s among the most consequential. If disputes cannot be resolved through binding arbitration or with the assistance of the CIRB, it leaves few alternatives for the government to restore stability. Policy-makers need better tools to support collective bargaining and protect the public interest. 

Second, Canada should learn from its peers. Other OECD countries, such as Denmark, Germany, and the Netherlands, have modernized their collective bargaining to reflect today’s realities of global competition, technological disruption, and demographic change. There is no reason we cannot adopt best practices that balance worker protections with employer flexibility. In this regard, Ottawa could launch a new tripartite review—bringing together labour, business, and government, as is done in international labour standard-setting—to modernize the Labour Code. This will take time, but will lay the foundation for stability in the decades to come.

Finally, we must align our training and upskilling efforts to address obsolescence and geographic mismatches in the country. Nation-building projects will demand technical expertise that Canada may not yet have in sufficient supply. Forging strategic partnerships with global industry leaders will be essential in bridging this expertise gap. 

We must reform our labour relations now or risk having our most urgent projects—and our economic future—held hostage to an outdated system. Mark Carney has staked his premiership on the promise of economic renewal and resilience—of shifting from reliance on others to strength at home. The vision is compelling, and the ambition long overdue. To keep that vision within reach, Canada needs a sustainable equilibrium in labour relations.

Julian Karaguesian is currently a visiting lecturer in the department of economics at McGill University and is former special adviser in both the International Trade and Finance Branch of Finance Canada and in the Office of the Secretary General of the OECD. Dan Safayeni leads the national association representing federally regulated employers