Parliament Hill in Ottawa - Ontario, Canada

The labour dispute between the federal government and the largest civil servants union could be disruptive, but won’t tank the economy, says National Bank Financial (NBF).

In a new report, the bank’s economists analyze the potential impact of the strike action launched last week by the Public Service Alliance of Canada (PSAC), which saw more than 100,000 workers walk off the job.

“Even assuming a prolonged conflict of, say, 30 days, we estimate the direct impact on economic growth to be in the order of 0.5% on annualized Q2 GDP growth,” the NBF report said.

Apart from the effect of lost income for striking workers, the impact of the labour disruption may also include delays in household transfer payments, disrupted processing for tax and immigration applications, and slowed-down border operations “that could impede the movement of people and goods,” it said.

“Even taking all these factors into account, we do not believe that this labour dispute will derail the economy,” NBF concluded.

On Sunday, PSAC’s president said the union was preparing to move picket lines to strategic locations such as ports on Monday.

“We’re trying to have picket lines across the country in some strategic locations where it’s going to impact the government, and we’re actually going to be escalating those actions — whether that’s ports across the country, or anything like that,” Chris Aylward, president of PSAC, told the Canadian Press.

“It has a very wide-ranging impact on Canadians and the Canadian economy as well, because imports [and] exports are being delayed and disrupted,” he said, while insisting he doesn’t want to unsettle Canadians’ lives. “We’re trying to get through this as quickly as we possibly can.”