More than 155,000 federal workers in Canada went on strike after wage talks with Prime Minister Justin Trudeau’s government failed.

The labour disruption is expected to impede government functions including the release of economic data from Statistics Canada, passports and immigration applications. More than 35,000 of the workers are employed by the Canada Revenue Agency, the country’s tax-collection body. However, the government has said it doesn’t plan to extend the May 1 deadline for filing personal income taxes.

Workers walked off the job at 12:01 a.m. Ottawa time on Wednesday. “We truly hoped we wouldn’t be forced to take strike action, but we’ve exhausted every other avenue to reach a fair contract,” Public Service Alliance of Canada President Chris Aylward told reporters Tuesday night.

The strike underscores that many workers are driven to recoup purchasing power they lost during the recent period of high inflation. It could even set the tone for wage negotiations by both public- and private-sector unions in the coming months.

PSAC, the largest federal civil-service union in Canada, has been seeking a 13.5 per cent raise over three years for Treasury Board employees — those who do jobs ranging from maintaining federal buildings to inspecting products to handling passport applications. Tax workers are looking for 20.5 per cent over three years, plus an immediate 9 per cent adjustment. The union said it’s received several wage offers but none keep up with inflation.

Annual consumer price gains drifted lower to 4.3 per cent in March, the slowest pace of inflation in nearly two years. The Bank of Canada sees inflation falling to 3 per cent by midyear, but officials have warned that elevated wage growth could make getting it back to the 2 per cent target “more difficult.”

The government said in a statement late Tuesday that it “has done everything it can to reach a deal and avoid disrupting the services that Canadians rely on.” It presented a “fair, competitive offer” that included a 9 per cent wage increase over three years as well as proposals on remote work and improved paid leave for workers with family responsibilities. “PSAC continues to insist on demands that are unaffordable,” the government said.

Four cabinet minister led by Treasury Board President Mona Fortier will hold a briefing on the strike and service disruptions at midday Wednesday.

PSAC said this will be the largest strike against any single employer in the country’s history.

The stakes are high for the prime minister, whose government has increased the size of the public service by more than a third since being elected in 2015. A scuffle with federal unions will likely draw the ire of the labour-friendly New Democratic Party, which is supporting Trudeau in a minority parliament, and widespread service disruptions will be unpopular among voters.

NDP Leader Jagmeet Singh said in a statement he’s “deeply disappointed by the government’s failure to reach an agreement” with PSAC, noting civil servants kept working through the COVID-19 pandemic. “New Democrats stand in solidarity with these workers and their demands for respect. They had Canadians’ backs when we needed them — now we have theirs.” 

Statistics Canada will still release economic data, but the agency won’t hold media lockups during the strike. Retail sales figures for February are due on Friday.

The Bank of Canada isn’t anticipating any significant impact on its operations, spokesman Paul Badertscher said by email.