The Ontario public-sector wage freeze that wasn't

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When the Ontario government projected a record deficit of $21.3-billion last March, it put teachers, nurses and other unionized public-sector workers on notice. There would be no money from the province to cover wage increases for new contracts, Queen's Park said in calling for a voluntary two-year wage freeze.

The policy has all but failed, according to a review of recent labour agreements. Tens of thousands of workers have won pay increases totalling $126.4-million over those two years.

Like Ottawa and the other provinces battling deficits, Ontario was determined to curb wage costs in the public sector. Premier Dalton McGuinty led by example, freezing the salaries of MPPs and 350,000 non-unionized public-sector workers for two years. But he stopped short of using legislation to impose a wage freeze on the 750,000 public-sector workers who bargain collectively, a move that would have antagonized doctors, nurses and teachers during an election year.

Mr. McGuinty's "we're all in this together" appeal fell short. A review by The Globe and Mail of 23 settlements with employees of universities, hospitals, long-term care homes and police services found wage increases averaged 1.6 per cent over the two years. These settlements have helped set a pattern for public-sector wages in Ontario, suggesting raises are in store for dozens of other contracts coming due this year.

Time after time, negotiators elected not to insist on a freeze in the absence of legislation compelling it. And the message from labour leaders and arbitrators was loud and clear: The province cannot balance its budget on the backs of public-sector workers.

"I told them right from the get-go that this is doomed to failure," said Warren (Smokey) Thomas, president of the Ontario Public Service Employees Union. "Nobody's going to violate that premise of free collective bargaining simply because [the province says]we should."

The Globe reviewed bargaining units of 300 or more members. Some agreed to meet the zero mark. But many of the 65,700 employees were awarded increases by arbitrators who said they did not feel bound by the government's wishes. And those decisions are set to trigger further wage increases.

The province's 50,000 registered nurses, one of the largest labour groups, began their second week of bargaining on Monday with the Ontario Hospital Association. The nurses are asking for "nominal" wage increases, said Linda Haslam-Stroud, president of the Ontario Nurses' Association.

"At the end of the day, the government is trying to get the books balanced," she said. "I just think they're looking in the wrong corner."

The nurses' contract expires March 31. Both sides have already pre-booked three dates with a mediator in March. Labour leaders know that arbitrators feel bound to follow their peers' rulings.

Arbitrator Christopher Albertyn last month awarded 2,250 professional and paramedical staff at Ottawa Hospital annual increases of 2.5 per cent over two years, saying he had no choice but to follow an earlier ruling for 16,000 hospital workers. Freezing their wages, he said, would have "unjustly penalized [these workers]relative to their peers."

With no new government funding for wage increases, the awards are putting hospitals under pressure.

An arbitrator awarded wage hikes averaging 3 per cent over two years to 400 workers at Windsor Regional Hospital. If that pattern continues, said Windsor Regional chief executive officer David Musyj, the hospital will have a shortfall of more than $6-million on its $300-million operating budget this year.

"The last thing we want to do is pay Peter 1 per cent and lay off Paul," he said.

OHA president Tom Closson said the province's 154 hospitals would have to find $280-million in savings this year alone to cover the cost of an across-the-board increase.

In the university sector, the picture has been much the same. Seven of 10 university contracts examined by The Globe included increases in the first two years.

Arbitrators have avoided, in the words of one, appearing to be a "minion of government." For example, William Kaplan awarded Carleton University's faculty members 1.5-per-cent salary increases in each of the first two years of a new deal, an agreement that Duncan Watt, Carleton's vice-president of finance and administration, justified by arguing that "a labour dispute would have been far more costly."

Mere hours after a strike deadline, the University of Western Ontario Faculty Association negotiated a settlement worth 1.5 per cent for each of four years. President James Compton said the freeze policy "is in tatters," and he is "proud" his was the first university association to negotiate across-the-board increases without the help of an arbitrator.

"I think we did set a precedent there," Prof. Compton said, adding that a number of faculty association presidents have asked how he did it.

Several university unions and faculty associations are still negotiating and about 20 more have agreements that will expire by the end of August. The current agreement for thousands of support staff at Ontario's 24 colleges will also run out this fall.

Even the two-year freeze contained in the new Ontario Provincial Police Association contract, negotiated by the government, is undercut by a generous pay increase. The association's 8,400 members receive a 5.075-per-cent increase this year, no increases in 2012 and 2013, and a guarantee that they will be the province's highest paid force by 2014.

Karl Walsh, the OPPA's president, said the deal puts the OPP on par with York Regional Police, and that it still represents real restraint. During the OPP's last round of bargaining, he said, officers received smaller increases than their peers.

"We fell from our traditional standing in the policing community of being No. 1 down to No. 17," he said. "So there had to be some levelling of the playing field."