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Ontario Premier Kathleen Wynne faces a challenge in balancing Ontario’s books and reducing the province’s budget deficit from this year’s predicted $12.5-billion to zero within a few years.Mark Blinch/The Globe and Mail

Ontario's new majority Liberal government has brokered its first deal with a major union, a bellwether for difficult labour negotiations in the months ahead.

While the terms of the agreement have not yet been disclosed, observers say its details will be studied closely by other workers – teachers, jail guards, bureaucrats – whose own contracts are up for negotiation.

Opposition politicians and the province's bond holders will also be taking an interest, given the growing concerns about Ontario's ability to manage its $12.5-billion deficit.

Negotiators announced on Sunday they had resolved a six-month standoff between the province and its white-collar workers in AMAPCEO – the acronym for Ontario's second-largest civil servants' union.

Like other public-sector unions, AMAPCEO had been pushing back against the Ontario government's plan to freeze wages unless savings can be found elsewhere. It was also fighting to keep extended health-care benefits and job-security language.

The negotiations had straddled the June election. Before the campaign began, union leaders had publicly accused Premier Kathleen Wynne's government, which then had a minority in the legislature, of "declaring war" on labour.

Now, the former adversaries are talking about working in partnership.

"This agreement shows that when partners commit to work together to negotiate, the result can be both fair and responsible," Deb Matthews, the MPP in charge of the Treasury Board, said in a statement. Her spokesman, Paul Tye, added in an e-mail: "Our government is committed to eliminating the deficit by 2017-18."

Gary Gannage, president of AMAPCEO, said in an interview on Sunday that he would not publicly discuss details of the tentative agreement before disclosing them to members on Tuesday.

"It's a tricky environment to negotiate in, not only the terms and conditions, but also the length," said Mr. Gannage, who helped negotiate the previous two-year collective agreement between the union and the government. The Association of Management, Administrative and Professional Crown Employees of Ontario represents policy analysts, economists, auditors, scientists and veterinarians.