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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

Premier Kathleen Wynne has scored a victory on the labour front, with one of Ontario's largest public-sector unions agreeing to a two-year wage freeze and the clawing back of some benefits.

The deal with the Association of Management, Administrative and Professional Crown Employees of Ontario (AMAPCEO), which primarily represents white-collar civil servants, runs until March, 2018. It contains two years without pay increases, followed by two years of 1.4-per-cent hikes. Members voted 96.6 per cent in favour.

The settlement comes as the governing Liberals look to wrestle down a $12.5-billion deficit in three years, in large part by holding the line on labour costs. The Liberals face several other tough labour negotiations in the coming year, including with the province's teachers' unions.

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"We're optimistic that we can use this same approach with other public-sector unions in future negotiations and we plan to do that," said MPP Yvan Baker, parliamentary assistant to Deputy Premier Deb Matthews, who is overseeing collective bargaining for the government. "It's a step towards our goal of balancing the budget."

The Liberals are attempting to achieve "net zero" contracts, in which any increases in wages or benefits are offset by cuts to other pieces of the deal. In the case of the AMAPCEO agreement, the hikes in the later years will be paid for by reducing benefits. For instance, the contract will phase out "exit pay" – money provided to departing employees – which the government estimates will save $55-million.

Ms. Matthews's office did not immediately provide other numbers in the contract, such as how much the pay hikes will cost and what money will be saved through other benefit reductions.

The government did not achieve all the cuts it sought at the bargaining table, AMAPCEO president Gary Gannage said. The province had initially tried to slash paramedical and long-term disability benefits, he said, but ultimately backed down. The union also won an increase in sick pay.

"We didn't stop all of their cuts or proposals, but we got a lot of positive results," Mr. Gannage said. "We managed to successfully resist the employer's aggressive agenda."

AMAPCEO represents 12,000 workers in the broader public sector, including professionals, supervisors and administrative staff.

The deal was a tough slog, with negotiations continuing off and on for several months.

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Labour has been a tough spot for the Liberals. Organized labour went to bat for the party during the June election – taking out attack ads on the Progressive Conservative opposition – and the Liberals are eager to keep unions' political support even while holding the line on their contracts.

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