1. What is a wage freeze?
A wage freeze is what happens when an employer refuses to
provide pay increases for its employees.
2. Does a wage freeze keep wages at the same level?
In a wage freeze, a worker earning (say) $22 an hour could
continue to earn $22 an hour for a period of several years. But with inflation,
the buying power of those wages would go down in real terms. A wage freeze is
really a pay cut that is equal to the rate of inflation.
3. What is the rate of inflation right now?
Inflation varies from month to month and from province to
province, but the Bank of Canada’s policy is that inflation should not be more
than two per cent per year. Inflation has stayed close to two per cent in Canada
for a long time.
4. When did the Ontario government announce that it intended to
bring in a wage freeze?
The wage freeze plan was first announced by Finance Minister
Dwight Duncan on Budget Day, March 25, 2010.
5. What workplaces are covered by the government’s wage freeze
The government’s wage freeze policy covers the Ontario Public
Service, all Crown agencies and transfer payment entities such as hospitals,
school boards, boards of health (including municipal ones), colleges,
universities, developmental service agencies, Hydro One, Ontario Power
Generation, all long-term care homes (for-profit, not-for-profit, and
municipally run) and other provincial agencies, boards and commissions.
6. Does the wage freeze cover municipal workers?
The provincial legislation that covers non-union workers does
not affect direct municipal workers. With respect to unionized workers, the
province has not directed municipalities to impose a wage freeze.
7. How does the wage freeze work?
In two ways: Non-union workers are covered by a piece of
legislation, Bill 16, which makes it illegal for employers to pay them more for
the two years from March 25, 2010 to April 2012. Unionized workers can still
bargain, but the government says employers in the provincial public sector will
not receive any money for pay increases for the first two years of their next
7. What does the government mean by "compensation restraint"?
Does the wage freeze only apply to wages?
"Compensation restraint" is a term the government has used to
describe the wage freeze and what is covered by it. It means that the freeze
caps not only wages but also improvements in pensions, benefits, and other
bargained items that are not wages. However, the government has stated that
costs that rise to keep a particular benefit at the same level are not
capped by the freeze.
8. What non-union workers are covered by the wage freeze
The legislation covers all provincially-funded non-union
workers, which is about 250,000 people across Ontario. It covers frontline
workers as well as managers at every level.
9. I’ve heard that many managers such as hospital CEOs will
still receive "pay for performance" bonuses in spite of the wage freeze. Is this
This is true. The government explains this by saying that these
individuals have a contract which includes the possibility of these bonuses, and
therefore CEOs and other managers are entitled to them when their performance
10. How does the wage freeze work for unionized staff?
The government says it will respect all collective agreements
that are already in force. Bargaining of new contracts will continue, the
government says. However, all employers will be told that they have no money for
any wage increases for the first two years of any new collective agreement.
11. So why bargain?
Throughout history employers have gone into bargaining saying,
"The cupboard is bare." Just because they say they have no money does not mean
it is impossible to negotiate wage increases or other improvements. Governments,
like employers, respond to changes in public attitudes, the political landscape,
and other factors, and working people can influence these. In addition, some
contract provisions may be of great benefit to workers but may not have a
significant direct cost for employers, for example, protections against violence
in the workplace.
12. If an existing collective agreement allows a group of
workers to move up the pay grid, and assuming the pay grid remains in place,
will they still be able to move up the grid even if their next contract includes
two years of no pay increase?
Yes, the government says they will.
13. What about pay equity?
Pay equity is protected under its own legislation and by the
Charter of Rights and Freedoms. The government policy is that the wage freeze
does not apply to pay equity settlements.
14. Many collective agreements are settled by arbitration,
especially in sectors where the workers do not have the legal right to strike.
What has the government said about arbitration?
Depending on the legislation in a particular sector, arbitration
typically occurs when either party requests it. The government has asked both
employers and unions to stop sending unresolved bargaining issues to arbitration
while it consults with the two sides about the wage freeze (see below for
information on the consultation.)
15. Have employers and unions stopped sending unresolved
bargaining issues to arbitration?
Some employers have asked for arbitrations to be put on hold.
OPSEU has continued to send issues to arbitration as per usual practice.
16. Arbitrators are supposed to be independent judges of what is
fair. Can the government force an arbitrator to impose a wage freeze in a
particular collective agreement?
Not without compromising the independence of the arbitrator.
This is a difficult problem for the government, which may find that arbitrators
will ignore the wage freeze in their deliberations and award wage settlements
above zero or, for that matter, above the rate of inflation.
17. What happens after the two year wage freeze is up?
According to the government’s fiscal plan, spending will still
be restrained for the five years from budget year 2012-13 to 2016-17, after
which the budget deficit is scheduled to be eliminated. The government says
spending will be held to 1.9 per cent per year, which is currently less than the
rate of inflation and may be in future as well. The 1.9 per cent figure does not
take into account population growth, which is typically about 1.2 per cent per
year. If the government’s plan plays out as intended, either Ontarians will see
public services cut or else wages will be kept below the rate of inflation for
the foreseeable future. Of course, it is a long time between now and 2017. Many
things could – and will – cause circumstances to change in that time.
18. Can unions bargain "catch-up" raises after the end of the
The government says this would defeat the purpose of the wage
freeze, which is (apparently) to cause a permanent reduction in wage rates right
across the provincial public sector in Ontario.
19. How is the wage freeze "permanent"?
Imagine that a worker earning $50,000 a year receives annual pay
raises equal to inflation (at the current rate of two per cent) for five years
in a row. Over five years, her annual salary will rise to $51,000 to $52,020 to
$53,060 to $54,122 to $55,204. Now imagine the same worker receives two years of
zero increases, followed by three years of increases equal to inflation. Her
salary rises to $50,000 to $50,000 to $51,000 to $52,020 to $53,060. At the end
of five years, her annual salary will be $2,144 a year lower with the freeze
than without it, and her total wages lost will be $9,326. Even if wage increases
continue at the rate of inflation, her salary will always be lower than
it would have been without the freeze. The effects of the wage freeze continue
long after the two-year freeze period is over.
Sample wage calculation over five years, with and without a
two-year wage freeze, for a worker earning $50,000 a year in Year Zero
Wage freeze in first two years, then increases equal to
Wage increases equal to inflation for five years (no
Income lost to wage freeze
20. Over the last several years we’ve been able to bargain many
contracts with wage increases greater than inflation. Can’t we still do that?
Of course, but it could take a very long time to make up the
money lost during the freeze. In the early 1990s, for example, public sector
wages fell for several years in a row. Average public sector wages in Ontario
did not return to their 1992 levels until 2008.
21. I understand the government is holding "consultations" with
unions and employers across the public sector about the wage freeze. What are
The government is holding two-week consultation sessions with
more than two dozen Ontario unions and employee associations and their employers
in the provincial public sector. These sessions began on Aug. 9; the last ones
are scheduled to be completed on Oct. 3.
22. What is the government trying to get out of these sessions?
It appears the government is mainly looking for ways to get
unions’ co-operation in accepting the wage freeze. The government wants to
arrive at "framework agreements" that would apply to large groups of workers.
23. Have any unions or groups arrived at a framework agreement?
To the best of our knowledge the only group to do so is the
Association of Law Officers of the Crown (ALOC), representing Crown Attorneys in
the court system. While not a union, ALOC does negotiate. They accepted a
two-year wage freeze in exchange for a 47-year (this is not a typo) framework
agreement that provides them (for the first time) with the right to bargain and
to access binding arbitration.
24. If the government is already able to direct employers not to
bargain wage increases through the normal collective bargaining process, why do
they even need framework agreements?
The answer to this appears to be political. By forcing a million
public employees to accept a permanent pay cut in the form of a wage freeze, the
government hopes to win support among right-leaning voters who voted Liberal in
October 2007 but may not vote Liberal in October 2011. Framework agreements
could help convince right-leaning voters that the Liberals have accomplished
25. Has OPSEU taken part in the consultations?
An OPSEU delegation led by President Warren (Smokey) Thomas
attended the first session on Aug. 9 and asked numerous questions of government
officials in attendance. On Aug. 10, the OPSEU Executive Board, sector chairs,
and chairs of Ministry Enforcement and Renewal Committees (MERCs) met to discuss
next steps. It was decided at that meeting that the union had (at that time) no
mandate to take part in the consultations. The Executive Board authorized a
special meeting of local presidents and key leaders from OPSEU sectors and
committees to be held in Toronto on Sept. 13 to discuss the union’s strategy
26. If the government could legislate a wage freeze for
non-union workers, why didn’t it legislate a wage freeze for unionized workers?
Only the government knows the answer to this, but two
explanations seem likely. First, the government may have feared unions’ ability
to fight back against such a move. Second, a June 2007 ruling by the Supreme
Court of Canada changed the way government can legislate around bargaining. The
court ruled that collective bargaining is a protected right under the Canadian
Charter of Rights and Freedoms. The court said the government of British
Columbia violated the Charter when it tore up the contracts of health care
27. Does this mean the government of Ontario cannot legislate a
wage freeze for unionized workers?
No, it does not. The 2007 Supreme Court decision gave specific
reasons why the B.C. government had violated the charter. One of these was that
the B.C. government made no effort whatsoever to consult with unions prior to
overriding their collective agreements. It is possible that the current round of
consultations in Ontario is part of a government strategy to be able to defend
in court any wage-freeze legislation that it might bring in. Regardless of that,
every case in law is unique, as is every court. While the courts could overturn
a wage freeze for unionized workers, no one can say with certainty how they
might rule on a specific case.
28. How much money does the government expect to save with the
Finance Minister Dwight Duncan says that wages take up 55 per
cent of the provincial budget. He says these wages are worth "more than $50
billion" a year. If every provincial workplace took a two-year wage freeze, the
annual savings at the end of the program would, therefore, be in the
neighbourhood of $2 billion per year. Depending on how other costs rise (for
pensions and benefits, for example), the actual saving would likely be somewhat
29. What will the government use the money for?
Depending on the day, the government says the money will be used
to protect public services, or pay down the provincial budget deficit, or
(sometimes) save public sector jobs. What it fails to mention is that the last
two provincial budgets have included major tax reductions for Ontario
corporations through the introduction of the Harmonized Sales Tax, the
elimination of the Capital Tax, reductions in the Corporate Income Tax rate, and
other tax cuts. When fully phased in, the cuts to the Corporate Income Tax rate
alone will cost provincial coffers more than $2.4 billion a year, according to
the government’s figures. In other words, every dollar public sector workers
give up through the wage freeze will go to pay for tax breaks for rich banks
like RBC, phone and cable companies like BCE (Bell), energy companies like
Suncor (which now owns Petro-Canada), media companies like Thomson Reuters,
insurance companies like Manulife, and thousands of others like them.
30. The government says the wage freeze is justified because
public sector workers have received pay raises greater than those in the private
sector since 2004. Is this true?
Public sector wages began to rise in 2004, but only after
falling for more than 12 years. Wages in the public sector finally reached their
1992 levels (after inflation) in 2008. But wage settlements in the public sector
were still four per cent less than wage settlements in the private sector over
the 16-year period from 1992 to 2008.
31. Have governments imposed wage freezes in the past in
Yes, although not often. The federal government brought in wage
and price controls in 1975-78 via the Anti-Inflation Act. Wage guidelines
were binding for all firms with over 500 staff as well as all federal employees
and most other public sector employees, including provincial ones.
In Ontario, the Inflation Restraint Act of 1982
eliminated the right to strike entirely and extended agreements by one year. The
Act imposed maximum wage increases of five per cent on approximately 500,000
public sector workers. A subsequent Act the following year, the Public Sector
Prices and Compensation Review Act, required arbitrators to consider the
employer’s "ability to pay" in the arbitration process and made all collective
agreements subject to review by a legislated Restraint Board.
In 1993, the Ontario government brought in the Social
Contract Act. The Social Contract imposed a wage freeze and mandatory unpaid
days off for provincial and municipal public employees. It was more restrictive
than the wage freeze currently being proposed by the McGuinty government. For
example, workers could not move up their pay grid or earn more vacation credits.
During this period many employers refused to bargain with unions on monetary
or non-monetary issues.
32. During the Social Contract, workers whose incomes were below
a low-income cut-off (or LICO) were exempt from the wage restraint program. Has
the McGuinty government proposed anything similar?
During the Social Contract, the Rae government set a threshold
at $30,000 a year (known as the Low Income Cut-Off, or LICO) and all workers
below this level were exempt from the legislation and its program of wage
restraint. The McGuinty government has not proposed anything of the kind, even
though hundreds of thousands of public sector workers, particularly part-timers,
earn very small incomes.
33. What would $30,000 in 1993 dollars be worth in 2010?
The LICO used during the Social Contract of 1993 would be worth
roughly $41,400 a year now. Over 63,000 OPSEU members earn less than this amount
34. In terms of wage restraint, what is happening in the rest of
Besides Ontario, the only other government that has wage
restraint legislation in place is the Government of Canada, which passed the
Expenditure Restraint Act in the 2009 federal budget. The legislation
includes legislated rates of pay for employees of the federal government and its
boards and agencies. In general the rates of pay imposed are greater than zero
but less than the rate of inflation.
British Columbia has negotiated a two-year wage freeze with
various public sector unions, albeit with improvements in job security and
certain benefits. Other provinces are facing varying degrees of hard bargaining,
with settlements both below and above the rate of inflation, but their
governments have not imposed a wage freeze. The closest is the government of
Manitoba, which is seeking a temporary wage freeze but open to significant
increases at either end of the freeze.
35. What has been OPSEU’s response to the wage freeze
legislation since it was announced in the 2010 budget?
On April 8, the OPSEU Executive Board met in an emergency
meeting. The Board authorized a campaign that would expose the links between the
wage freeze plan, the government’s corporate tax cuts, and the money paid by
corporations to fund the Liberal Party. Delegates to OPSEU Convention voted
unanimously to expand the union’s campaign and supported a resolution calling
for more political and economic education for OPSEU locals.
From April through August, Executive Board Members organized and
led countless protests at Liberal fundraisers in several regions of the
province. The union also used the G-20 meeting of world leaders to oppose the
imposition of austerity measures by governments around the world and here in
In addition to the Sept. 13 meeting designed to bring OPSEU
local presidents and other leaders into the union’s strategy discussion, several
OPSEU regions have also scheduled Regional Presidents’ Conferences. These
conferences are designed to provide locals with further insights into the
forces, both global and provincial, that are driving the agenda in Ontario
today, to improve members’ skills in talking about the issues, and to further
discuss strategy and tactics as they could be implemented at the local and