McGuinty Wage Freeze Law Drives Workers to Unions

One of the core lessons of the industrial relations theory systems theory was that the industrial relations system is a web of interrelated causes and effects. When you pull on one strand of the web, all other strands are influenced. We can see an example of this in regards to the Ontario Liberal government’s attempts to freeze public sector wages last year.  The government’s attempt to freeze wages could very well end up raising labour costs in the long run by increasing the level of collective bargaining in the Ontario public sector.
The government enacted the Public Sector Compensation Restraints to Protect Public Services Act, 2010, which froze wages of nonunion public sector employees from March 2010 to March 2012.  It did not apply to wages bargained collectively, with the result that unionized employees of the government continued to receive raises through collective bargaining or by way of interest arbitration awards (see my posts on nurses and professors, for example).  It was completely predictable that if you freeze some employees’ wages and not others, you are creating a patently unfair system.  Therefore, it should surprise no one that one effect of the wage freezing legislation would be an increase in demand for unionization among the nonunion workers whose wages were frozen.  As I noted earlier this year, the City of Toronto under penny-pinching Mayor Ford recently granted a nice raise to nonunion employees whose wages had been frozen while unionized employees bargained a wage increase.  I opined that this decision by Council was influenced in no small manner by the fact that the nonunion, managerial staff had been showing increased support for unionization.
As this Globe and Mail piece explains, nonunion health care workers have been welcoming unionization since the wage freeze legislation.  When setting wages for nonunion nurses in Ontario,   the government used to match the wages collectively bargained at the unionized hospitals.  The legislation prevented that trend, so that the nonunion nurses fell behind.  Now they are looking to the Ontario Nurses Association and OPSEU for help.
The enemy of the government in this story are interest arbitrators, who refuse to accept the premise that a government has no money to pay regular raises to its employees.  As I’ve explained before (here and here), arbitrators recognize that with government employers, it is always a question of political priorities, not affordability.  The Liberals made political decisions to award MPP raises and cut corporate taxes, but then argue that they have no money to give cost of living raises to their own employees.  Virtually all leading arbitrators in Canada reject the premise that government employees should be expected to shoulder the cost of those political decisions.
Should governments legislate wage freezes for their own employees?