The government’s economic policies have caused hardship, economic suffering, and a loss of democratic bargaining rights . . . the government has refused to listen to any worker representatives who have tried to suggest positive ways of controlling inflation without hurting working people.
This statement, from the Canadian Union of Public Employee’s (CUPE) national President, Grace Hartman, in the summer of 1976, summed up the position of millions of labourers in Canada during the mid-1970's when the wages of working people were held back by the federal government. The wage controls, which were brought in by the ruling Liberal government under Prime Minister Pierre Trudeau, were a result of inflation-fighting legislation that attempted to curb skyrocketing inflation rates. However, by making the working poor the focus of the anti-inflation legislation, by rolling back annual increases that were arrived at through collective bargaining procedures and refusing to consider the limitation of corporate profits, the government struck the ire of labour unionists, nonunionized working Canadians, and political activists. The protest to this legislation culminated within the Canadian Labour Congress (CLC), which organized the National Day of Protest on October 14, 1976. Although participation in (and the effectiveness of) the protest were questioned, the consequences of a large-scale, country-wide walkout and the reasoning behind it were felt, and continue to benefit unionized and non-unionized workers across Canada.
Starting in the late 1960's and progressing into the mid-1970's, rising levels of unemployment and inflation (termed stagflation, which also includes a fall in the value of a country’s gross domestic product) created economic turmoil and upheaval in North American economies. Not only were prices on domestic goods and services rising at an alarming rate, but economies in the former West Germany, Japan, Taiwan, and Korea were gaining strength due to innovative entrepreneurs and cheap rates of labour. Domestic producers were finding very hostile economies, both in North America and abroad, forcing them to seek solutions to these economic problems for a more stable marketplace. Thus, the cause of the rapidly rising rate of inflation had to be found and controlled, according to the capitalists. With the partnership of the federal government, Canadian business found that the aggressive demands of unions were the main culprits of rising inflation and falling profit margins.
Workers’ wage and salary demands seemed to be the most visible cause of retail price inflation (if the sudden jump in oil prices set by the Organizations of Petroleum Exporting Countries and rampant real estate speculation in metropolitan areas were overlooked).
The government of Pierre Trudeau had a further problem with organized labour. It, along with big business, saw the disappearance of the "contented, differential worker," who was likely to accept the meager changes and concessions offered by his or her employer, and witnessed the emergence of a stronger, self-assured individual that would fight for better working conditions and enforce wage demands on their employer.
The crime attributed to organized workers was simply that they were using the structures of collective bargaining as the system had been designed, for maintaining living and working standards in the face of inflation, technological change, and other disruptions.
The government’s goal was to curtail rising prices and stabilize inflation, but as a result of this they would limit or seriously impact the ability of labour unions, and workers in general, to bargain collectively and strike, not allowing their true intentions to be overtly recognized.
Thus, legislation was introduced and passed through a Liberal majority House of Commons that introduced Canadians to a program of income and price controls designed to combat high unemployment levels and inflation. The legislation, which took effect on October 13, 1975, came only after failed attempts at getting employers and unions to voluntarily agree to wage restrictions. The wage control would occur in stages, over a period of three years, with workers employed in companies of over 500 employees, workers in the federal civil service, workers in construction companies that employed more than 20 people, and many thousands more facing limits to all forms of compensation. The restrictions were to total no higher than eight percent in the first year, six percent in the second year, and four percent in the final year respectively. An Anti-Inflation Board (AIB) was set up, consisting of government bureaucrats, whose purpose included monitoring wage settlements, determining if an overpayment had been made, and forcing the employer to collect the excess salaries or wages. Price controls were also part of the legislation, but were rarely enforced, and were seen by many analysts as just a formality thrown in by the Trudeau government to gain labour’s compliance. The final element added was Supreme Court of Canada compliance, which argued in favour of the Liberal legislation, saying that the rising of inflation was a national emergency, making wage controls legal under the Constitution.
This legislation infuriated many, particularly labour leaders. Many felt cheated and insulted by the Trudeau Liberals, who had campaigned on a platform that promised to solve the country’s economic crisis with methods other than wage and price controls. As Buzz Hargrove writes in his autobiography, Labour of Love:
We know from the brief experience of wage and price controls in the United States that we would end up with controls on wages, but no real controls on prices or corporate profits. Wage controls contributed a direct attack on labour. They put a lid on what unions could bargain for and marginalized the leadership. As expected, the Trudeau government made no attempt to control prices, or determine where capital investment should be focused to strengthen the economy. The struggle over wage controls was ultimately about worker concessions. Over the three years of their implementation, wage controls cost the average Canadian worker $2,200.00 - $20 billion for the country’s workplace. In the meantime, corporate profits soared. Between 1978 and 1979 (when waged controls were at their most effective), corporate profits surged 58.3%.
Soon after the roll-backs were implemented, it was revealed that public sector workers, specifically low-paid workers in schools, hospitals, and municipal governments, would be affected hardest by the loss of wages, forcing the CLC to pull all labour representatives off of consultative bodies. Labour activists and leaders were also quick to attack the true intentions of the anti-inflation legislation and the tactics used by the AIB, as illustrated in this passage from a CUPE 1975 paper entitled, Defend Your Basic Right: The fact that the Board existed intimidated workers, thus negatively affecting collective bargaining. The fact that it rolled back increases; increases that workers had usually spent months negotiating for, waiting for, and depending upon, proved that the Board was in fact violating your rights. The fact that it is now repeatedly requiring workers to pay back to the Board money already received and spent, clearly indicates the utter callousness of the Board and the determination of the government to demoralize working people and to back-date labour rights by 50 years or more.
In mid-1976, after months of arguing by the United Auto Workers, CUPE, and the Canadian Union of Postal Workers, among others, the CLC, the overarching body of organized Canadian labour unions, called for a day or protest to be held on October 14, 1976. The day of protest was to be one day where all workers, unionized non-unionized alike, could protest the actions of the Trudeau government, and unite under a common voice that would be extremely difficult for the government to ignore. Although some union leaders were initially skeptical about the effectiveness of such a strike and were reluctant to support it, most would eventually throw their support behind the CLC, or left it up to their individual members to decide if they would remain on the job or not. And to show they were not looking for a grand scale shutdown of Canadian cities or towns, which would endanger the lives of Canadians, essential service workers were asked to remain on the job, but contribute a day’s pay to the CLC’s protest fund.
The day of protest gained momentum as workers were told they would not receive the raises they had bargained for, and were forced to pay back thousands of dollars of "over payment," most of which had been paid out before the wage and price controls were made law. Research by labour unions, as given in a September 21, 1976 memorandum from CUPE Local 1975 on the University of Saskatchewan campus, shows that not only was there little evidence of price controls being implemented, but that the true cause of inflation was not increases in workers’ salaries.
The main cause of inflation in Canada is the obscene cost of borrowing money - 12%-25%. Housing is in very short supply and people have no option but to buy in a market condition which is grossly inflated. Wage earners are paying up to 50% of their earnings on house mortgages, which means they are in bondage to mortgage companies. What about Trudeau’s just society? We never hear that cliche anymore. Banks and mortgage companies profits are up as high as 60% from last year. This is nothing more than a massive rip off. Note that none of the above three items, food, energy, and cost of money, come under Trudeau’s price controls.
A further problem seen by the CLC as being very detrimental to labour was the impact of wage controls on collective bargaining. The concern was that negotiating forms of compensation, being limited by the anti-inflation legislation and controlled by the AIB, would leave employers discouraged from bargaining directly with the unions. With constant referral to the AI B, unions and employers would no longer be able to bargain with each other, in good faith, basically having the AIB dictate terms of all agreements referred to them. This may have been just what the government wanted, giving them the power to limit all forms of compensation, factors which were evident by the broad definition of compensation used in the wage control legislation: ". . . all forms of pay, benefits and perquisites paid or provided, directly or indirectly, by or on behalf of an employer or for the benefit of an employee." To maintain good faith and trust, however, between employers and unions, employers were encouraged by the CLC to bargain with the employees’ union when a collective agreement needs to be reworked or is near expiration, and then submit the terms of the agreement to the AIB for review.
Although the employer is required to submit forms to the AIB, there is no requirement in the legislation or the regulations compelling the employer to constantly consult the AIB to determine whether such and such a settlement exceeds or is within the guidelines. The employer should negotiate an agreement in good faith and then let the AIB decide from the information provided by the company whether the settlement is within the guidelines. Meanwhile, the union should insist that the employer immediately pay the wage scale which has been negotiated, even if it apparently exceeds the guidelines or the AIB has so ruled.
This was only one of many tactics used by the CLC to oppose the anti-inflation legislation.
Adding fuel to the day of protest campaign was the expensive advertising by the government, singing the praises of the wage and price control program. The advertisements, taken out in major newspapers across the country near the time of the protest, praise the anti-inflation legislation for doing just what is was intended to, take down inflation. Although most prices had not noticeably receded, the advertisements passed blame for prices remaining stationary, or increasing after price controls were brought in, on factors out of the government’s control.
The anti-inflation program has helped to guarantee that cost savings are passed along to you on the products your family needs week by week. If a price goes up, chances are there is a reason, like bad coffee crops in Brazil. But if the reason for a higher price disappears, you can expect the price you pay to go back down, too.
These advertisements were criticized by many for using inaccurate and skewed data, and only contributed to the CLC campaign against the government.As the day of protest drew near, the campaign gained more support from unions across the country, and the criticisms of the government and their lack of attention to wage controls became more frequent and harsh. However, having labour in a position which put the power to strike collective bargains in their hands, the government paid little attention to the issues of wage pay backs and roll backs, and more attention to the legality of the upcoming protest. As Minister of Labour, John Munro expressed in parliament the day before the protest:
. . . if the rank and file organized worker feels under some compulsion to protest he should do so legally and not break collective agreements; he has lots of latitude to do that - lunch hours, split shifts, and so on - when he is not working.
It was clear that the attitude amongst the nation’s politicians, excluding some members of the New Democratic party, was that it was fine for the government to ignore collective agreements, but imperative that agreements be followed by all unionized workers.
The day of protest was initially thought to have a mixed impact on the CLC’s cause, but it was clear that by the shear number of workers who walked off the job for the day, an estimated 1,054,744, that there was great disapproval of the anti-inflation program across Canada. The day of protest was, and is to this day, the largest organized labour protest in the history of the North American labour movement. The day of protest was heralded, although cautiously, by Canada’s only national newspaper, The Globe and Mail:
. . . the ability of the congress to take more than a million markers off the job, by the CLC’s tabulation, is an impressive feat considering the loss of pay incurred by the workers and the decision by the Public Service Alliance of Canada, representing federal civil servants, not to take part in the strike.
Another positive result of the day of protest campaign was that unions took advantage of the media coverage, which paved the way for better media and public attention to labour issues, such as equal pay for equal work, another topical issue at the time. The day of protest campaign gave labour unions from across the country the opportunity to unite under a common cause, and show the governments of the country, especially the federal government, that workers are articulate, enlightened, and ready to challenge the government on issues pertinent to them. The most important gain that the labour movement made with the day of protest though, was that the controls of wages were not extended past the 1978 termination date, nor were the rules of the anti-inflation legislation changed to include harsher wage controls. The CLC and labour unions in Canada were victorious in both pressuring the government to take their concerns seriously, while making gains for unionized and non-unionized workers by pointing out the discriminatory practices of the government and the obvious flaws in the anti-inflation legislation. By ensuring the death of the anti-inflation legislation through the national day of protest, Canadian labour not only saved institutions dear to them (such as collective bargaining), but also stopped the Trudeau government from gaining power and control over labour and collective agreements.
Culminating in the October 14, 1976 day of protest, the campaign by Canadian labour unions, specifically the Canadian Labour Congress, shed truth and light upon government legislation that was malicious and ill-intended. The wage controls of the Trudeau government’s anti-inflation legislation did little to curb inflation, but led to workers losing money they had bargained hard for, and in some cases, had already been paid. Although inflation was a huge economic problem, legislation designed to take money away from working people while ignoring soaring corporate profits was exposed by labour as having little economic impact, while giving the federal government more control over trade unions and their collective agreements. Given these circumstances, and the formidable forces they faced, Canadian labour can claim the 1976 day of protest as a victory for all working people in Canada.