In the 1970’s Canada was facing very real concerns regarding inflation. There were several causes for the increasing costs of living: The United States had spent vast amounts of money in Vietnam, which created a balance of payments deficit in the US in the 1960’s and helped to create a balance of payments surplus in Canada, the Bank of Canada increased the money supply in order to keep the Canadian dollar fixed to the US dollar, fiscal expenditures had been increased in hopes of preventing further increases in unemployment, and the prices of oil and commodities increased. Despite attempts to keep the economy stable, the levels of unemployment rose from 5.4% in 1974 to 7.2% by mid 1975 and the cost of living, which had increased 5.1 percent 1972, increased more than 9 percent in 19722. In February of 1974, Prime Minister Pierre Trudeau claimed that inflation was "caused by people ‘who want to take more out of society than they put into it’" and that price and wage controls would not be effective in slowing inflation because of "strong external influences on Canada’s economy."
Pierre Trudeau continued to oppose controls during the federal election in the summer of 1974. Although he ran on an anti- control platform, he introduced control legislation just 15 months after he was elected. The controls he instituted have been called "…the most radical peacetime direct intervention in the economy…". Trudeau blamed his change of heart on the fact that domestic inflation in 1975 was affected more "by Canadian expectations of large price increases than by external factors as in 1974, thereby making wage and price controls appropriate for fighting inflation. Legislated controls were deemed necessary because inflation rates were continuing to increase, a voluntary program of restraint had failed to make it past the proposal stage because the Canadian Labour Congress could not garner locals support, and wages were viewed to be one of the major causes of inflation.
The controls affected firms with more than 500 employees, all construction firms with more than 30 employees, federal and Crown corporation employees, employees whom bargained in association with employees from another firm, professionals, and employees of participating provinces and those provinces’ Crown corporations and employees of the municipalities within the participating provinces. The wage controls affected many types of remuneration -including stock options, fringe benefits, and bonuses. Some increases were exempted: increases due to promotion or improved output resulting in increased pay (ie: commissions and piecework), increases to improve pay equality in the workplace, and an inability to attract and/or keep employees at the existing pay rate were not subject to controls.
There were four factors that made up the income guidelines: The basic protection factor, the national productivity factor, the past wage and experience factor, and the minimum and maximum dollar increases. The basic protection factor allowed for increases so that the standard of living of wage- controlled workers did not fall dramatically over the period of the controls. The maximum increases were set at 8 percent in the first year of the control program, 6% in the second year, and 4% in the third and final year. The percentages were chosen with the expectation that the controls program would be successful in slowing the rate of inflation, however, the percentages were to be increased if inflation was not brought under control as effectively as expected. The national productivity factor allowed an additional increase of 2% per annum. The adjustment for past wage and salary experience involved the use of a benchmark. Pay increases were compared with the increases in the Consumer Price Index over the past two years plus two percent. If the increase was greater than the benchmark it was adjusted downwards to a maximum of two percent. If the increase was lower than the benchmark, it was adjusted upwards to a maximum of two percent. The minimum wage increase was established at $600, regardless of the percentage increase; the maximum was $2,400 average per person for a unit. The maximum increases in net income for a self-employed professional was capped at $2,400 unless the increase reflected an increase in workload rather than an increase in fees.
All provinces except Saskatchewan and Quebec took part in the federal control program. The fact that Quebec declined participation in the program is most likely more reflective of the difficulties between Quebec and Canada than faults in the federal program. Saskatchewan Premier, Allan Blakeney, was critical of Trudeau’s program and instead introduced a voluntary program. Blakeney thought the federal plan to be weak and discriminatory because not all forms of income were subject to controls; rent and dividend income should also be controlled, as the prices of select goods, including – but not limited to – steel, cement, flour, and milk:"Tough measures are needed and they are needed now. The government of Saskatchewan is prepared to cooperate fully with any federal government on any joint effective method to beat inflation’… ‘I’m not talking simply about wages because if you control wages you discriminate against working people and do nothing about speculators and expense- account executives." Although Blakeney’s view on what constituted a fair control program was different from Trudeau’s, his program received no more support from the unions than the federal program did. In fact, the union- organized protest against wage control in Saskatchewan was most likely the catalyst for the national Day of Protest. The Saskatchewan protest took place on February 2, 1976. Between three- and four thousand protesters gathered at the Exhibition Auditorium in Regina before proceeding to the Legislative building, where a rally was held. A "Workers’ Proclamation" against wage controls were posted to the doors of the legislature. The proclamation offered more palatable suggestions to battle inflation, including increased availability of low cost housing, increased Old Age Pensions, minimum wage, job creation, and lower interest rates. A petition against wage controls were taken to Allan Blakeney’s office were it was left with Blakeney’s executive officer, Jack Kinzel11along with the message, "advise him we were here, and tell him, this is only the beginning."12 Progressive Conservative leader Dick Coliver was the only party leader at the demonstration in front of the legislature. Although he was standing near the microphone and his aid requested he be allowed to speak, organizers denied his request. The protesters returned to the Exhibition Auditorium for more speeches. Gerry Macdonald, President of the Regina Public School Teachers’ Association attacked the provincial government in his speech. "The NDP cannot ‘continually turn around and kick working people in the teeth then ask who else they have to have to vote for’… ‘I think its’ time [organized labour] turned around and bit them back.’"13 The difference of opinion between Labour and the New Democratic Party is only one example of the disagreement over wage controls as a tool to control inflation. The Saskatchewan Young New Democrats (SYND) passed a resolution at the convention, also in February 1976, which criticized the provincial government for creating a program which the SYND found to be discriminatory "against poor people, women, native people and working people" 4. The same resolution also applauded the federal NDP caucus for its opposition to the federal anti-inflation program. Even Beryl Plumtree, Vice President of the federal Anti- Inflation Board expressed that the fight against inflation was done mainly on the backs of workers: " ‘Spiraling government deficits have contributed at least as much to our inflationary spiral as have spiraling demands for higher wages and higher incomes…. But I still look for a more convincing change of attitude on the part of most governments in this country’" 5. It does appear rather ironic that although the federal government was encouraging fiscal tightening that its Anti- Inflation Board had over three hundred employees. As time passed, opposition to the control program grew. In a speech to the Brotherhood of Railway, Airline and Steamship Clerks on Feb 5, 1976, Joe Morris, president of the CLC "accused the anti-inflation board of failing to roll back a single increase in prices or profits while regularly rolling back union-negotiated wage increases. The program clearly was intended to control wages only…." 6. On August 12, 1976, the Canadian Labour Congress (CLC) announced that a national Day of Protest against wage controls would be held on October 14, the one year anniversary of the federal wage control program. With the CLC’s membership of 2.3 million such a protest would impact the country even though the Public Service Alliance (PSA) declined participation of its roughly 177,000 members. The PSA was not in a legal strike position and its President, Andy Stewart, did not feel it was moral to encourage people to break the law. Prime Minister Trudeau responded to the CLC’s announcement by blaming unions and businesses for causing inflation. He said that if unions and businesses stopped asking "…‘for more than their fair share of the national pie," the government would take controls off the next day for they would succeeded in what they wanted to do. 7 Despite the protest being ruled an illegal strike in Ontario, the Day of Protest became Canada’s first national one- day protest. The protest was simultaneously ruled a success by Labour and a failure by government. CLC President Joseph Morris claimed that the more than one million protesters wanted "…to be part of the decision making system… part of the checks and balances that maintain a viable democratic system" 8. Federal Labour Minister John Munroe claimed that the protest would not affect the government’s economic management plans because "No democratic government can knuckle into any special interest group, no matter how legitimate" 9. The protest was peaceful for the most part but there was at least one incident of violence: A half-ton truck drove through a blockade on Reversing Falls Bridge in New Brunswick at full speed, injuring three people. Except for that one vehicle, protesters were successful in blocking suburbanites from the downtown core. Although over one million Canadian workers took part in the Day of Protest on October 14, 1976, the protesters numbered less than one-half of the CLC’s membership. The relatively low turnout, while still large enough for the protest to be considered a success, may be reflective of the controversy surrounding the use of wage controls to curb inflation. After all, the issue had divided political parties – and unions members often have more varied ideologies than members of the same political party. Even if the number of protesters was in fact negatively impacted by differing views on the effectiveness and equity of the anti- inflation policies under Pierre Trudeau, the protest did not lessen the solidarity among union members. For instance, the city council in Campbelltown, New Brunswick reversed a decision to terminate 41 employees who participated in the Day of Protest after CUPE President Harrison Harvey threatened a walkout of 17,000 members. Although union members disagreed on anti- inflation policy, they still agreed that strength existed in numbers.