Anti-Inflation Board Research Articles

The Struggle against Wage Controls: The Saint John Story, 1975–1976 (review)

Reviewed by: The Struggle against Wage Controls: The Saint John Story, 1975–1976 Greg Marquis The Struggle against Wage Controls: The Saint John Story, 1975–1976. George Vair. St John’s: Canadian Committee on Labour History, 2006, introduction by David Frank. Pp 136, $19.95 This memoir, which has a foreword by Bob White, former president of the Canadian Labour Congress (clc), is a vivid insider’s account of the labour movement’s struggle against Canada’s national wage and price control program of the 1970s. The volume was edited by David Frank, head of the New Brunswick Labour History Project. At the time, George Vair was a young labour activist who recently had become president of the local labour council. He had been president of two local union branches, the International Brotherhood of Electrical Workers and the United Auto Workers. The demonstration that took place in Saint John in October 1976 was part of the clc’s national protest against the Trudeau government’s economic policies. In 1974 Prime Minister Trudeau had mocked the suggestions of the Progressive Conservative opposition that inflation be countered by a ninety-day wage and price freeze. According to Trudeau, mandatory controls would be unworkable and would create a massive bureaucracy. A year later the Liberal government changed its mind and announced an income and price policy based on the Anti-Inflation Board (aib). The aib had the power to limit wage increases to 8 per cent annually in companies and organizations employing 500 or more workers. It also had the job of selling the program, whose appeal process was confusing, to the public. Employers and unions that did not abide by aib orders faced fines and jail time. Canadian workers had been enjoying regular wage increases since the late 1960s, and the labour movement viewed the aib as a money grab that benefited corporations at the expense of workers. The clc also denounced the controls as a threat to free collective bargaining. [End Page 269] Vair provides, in a clear and concise fashion, a unionized worker’s point of view on the aib program and the details of labour’s response to the policy in a mid-sized industrial city, Saint John. Major employers in the private sector included an oil refinery, a dry dock, two pulp mills, two breweries, a box plant, and a sugar refinery. Unions also represented public sector employees, port workers, and the building trades. At the time, Saint John was experiencing a boom, and the union movement was relatively strong, with two labour representatives on the city council. As Vair notes, the area’s building boom meant an extremely low unemployment rate, which factored in to local industrial relations. Employers, as the book details, often sympathized with specific union wage demands, usually for the pragmatic goal of labour peace, but unions usually faced the combined resistance of the federal and provincial governments, business organizations, and elements of the media. The last were particularly noticeable in New Brunswick, where the Irving industrial interests owned both Saint John newspapers. Vair provides a valuable record of how the Saint John and District Labour Council planned, organized, and staged a day of action that was part of the clc’s campaign to force the withdrawal of the aib legislation. The National Day of Protest, which involved more than 1 million Canadian workers, in essence was a general strike. The Liberal government and its allies resorted to tactics to oppose, minimize, and discredit labour resistance, including asserting that the leadership did not represent the rank and file. In Saint John, public transit, the port, most industries, and many stores and government offices closed, and the action was denounced by local business organizations. Despite Vair’s expectations at the time, the national protest turned out to be an isolated event. In his analysis, this was because the protest had the effect of weakening Trudeau’s resolve (the restraint program ended in 1978). The details of these local events, personalities, and disagreements over tactics remind researchers of the human side to historical events, and how protest movements face powerful obstacles, including the mainstream political parties, the media, and big business. Having recently attended three rallies...

Politics is about Winning: Stephen Clarkson on the Success of the Liberal Party of Canada

For those who are obsessed with the inner workings of Canadian politics and its political parties, The Big Red Machine a must-read in order to understand the complexities facing the Liberal Party, especially in the post-electoral environment of 2006. Stephen Clarkson has given us the last of the trilogy on the Canadian Liberal Party, following very well in the footsteps of high standards set by Reg Whitaker in The Government Party: Organizing and Financing the Liberal Party of Canada, 1930-58 and Joseph Wearing in The L-Shaped Party: The Liberal Party of Canada, 1958-1980. He goes beyond these two volumes, however, which largely devote themselves to the techniques of party organization and policy development. Clarkson gives the reader a racy, almost breathless ride through the last 30 years of the more than century-long Liberal hegemony, positing that Liberal success can be attributed to periodic dramatic policy reverses in the quest for power. Interspersed with painstaking research from a myriad of sources, Clarkson, in an unscholarly way, comes to many subjective conclusions, based, I suspect, on his own deep love of the political game. Few people can manage Clarkson's ability to capture the essence of Liberal Party life, for he very much a liberal at heart, if not technically a member of the party, although I suspect he has voted Liberal more often than not. I got to know Stephen in 1969 when, as a young party official, I worked on his mayoralty campaign. He very much a Rosedale patrician, yet incurably idealistic. To him, politics was about the noble pursuit of democracy and the implementation of progressive principles for the greater societal good. I do not think he believed that he would win the 1969 race to preside at Toronto City Hall, but the race itself, the ideas debated, and the chance to inculcate one's values upon the electorate were more important than winning. As Clarkson points out in the preface of the book, however, the Liberal Party's main credo was the joy of no matter what the cost to the parry's intellectual self-esteem or financially to the country. Clarkson, like many of us young idealists at the time, believed that politics could be different, new ideas could dominate. As a party staffer in the minority government period of 1972-74, I remember challenging Senator Keith Davey at one Ontario Campaign Committee meeting about our strategy, which was obviously Ontario-centric. Would it not be better to have a minority government that represented all regions, particularly the West, where we had almost been shut out, rather than a majority overwhelmingly based in Central Canada? Davey without a blink of the eye declared that he was glad the prime minister had named him the campaign chair, and not someone like me. Politics, he said, is all about winning, and by extension, at all costs, using all of one's guile and incision. Without winning big-a majority-you cannot put into place your policies and ideas. In The Big Red Machine, Clarkson meticulously chronicles the application of this tenet, which has made the party so indomitable; yet often what comes through in the book how offensive the strategy to Clarkson's principles and intellect. By the 1974-79 period, following the restoration of majority government that had been interrupted by the 1972 election, Clarkson's balloon of intellectual idealism obviously had burst. He talks about inertia in the government from the prime minister on down and particularly critical of the policy reversal on wage and price controls and the establishment of the Anti-Inflation Board; however, he does not seek out the electoral rationale for doing this from Davey or the prime minister's principal secretary, Jim Coutts. He does not acknowledge that to win in politics, as with everything else in life, timing everything. Progressive Conservative Leader Robert Stanfield may have been prescient when he advocated the imposition of wage and price controls in the 1974 election, but obviously the conditions that would justify their implementation had not fully taken hold in the economy and certainly not within the electorate. …

The Compensation Decisions of the Anti-Inflation Board

This paper examines the determinants of compensation decisions of the Anti-Inflation Board during its first year of existence. A bureaucratic behavior model is developed and tested using multiple regression techniques.

Canadian wage controls in an eclectic model of wage determination

Using a model of wage determination that allows for wage inertia, price expectational and price catch-up influences and quarterly data on annual wage change in new major Canadian settlements for 1967–1987, this paper shows that the Anti-Inflation Board (AIB) wage control programme has a much larger wage restraining influence than is estimated in previous studies. In contrast, the Six and Five wage control programme exerts only a modest restraining influence. Both results are of special interest because the wage determination model used here allows for not only the direct effect of wage controls, but also the indirect wage restraining effect of controls operating through lagged wage changes.

Panel on Patronage Table ronde sur le patronage

At the beginning of 1987, the Journal of Canadian Studies brought together three persons whose experience as politicians or political managers gives them a rich perspective on the political process, and the role of patronage therein. Jean-Luc Pepin’s long political career spanned a variety of important portfolios in the Pearson and Trudeau governments, as well as the chairmanships of the Anti-Inflation Board and of the Task Force on Canadian Unity. After a twenty-year absence he has now returned to teaching political science at the University of Ottawa. William Neville served as an aide to several Liberal cabinet ministers before becoming a Conservative candidate and advisor. He served as Principal Secretary to Prime Minister Joe Clark in 1979-80, and is now president of the Ottawa consulting firm. Public Affairs International. William Knight served as federal MP for Assiniboia and as Principal Secretary to Saskatchewan Premier Allan Blakeney before taking up his current role as Chief-of-Staff for federal NDP leader Ed Broadbent. The discussion was moderated by Jeffrey Simpson, Ottawa columnist for the Globe and Mail, and by Ralph Heintzman, member of the Journal's editorial board and co-editor of this special issue. The following is an edited transcript of the discussion.

Two Cheers for the Anti-Inflation Board

Two Cheers for the Anti-Inflation Board

The Impact of the Anti-Inflation Board on Negotiated Wage Settlements: A Reply

to gauge changes in employment opportunities, as measured by quantity of newspaper advertisements. Perhaps this measure does accurately reflect changes in employment opportunities from one period to the next for a given region. However, comparison of index values across regions is meaningless, unless the number of vacancies was identical in all regions in 1969. The job vacancy survey data compiled by Denton, Feaver, and Robb (1975) indicate that this is unlikely.2 Consequently, variation across regions in labour market conditions is probably inaccurately measured by ACSW. Since the measurement error occurs in one of the explanatory variables for their regression model, in principle it should result in estimation bias, thus calling into question the validity of their reported results (Johnston, 1972, 281-2). In a preliminary version of this paper, which was presented at the 1978 meetings of the Canadian Economics Association, the authors had results based not only on the regionalized help-wanted index, but also on regionalized job vacancy rates derived from the job vacancy survey data compiled by Denton et al. Given the conceptual problem associated with the regionalized help-wanted index in the context of this study, it would seem preferable to base conclusions on the estimates obtained using the job vacancy series.

The Impact of the Anti-Inflation Board on Negotiated Wage Settlements: Comment

The Impact of the Anti-Inflation Board on Negotiated Wage Settlements: Comment

Public Decision Making in Canada: The Case of the Anti-Inflation Board

Public Decision Making in Canada: The Case of the Anti-Inflation Board

A Microeconometric Analysis of Spillovers within the Canadian Wage Determination Process

T HE objective of this paper is to develop and test models of wage spillovers utilizing a large micro data base constructed from Canadian collective bargaining wage contracts signed between 1966 and October 1975 (the introduction of wage controls in Canada). There are two basic approaches to the wage spillover hypothesis that can be found in the literature. 1 Institutional spillover models, characterized by Dunlop's wage contours and Ross' orbits of coercive comparisons, emphasize the distributional structure of wage rates between occupational-industrial groups. A second approach follows the tradition of microeconomic labour market theory and emphasizes relative wages, labour mobility, labour turnover costs, etc. For example, a simple Marshallian model would include both the firm's own wage rate as well as competing wage rates as determinants of labour supply (and consequently wage changes). More recently Phelps (1968) has proposed a generalized excess demand model of frictional labour markets in which a profit-maximizing firm establishes an optimal wage differential between its own wage rate and competing wage rates.2 Unfortunately it may be impossible to identify empirically the precise origin of wage spillover effects. The existence of wage spillovers is totally consistent with economic models of wage determination as well as being consistent with institutional hypotheses that emphasize bargains, wage leadership, pattern wage adjustments, maintenance of historical wage differentials, etc.3 Thus, our interpretation of the theoretical rationale for wage spillovers must, of necessity, be somewhat agnostic. Turning to the empirical evidence, three studies have advanced evidence pertaining to wage spillovers, each study based on a very different statistical methodology. Perhaps the classic study in this area is the Eckstein-Wilson (1962) paper which emphasizes a number of institutional aspects of the wage determination process. Eckstein and Wilson provide empirical evidence, based on the of specific wage rounds, supporting a combined market-institutional spillover model of wage determination within the U.S. manufacturing sector. For a key of industries, identified largely from impressionistic evidence, wage changes are determined by profit and unemployment rates based on the aggregate rates for all industries within the group. Outside the group of industries, wages are principally determined by wage spillovers from the group. Unfortunately, the underlying wage round technique employed by Eckstein and Wilson is notoriously difficult to implement, i.e., to identify unambiguous aggregate wage rounds. McGuire and Rapping (1967) have challenged the Eckstein-Wilson study on the grounds that at best their evidence lends weak support to their institutional hypothesis, that their central result for the group of industries is ambiguous, and finally that they have not resolved the problem of distinguishing between neo-classical labour supply forces and institutional spillover effects. McGuire and Rapping's own model (1968), which is tested with cross-sectional data (industries at the state level), reveals that while market forces play an important role in the relative wage determination process for the U.S. manufacturing sector, wage spillovers from steel and automobile bargains (particularly steel) are also relevant explanatory variables. Received for publication July 13, 1978. Revision accepted for publication May 23, 1979. * University of Guelph. We gratefully acknowledge the helpful comments that we have received from Doug Auld, David Dodge, Mark Mueller, and John Vanderkamp. This paper could not have been written without the financial support of the Anti-Inflation Board and the diligence of an exceptionally fine research assistant, Jane Forster. None of the above-named individuals, nor the Anti-Inflation Board, should be held responsible for the arguments and conclusions of this paper. 1 For a thorough review and critique of spillover theories, see Burton and Addison (1977). 2 This optimal wage differential takes into account the turnover costs associated with recruiting, hiring, and training new workers. 3 For further discussion of this identification problem, see Addison and Burton (1979). [ 213 ]

The Research Output of the Anti-Inflation Board: A Review

The Research Output of the Anti-Inflation Board: A Review

The Impact of the Anti-Inflation Board on Negotiated Wage Settlements

This paper analyses the impact of the Anti-Inflation Board on wage settlements negotiated prior to any AIB-recommended wage rollbacks. During the first two years of AIB wage controls, union wage settlements in the private and public sectors have been between 2and 3A percentage points per annum lower than the pre-AIB wage structure would have predicted. By 1977Q3, the cumulative wage effect of the AIB is on the order of 3.2 per cent in the private and 4.6 per cent in the public sector. Using the framework developed by Lipsey and Parkin, it is found that the AIB wage guidelines were about 50 per cent effective in restraining wage increases (prior to any AIB wage r ollbacks). L'impact de la Commission Anti-Inflation sur le niveau des salaires negocies. Ce memoire a pour but principal d'analyser l'impact de la Commission Anti-Inflation sur le niveau des salaires n6gocies. L'etude s'attache aux niveaux n6goci6s entre les parties avant toute intervention gouvernementale recommendant ou ordonnant l'acceptation de niveaux plus bas aux termes de cette loi d'exception. Au cours des deux premieres ann6es d'op6ration de la CAI, il appert que les salaires negocies pour les syndiqu6s dans les secteurs prive et public ont et6 de 2a 32 points de pourcentage plus bas par ann6e que la structure de compensation de l'avant-cAI aurait pu le laisser pr6voir. Au troisieme trimestre de 1977, l'effet cumulatif de la Commission AntiInflation 6tait de l'ordre de 3.2 pour cent dans le secteur priv6 et de 4.6 pour cent dans le secteur public. Les auteurs utilisent le cadre de reference suggere par Lipsey et Parkin et arrivent a la conclusion que la Commission Anti-Inflation a et6 efficace dans l'ordre de 50 pour cent dans ses efforts pour reduire l'augmentation des salaires negocies en premiere instance.

The Estimate of Productivity Growth in Canada’s Prices and Incomes Policy

A critical element in the determination of allowable increases in real compensation under the Anti-Inflation Act Regulations is the national productivity factor which has been set at two per cent for each guideline year (Anti-Inflation Board, 1975, section 47).1 The national productivity factor, in conjunction with the basic protection factor and the experience adjustment factor, is supposed to provide workers with «a share in increases in national productivity» (Government of Canada, 1975a, 21).2 The rationale for the 2 per cent figure is explained in the government's white paper as follows:

A Note on the Wage Decisions of the Anti-Inflation Board

Auld, D.A.L. (1974) 'The Impact of Taxes on Wages and Prices,' National Tax Journal I47-150. Beigie, C. and J. Mendelsohn (1976) Tax Concessions to Boost Investment (Montreal: C.D. Howe Research Institute) Courchene, T.J. (1976) Monetarism and Controls: The Inflation Fighters (Montreal: C.D. Howe Research Institute) Economic Council of Canada (1976) People and Jobs: A Study of the Canadian Labour Market.