Premier Danny Williams says there's no money to offer public sector workers any wage increases in this year's round of collective bargaining.
He used a province-wide television address Monday evening to directly tell government, health and education workers that his government will not negotiate wage increases in talks that are about to start.
"One of the messages we will be bringing to the unions is that there is no money available for salary increases at this time," Williams said.
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He said union leaders have been already told, and he wanted to pass the word on to union members before the final stages of bargaining.
Williams acknowledged the decision will be difficult to accept, however "no one in this province was told that the debt would increase by more than $1 billion in each of the next four years.
"We can only conduct collective bargaining based upon the fiscal realities we all face, and we should only reach agreements that we can afford otherwise we only postpone the inevitable."
The announcement came on the same day that the government released a PricewaterhouseCooper review of the province's fiscal situation. It projects deficits of more than $1.1 billion in the next couple of years if action isn't taken.
Related story: Review confirms province's financial woes
That study found 52 per cent of government spending is on wages. The last round of bargaining led to 15 per cent wage increases over three years that added $350 million a year in expenses.
While announcing a wage freeze, Williams said his PC government would do everything it could to honour its election promise to avoid large-scale layoffs.
He noted 6,000 workers are coming up for retirement in the next few years, but he avoided saying how many of them would not be replaced.
NAPE gearing up for strike
NAPE, the province's biggest public sector union, already is planning strike votes for mid-March.
"The only people (Williams) singled out tonight was the public service," says union president Leo Puddister.
He says with contract talks about to begin, the premier is engaged in bad faith bargaining.
"We're extremely disappointed, but it doesn't change our deadlines one iota," Puddister says "We will go to the table, we will negotiate in good faith, and we will see on March 31st. if there's a salary increase or not. If there's not, then we will do what workers do."
Related story: NAPE leader unfazed by fiscal review
Const. Joe Boland, president of the Royal Newfoundland Constabulary Association, also says he's disappointed with Williams. He says the police force already has a hard time trying to recruit members because his members have seen only one wage increase in 15 years.
"We thought we were at a stage here were we were going to make some gains, start getting some new blood into our organization," Boland says. "No increases for our members we're already the lowest paid in the country."
In addition to his opening bargaining statement, Williams repeated a promise from the party's election blue book that every government program would be reviewed, and ones that are ineffective or inefficient would be eliminated.
The government also wants to review the number of seats in the House of Assembly.
Government site: Williams speech text
Williams said short-term spending cuts announced soon after the PCs came to power have saved the government more than $1.5 million. The measures included the abolition of 44 political appointments, a hiring freeze and restrictions on travel and other discretionary spending.