OTTAWA—Hidden in the Conservatives’ massive budget legislation is a measure removing the federal fair wages act — another in a flurry of measures by the Harper government that critics say will keep wages low for a middle-class that has seen little improvement in income for decades.

Scrapping the wages act is one of approximately 70 changes to federal law crammed into the 425-page budget bill. The move went largely unnoticed until spotted by New Democrat MP Pat Martin a few days ago.

Known in full as the Fair Wages and Hours of Labour Act, the law requires contractors who have been awarded federal government construction projects to pay their workers the prevailing wage in the region as well as overtime.

Prime Minister Stephen Harper’s government has been under pressure to eliminate the law, which stems from the Depression era 70 years ago but was updated in 1985.

Merit Canada, a national group representing “open shop,” or non-unionized, construction associations, argued in a brief last year that the law is outmoded and regulating pay rates leads to higher wages among workers.

Critics say eliminating the measure means contractors on federal construction jobs will no longer have to meet the prevailing wage — $20-to-$30 an hour depending on the region — but instead can pay as little as the provincial minimum wage ($10.25 an hour in Ontario).

“The Fair Wages and Hours of Labour Act took wages out of competition so that contractors on federal projects would win jobs based on their skill and their ability, not their ability to find cheaper and cheaper wages,” Martin said in the Commons on Thursday. “In whose interest is it to drive down the wages of Canadian workers?”

But Labour Minister Lisa Raitt said the Fair Wages act is seen as “unnecessary red tape for employers” and stems from a time when federal government contracts made up a larger portion of non-residential construction across Canada. Currently, it’s only 2 per cent, she told CBC Radio’s As It Happens.

“The reality is, today, that this is really provincial jurisdiction,” Raitt added. She contended that scrapping the law would not affect wage rates in the construction industry.

Unions, however, see it as another step in a wide-ranging campaign by the Harper government to blunt the power of organized labour and keep a lid on workers’ pay rates.

“Eliminating the fair wages act will contribute to a race to the bottom on wages and it’s part of this broader Conservative attack on labour,” said United Steelworkers economist Erin Weir.

The government is also pressuring employment insurance recipients to take lower-paying jobs, changing the Temporary Foreign Worker program in a way that may drive down wages and is tying immigration more closely to business needs. As well, the Conservatives are using back-to-work legislation to block strikes at companies such as CP Rail and Air Canada.

“All of these measures together are clearly aimed at suppressing wages,” said Canadian Auto Workers economist Jim Stanford.

Economists wonder how these policies will help average Canadians, who are facing an economy with 1.4 million unemployed and wages that, at an increase of 2.1 per cent annually, are barely keeping up with inflation.

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“Wages are flat as a pancake,” said Canadian Labour Congress chief economist Andrew Jackson. He said he can’t understand why the government isn’t doing more to provide skills training for Canadians, particularly the unemployed, rather than suppressing pay rates.

“There’re a lot of sticks being waved around and not a lot of carrots,” he said.