TORONTO - Pay raises for Ontario politicians and senior bureaucrats were capped Tuesday in a "symbolic" measure from the government to address the troubled economy -- a gesture slammed by critics as cheating taxpayers by still giving officials salary hikes in tough financial times.

The so-called "restraint" measures -- which limit salary increases to 1.5 per cent -- are an insult to the thousands of workers who have lost their jobs, said Progressive Conservative Leader John Tory.

"I think it's a fraud," he said.

"I think the person out there who's lost his or her job is going to be saying, `Look, why is someone making $400,000 or $300,000 or $200,000 getting any raise at all, when I'm paying for it and I'm out of work?"'

Premier Dalton McGuinty described the measures as "largely symbolic" last week, but that doesn't even come close, said NDP Leader Howard Hampton.

"This is cynical symbolism," he said.

"The government that gave MPPs a 40 per cent pay increase over the last 19 months doesn't have much to offer here."

The measures, which also include a hiring freeze on full-time workers in the public service, will save the province about $500,000 a year and take effect immediately, Finance Minister Dwight Duncan said Tuesday.

The government is also "strongly" encouraging the broader public service, which includes government-run agencies, to cap pay hikes at 1.5 per cent for about 1,700 employees who earn more than $150,000, he said.

The federal Conservatives announced last week they would cap public service raises, including those for politicians, to 2.3 per cent this year and 1.5 per cent annually the next three years.

Duncan said he held back on a pay freeze because he didn't think it would do "a lot of good."

But he bristled at suggestions the measures are a sign his government is too weak to make tough decisions in hard times.

"Well, last Thursday I heard a government talk about a number of things that they rescinded by Saturday afternoon," he said.

Duncan was referring to the federal Conservatives, who are fighting off the threat of a Liberal-NDP coalition government after delivering a provocative fiscal update last week.

The Tories have been backpedalling since then, even revoking a contentious proposal to end public financing of political parties that seems to have sparked the parliamentary crisis.

However, Duncan's new restraints are a far cry from the kind of cost-cutting that opposition parties and taxpayer groups had been calling for.

Ontario has the biggest wage gap among the provinces when government salaries are compared to private sector wages, the Canadian Federation of Independent Business said Tuesday.

The average salary in the public sector of $60,656 is 13 per cent or $7,000 higher than the comparable private sector wage of $53,682, the group said.

And that doesn't include benefits like pensions and insurance, which are "considerably richer" in the public sector, the federation said.

The wage gap will likely widen as the government continues its collective bargaining talks with public sector employees, it said.

Currently, there are 68,645 full-time equivalent employees in the Ontario public service, according to the Finance Ministry.

McGuinty had mused last week about possibly freezing the salaries of politicians and senior bureaucrats, but said he'd leave the final decision up to his finance minister.

Duncan had downplayed the restraint plan, saying it won't save much money.

The government has already scaled back some spending after warning the current economic downturn will sink the province into at least a $500-million deficit.

In its fall economic statement last month, Duncan announced he would find $108 million in savings before the end of the year.

That includes $10 million in internal savings from reducing travel costs for government staff and freezing the purchase of government vehicles for the rest of the fiscal year.

The government is still on track to deliver $1.1 billion in savings by the end of the year, as promised in March's budget, Duncan said Tuesday.

But opposition parties say there's plenty more belt-tightening to do, such as skipping hotel conferences when meeting rooms in the legislature are empty.

McGuinty hinted at the additional measures last week, saying the government should lead by example during the current economic downturn.

But he also acknowledged he flew business class when he visited China on a trade mission earlier this month.