TORONTO - Ontario's Liberal government may be headed for tense dealings with several unions as tough economic times limit funds and trade groups deal with the sting of recently imposed back-to-work legislation.

The province settled a contentious 12-week strike at York University this week by enacting legislation that will force teachers back into the classroom, but it's facing a flurry of other contract negotiations at a time when it has fewer means to address union demands.

"Labour and education, whether it's post-secondary or secondary or elementary, certainly is back on the forefront for Mr. McGuinty and -- particularly as dollars become tighter -- his ability to manoeuvre becomes more difficult," said David Docherty, a political science professor at Wilfrid Laurier University.

"One of the things he had going for him in his first mandate was economic times were relatively good. He didn't buy off the teachers, but he could certainly afford to pay for the contracts that were being negotiated at the school board levels."

Faced with a ballooning deficit, dwindling revenues, and an increasingly gloomy outlook on the economy, McGuinty will be struggling to pay not only for the contracts but for the overall infrastructure.

"Those kinds of things are going to mark a very different second term for McGuinty than the first one when it comes to education," Docherty said.

The province is in the middle of negotiating contracts with its correctional officers as well as secondary teachers, public elementary teachers and several universities.

Various levels of staff at McMaster, Trent, Lakehead and Laurentian universities are currently in bargaining.

Observers say the way McGuinty dealt with the York strike has set a precedent, and may also sour relations for upcoming bargaining.

"The Liberals did pick up, in 2003, a great deal of trade union support of people who wanted to get rid of the Conservative government, and they held a lot of their support," said Henry Jacek, a politics professor at McMaster University.

"Dealing with the kind of legislation he's dealing with now runs the risk of him losing that image among the labour union community."

To Docherty, the bigger risk is alienating parents with more school strikes.

"There are a lot of parents out there with kids in university, so every time he talks about 45,000 students at York, for example, being affected, they're also talking about their parents being impacted, and even more so when it comes to secondary, elementary, primary school," Docherty said.

"You may have corrections workers who have concerns, you may have health-care workers in certain sectors who are concerned, but education is one of those things that cuts across all demographics."

The Elementary Teachers' Federation of Ontario is threatening a strike vote by March if "significant progress" isn't made in contract talks with school boards by Feb. 13.

The union is asking for pay raises of three to four per cent in the first three years, and no increase in the fourth year so the money could be used to hire 1,500 more teachers. A strike would affect about 750,000 children.

Education Minister Kathleen Wynne said she hopes to avert a strike, calling the situation at York a "cautionary tale" for elementary teachers.

"There is a raft of problems that has to be addressed at this point, and particularly from someone that calls himself the education premier," said Progressive Conservative critic Peter Shurman.

"You've got not-so-veiled threats by elementary school teachers, no secondary school teachers, you've got this strike that has been settled this way ... (and) a series of other contract negotiations between universities and CUPE.

"The education premier has got more to do than one bill, 82 days after the fact, being presented to resolve one labour dispute."

One aspect of the economic downturn that may help McGuinty is a lack of sympathy for wage increase demands from unions when people in other sectors are losing their jobs.

"It will weaken, for the time being at least, the resolve of militancy of leaders of trade unions or labour unions that are bargaining in the public sector," Jacek said.

Unionized correctional officers have voted for strike action, saying they are upset with proposals to restrict the number of sick days they take off.

They are to return to bargaining but the workers provide an essential service and can't walk off the job entirely.