Chamber members concerned about minimum wage increase
The Keep Ontario Working Coalition’s independent economic analysis of the impact of the provincial government’s Bill 148 (including increasing minimum wage and changes in vacation) predicts if it comes into place, it will cost every household $1,300 next year.
With the Ontario Chamber part of the Coalition, Northumberland Central Chamber of Commerce president Kevin Ward has distributed the study’s findings to local members and the media.
Earlier this summer a meeting was held to update members about the Coalition’s actions related to the proposed Bill.
“Needless to say, there was concern expressed at this meeting regarding the potential repercussions of a mandated 32% increase in minimum wage,” Ward stated in an e-mail. “Clearly the only options available to businesses are to absorb the added cost out of profits, raise prices or reduce labour forces through automation or by making do with less work.
“As Hendrik Brakel Senior Director, Economic, Financial & Tax Policy, Canadian Chamber of Commerce pointed out, ‘if we look at profit margin by industry, the biggest users of minimum wage labour are in retail and food service, with razor thin (below 3%) margins. There is very little room to absorb these costs, and if a business is not profitable, there is not much point in keeping it going.’
“That leaves higher prices and fewer jobs as the only options for many,” Ward stressed.
Ward also noted that while the “prevailing attitude” of local chamber members was supportive of increasing the minimum wage, “there are grave concerns that the aggressive time frame proposed to implement such a significant hike will ultimately have the opposite of the intended effect - and it will be the most vulnerable who are the hardest hit.”
The provincial government proposal is to increase the minimum wage to $14 Jan. 1, 2018 and to $15 the following year.
The Keep Ontario Working Coalition’s media release states that “that if the legislation is implemented as currently drafted, there will be significant, sudden and sizable uncertainty for Ontario jobs, economy and communities.
The study concludes that these vast, unprecedented reforms will put about 185,000 jobs at risk in the first two years, greatly impacting Ontario’s most vulnerable workers.”
These are some of the details from the analysis:
• $23 billion hit to business over the next two years alone;
• 185,000 Ontario jobs will be at immediate risk over the next two years;
• 30,000 of the jobs at risk are youth under 25;
• 96,000 employees at risk are expected to be women;
• 50 per cent increase to inflation for this year and the foreseeable future. The cost of everyday consumer goods and services will go up by $1,300 per household on average each and every year;
• The Ontario government would need to borrow $440 million more to cover the increases in new costs from this legislation. If the government were to provide offsets to businesses, as they have indicated, the province’s treasury will take a bigger hit; and
• Municipalities will be forced to increase employee wages by $500 million without additional offsetting revenues.
The Coalition promises to release more study details but states that the provincial government will not be able to provide businesses with enough assistance to offset the impact without significant changes to the proposed legislation.
Northumberland-Quinte West MPP Lou Rinaldi says those measures are still being developed.
The proposed legislation was scheduled for second reading this week.