Ontario businesses prepare for minimum wage increase

Photo: Christopher Katsarov The canadian Press
Many small business owners in the province are wondering how they can maintain their profits if wages are increasing as much.

The new minimum wage to $ 14 an hour shall not come into force until 1 January in Ontario, but Chris Stevens had already taken steps to ensure that his restaurant could take the hit.


The co-owner of Kaboom Chicken, in the neighbourhood of Leslieville in Toronto, has increased the prices on the menus in anticipation of the increase in the minimum wage. He and his business partner have also the intention to reduce the hours of their employees in this new year and work themselves further in order to save money.


In the New Year, workers will benefit from the first of two increases in the minimum wage. The second will enter into force on January 1, 2019, when the minimum wage reaches $ 15. After that, it will be adjusted for inflation.


The ontario government believes that this change will give more purchasing power to families and build a stronger economy, but many small business owners in the province are wondering how they can maintain their profits if wages are increasing as much.


Mr. Stevens believes that it is difficult to maintain the status quo by losing such large sums over a short period of time. According to him, the restructuring was inevitable.


The business man is said to be in agreement with the increase in the minimum wage, but he believes that the burden rests too much on the small businesses.


Dan Rishworth, the store specializes in cycling, Enduro Sport, employs seven full-time permanent employees, in addition to some of the young people who work during the summer. This increase in minimum wage could force them to hire fewer seasonal workers, according to him.


“I believe that at this point, we’ll hire six employees for the summer. We’ll hire only three or four “, he said.


In addition, senior employees will receive less than wage increases, which will also be smaller, he warned.


“And I anticipate that (more senior employees) who are already receiving $ 15 an hour will expect to have 17 $, 18 $, or even more because the minimum wage approach $ 15”, he added.


Job losses ?


The Office of the director of the financial responsibility of the Ontario — an independent agency that analyzes the economic situation for the legislative Assembly — has argued that increases in the minimum wage could result in the loss of 50 000 jobs.


“Some companies try to reduce their expenses by replacing minimum wage workers with better paid workers, but more productive, or leveraging automation,” wrote the organization in its report published in September.


“These measures will result in job losses among minimum-wage workers. “


But the minimum wage will also increase consumer spending, which “will stimulate economic activity and will thus help to compensate for these losses by creating new jobs,” he qualified.


The ontario minister of Labour Kevin Flynn said last week that he did not believe in the predictions “gloomy and sinister” related to the increase in the minimum wage.


“We have increased the minimum wage by 70 percent since 2003, and we have seen an increase of employment precisely during that period,” he said in a press conference.


“I think we have proven that we can work with small businesses. We reduce their tax rates, we reduce the burden on small businesses, then we ask them to play their role, ” he added, referring to the elimination of the capital tax on businesses, and the decrease in the tax rate for small businesses.


“But this will require an adjustment… a change,” he acknowledged.


One way to strengthen the economy


In June, 50 economists from universities across Canada have co-signed an open letter in support of the increase in the minimum wage, arguing that higher wages strengthen the economy.


“Whereas those who have lower wages spend more of what they earn than those with higher salaries, raising the minimum wage could play a role in the economic recovery,” they wrote.


“For years, we’ve heard that the increase in the minimum wage would kill jobs, raise prices and scare off businesses. This fear scaremongering is not in tune with the latest economic research. “


Some companies, however, remain skeptical.


Mr. Stevens pointed out that there was no guarantee that the minimum wage will increase spending, especially in restaurants and bars.


“Why do you give them more money ? Is it that there will be enough for that (these workers) to go to the restaurant, spend the money and take advantage of the nightlife ? Or it will be to put money on the table and pay their rent ? “he questioned.