On May 30th, the Ontario Government announced the Fair Workplaces and Better Jobs Plan which proposes numerous changes to current labour and employment standards legislation, including:
- Raising Ontario’s general minimum wage to $14 per hour on January 1, 2018, and then to $15 on January 1, 2019, followed by annual increases at the rate of inflation
- Mandating equal pay for part-time, temporary, casual and seasonal employees doing the same job as full-time employees; and equal pay for temporary help agency employees doing the same job as permanent employees at the agencies’ client companies
- Expanding personal emergency leave to include an across-the-board minimum of at least two paid days per year for all workers
- Ensuring at least three weeks’ vacation after five years with a company
- Updating employee scheduling rules, including requiring employees to be paid for three hours of work if their shift is cancelled within 48 hours of its scheduled start time.
For affected employers, both large and small, these proposed changes are increasing anxiety and frustration levels as business owners work to calculate the added costs to their operation and develop plans for implementation. Many of these employers have told me that these changes will have the opposite affect of what the Government is looking to achieve. A few have indicated they are questioning whether their business will be able to survive at all.
Higher costs for employers will inevitably lead to inflation (higher consumer prices) as business owners are forced to increase prices to offset this dramatic increase in operating costs. The hospitality and retail sectors will be particularly hard hit due to the nature of their business which includes numerous service-focused, minimum wage positions that are vital to a successful operation – waitstaff, dishwashers, salesclerks, and housekeeping will cost more to employ. If the market can’t bear a full transfer of these new costs to the consumer, employers will be looking to reduce overhead by cutting staff hours and possibly cutting the number of staff. This will reduce the job opportunities available to youth and other low-skilled individuals who need employment.
While the stated intentions of these proposals are admirable, it is clear that we can’t legislate prosperity. Instead of creating more opportunity for workers, changes like these often have the opposite effect by reducing jobs and increasing the cost of living.
“The Canadian literature generally finds that a 10% increase in the minimum wage reduces employment among teens and young adults (ages 15 to 24) by 3% to 6%. By making it harder for low-skilled workers to obtain an entry-level position, the minimum wage may perversely hinder the development of human capital and harm the long-term career prospects of the very people it ostensibly helps. Indeed, Canadian researchers have found that hiking the minimum wage has no statistically significant impact on poverty and in some cases can increase it.”
– The Fraser Institute
“Businesses are facing unprecedented challenges – high cost of electricity and food to name just a couple. I have serious concerns about the impact of further barriers to job creation and economic growth without having an impact on their stated objectives.”
– Chamber member in the restaurant business
“There are very little margins in food and beverage services so this will put us in a negative even with a price increase.”
– Chamber member hotelier
We need policy that is developed based on evidence rather than emotion. We need the government to undertake a comprehensive economic analysis of these proposals BEFORE this legislation becomes law.