Chamber concerned minimum wage hikes will have unintended consequences

CHARLOTTETOWN – Responding to an announcement from provincial government, the Greater Charlottetown Area Chamber of Commerce is raising concerns about the impact a 6% minimum wage hike will have on Island workers and businesses.

“The Chamber agrees that modest increases in minimum wage can be done without disrupting labour markets, but government has to be cautious about hurting competitiveness,” said Chamber CEO, Penny Walsh-McGuire. “We’re uncertain how some businesses, particularly those in retail and food service, will be able to respond when margins are already razor-thin.”

Today’s announced increase will be double that of the current rate of inflation when it takes effect April 1, 2019. It will mark an almost 53% increase in minimum wage over the past 10 years with a cost of living increase of 16% for the same time period.

“When a business owner is faced with rising costs they can either absorb costs out of the profit margin, or raise prices for consumers. If neither is an option, they may reduce employee hours, and be forced to work more hours themselves,” said Walsh-McGuire. “It’s a matter of businesses having to make decisions about how they will react to rising costs.”

In its annual submission to the Employment Standards Board, the Chamber lobbied for government to implement a long-term minimum wage strategy as a way to create a process that is open, and transparent. The Chamber welcomed the provincial government’s commitment to provide businesses almost six months’ notice of changes to minimum wage. The submission noted that decisions around minimum wage should consider financial realities that are already being faced by employers and should not discourage job creation, investment, and economic growth.

The Chamber noted that there are other proven mechanisms for supporting our workforce. P.E.I. has the second lowest basic personal tax exemption in the country notes the Chamber. This is the amount of earnings that is exempt from provincial income tax.  The Chamber recommends that this exemption be increased to the Canadian average and indexed to the rate of inflation going forward. This would remove the hidden tax hike that the Island’s minimum wage workers experience every year due to the low basic personal exemption amount.

“The economy is doing well. With that, there needs to be a balance where both government and business are supporting our most vulnerable workers and keeping our businesses competitive,” said Walsh-McGuire. “That means looking at all the tools in the toolbox and ensuring this shared responsibility is just that- shared.”