Nearly two-thirds of employers in Ontario say that they might have to lay off workers, or reduce their hours and benefits because of the planned minimum wage hikes. And in some sectors, the forecast is even more dire.
The Human Resources Professionals Association surveyed over 1,100 of its HR professional members about how their organizations will be impacted by the coming legislation which will raise the minimum wage from the current $11.40 per hour to $14 per hour in January 2018, and then to $15 in January 2019. That marks a 32 per cent hike over 18 months.
More than 60 per cent of respondents said that their companies will need to cut back on employees’ hours and benefits, or lay off employees completely, in order to compensate for the added cost of the minimum wage increase.
In the restaurant industry, the effects on employment are expected to be even worse.
According to a recent Restaurants Canada survey, 95 per cent of restaurateurs say that raising the minimum wage to $15 an hour is going to negatively impact workers in their sector.
That is because in order to comply with the added costs of labour, almost all of the restaurant owners surveyed (97 per cent) say that they will need to reduce staff hours, and 81 per cent say that they will lay off employees.
How restaurants plan to survive the coming wage hikes:
- 98 per cent will raise menu prices;
- 97 per cent will reduce labour hours;
- 81 per cent will lay off staff;
- 74 per cent will explore labour-saving technology such as self-service touch screens; and
- 26 per cent are likely to close one or more of their locations.
“The survey results are not surprising, given the average pre-tax profit margin for a restaurant operator is just 3.4%,” says Restaurants Canada’s Vice President Central Canada James Rilett. “The government’s drastic minimum wage hikes will reduce profitability by 5 to 7 points – forcing restaurateurs to lay off staff, reduce employment or close their doors entirely. Many of our members just don’t know how to cope with an increase of this magnitude.”
So, while the minimum wage hike will improve the salaries of people at the bottom end of the pay scale, many employers predict the unintended result will be more people earning no wages at all.
What do you think? Is the $15 per hour minimum wage hike a win for workers or an employment killer? Please, share your thoughts with us.