Canadian Retailer - March/April 2010 - (Page 46)
C LO S I NG T I M E : AT I S S U E
The retail landscape is constantly changing, challenging retailers to change with it to meet the needs and demands of their customers and employees. Retail Council of Canada recognizes this, and as always is committed to addressing your needs. To this end we’d like to hear from you. Share with us your concerns, whether controversial or otherwise, and as your Voice of Retail we’ll share those concerns to engage the rest of the industry on the topics and issues that matter most to you.
Why consecutive Minimum Wage increases challenge the sector
On March 31st, the Ontario government raised the minimum wage in the province by 75 cents from $9.50 an hour to $10.25. This latest increase was the sixth consecutive hike in Ontario since 2004, equating to a 50% increase over the past six years.
At the end of six years of consecutive increases to Ontario’s minimum wage, many retailers have found it challenging to manage the burden of this cumulative effect to their bottom lines. “The financial impact to the bottom line has been significant,” says Bill Goodwin, President of Ontario party supply superstore Party Packagers. “We’ve had to both raise prices and reduce working hours available to pay for the increase. It hasn’t stimulated the creation of jobs. In fact, it has taken away jobs. I know many other retail executives who have had no choice but to reduce labour in order to offset the dramatic impact to the fiscal health of their companies.” Increases in minimum wage across the province have posed a significant impact on the industry, given the fact that the great majority of general merchandise retailers already pay their employees wages beyond that of the minimum. This results in upward pressure put on other hourly rates. “It is clear that the new minimum wage at $10.25 will start to bump up against other longer term employees who resent being paid similar wages to brand new employees,” he says. “Most retailers cannot afford to make adjustments to their entire employee base. So wage compression becomes a meaningful associate satisfaction and equity issue.” Many are suggesting that a more thoroughly thoughtout, sustainable approach to increases could have resulted in greater possibility for business prosperity in the province, and the chance for Ontario businesses large and small to contribute toward the employment of their communities. Recognizing the need to maintain a healthy level of employment in their province, the Government of British Columbia elected to take a different approach to that of Ontario, freezing the minimum wage during the recession. “Simply put, if retailers are keeping their HR costs static and are then forced to raise their wages, some will decide to lay off staff, or reduce hours,” says RCC’s Max Logan, Director, Government Relations and Membership Services, British Columbia. “By not raising the wage in BC, employers were able to maintain staff and keep the HR budgets intact at a time when sales were declining and their objective was to keep costs low.” Provincial governments across the country have often leveraged increases in the minimum wage for use as a social policy instrument. Unfortunately, these increases can often have the opposite effect than was intended, and reduce income for students and young people who depend on entrylevel positions. RCC is calling on provincial governments to an arms-length, independent mechanism to review their minimum wage structure, using objective data, and provide recommendations to government for appropriate increases. This process would substantially remove the politics from such decisions, providing full discussion in a transparent forum, and ensuring that public policy interests of all stakeholders for government policy are being served first and foremost.
As the province recovers from the recession and tries to regain its position in Canada as a “have” province instead of a “have-not”, increasing business’ ability to invest and create jobs should be the top priorities. RCC continues to advocate on behalf of the sector for a third-party economic review of the impact of future increases in minimum wage.
Canadian minimum wage by province
Current Wage Effective Date
Apr. 1, 2009 Nov. 1, 2001 Oct. 1, 2009 Sep. 1, 2009 Jan. 1, 2010 Dec. 28, 2003 Apr. 1, 2009 Sep. 5, 2008 Oct. 1, 2009 May 1, 2009 May 1, 2009 Apr. 1, 2009
Adjusted every April.
AB BC MB NB NL NT NS NU PEI QC SK
$8.80 $8.00 $9.00 $8.29 $9.50 $8.25 $8.60 $10.00 $8.40 $9.00 $9.25 $8.89
$10.00 by Sept. 2011 $10.00, July 1, 2010 $9.65 by Fall 2010
$9.50, May 1, 2010
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Table of Contents for the Digital Edition of Canadian Retailer - March/April 2010
Canadian Retailer - March/April 2010
In Your Interest
Environmental Sustainability: Back to Basics
Human Resources Supplement
What's Your Impact?
Greening the Industry
Canadian Retailer - March/April 2010