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Ontario will hike $10.25/hr minimum wage retroactively

Ontario’s Liberal government will move quickly to retroactively raise the $10.25 an hour minimum wage, which has been frozen for four years, sources said Monday.

Government sources told The Canadian Press there would be an announcement later this week to hike the minimum wage retroactively to 2010, based on the rate of inflation since then.

Statistics Canada puts the annual inflation rate at 2.9 per cent in 2011, 1.52 per cent in 2012 and 0.91 per cent in 2013.

The Ontario Convenience Stores Association said Monday it likes seeing future increases in the minimum wage tied to the inflation rate, and wasn’t concerned by a retroactive hike back to 2010, saying “it looks very minimal and will protect jobs.”

The Ontario Chamber of Commerce had recommended future changes in the minimum wage to be tied to the rate of inflation, but the Canadian Federation of Independent Businesses was not happy with word of a retroactive increase.

“Businesses can’t go back to their customers and retroactively charge more fees for their products and services, so really why should government be able to do this,” asked CFIB policy analyst Nicole Troster?

“I think any kind of increase, be it an increase in the hourly rate or retroactive increases, it’s going to make it difficult for businesses to cope, period.”

The CFIB warned that hiking the minimum wage hurts low-skilled, low-income workers — the very group it’s supposed to help — because it forces small firms to absorb the cost through reduced hours or job cuts.

A special advisory panel set up by the Liberal government to look at ways of adjusting the minimum wage released its report Monday, calling for changes to be linked to the inflation rate, and to give businesses four months warning of any increases.

It recommends the minimum wage be changed April 1 each year, with advance notice in December of exactly how much it will go up, and said the whole process should be reviewed every five years.

Premier Kathleen Wynne said it was fair to base future changes in the minimum wage on the Consumer Price Index, a key indicator of how the economy is doing.

“It takes the decision out of the realm of political whim and puts it into the realm of some kind of relationship with the way the economy is growing,” she said.

“I think that businesses and individuals should be pleased that there will be a more predictable system in place.”

A study last fall by the Wellesley Institute, a Toronto-based research organization, showed the number of minimum wage workers in Ontario more than doubled since the Liberals came to power in 2003 to nine per cent of the workforce in 2011, or 464,000 people.

Young people used to make up the bulk of minimum wage workers, but the data show that by 2011, nearly 40 per cent were 25 or older.

Various social groups, unions and health-care professionals have been pressuring governments to raise the minimum wage to $14 an hour, noting it would mean a pre-tax difference of $650 a month to thousands of the lowest-paid workers in Ontario.

The Workers Action Centre in Toronto, one of the groups fighting for a $14 minimum wage, is pleased to see increases tied to inflation, but warns it’s not enough.

“A full-time minimum wage earner falls 25 per cent below the poverty line, and we need much more than a cost-of-living increase to address this shortfall,” said spokeswoman Deena Ladd.

However, Wynne is worried about the impact of such a big hike on business.

“I know that there’s a call for $14 (but) we have to move very carefully because this is about making sure that we retain and create jobs,” said Wynne.

“At the same time, we need to have a system in place that has a fairness to it that I think has not been the case for many years.”

The $10.25 an hour rate in Ontario and British Columbia is about middle of the pack for provinces and territories, which range from $9.95 in Alberta to $11 in Nunavut.

Ontario also has a $9.60 an hour minimum wage for students under 18 working less than 28 hours a week, and a $8.90 minimum for liquor servers. People doing paid work at home for an employer are entitled to a minimum wage that is 110 per cent of the general minimum.