Promogram Canada

Ontario Premier Proposes Minimum Wage Increase

Ontario Premier Kathleen Wynne has officially announced a number of proposals to implement significant workplace reforms across the province, including raising the minimum wage in Ontario to $15 an hour by 2019. The increase will be phased in gradually, starting in October when it will jump to $11.60 from its current rate of $11.40, followed by an increase to $14 on Jan. 1, 2018, and then $15 on Jan. 1, 2019.

Alberta was the first province to officially pass a minimum wage increase, announcing in September that it will be $15 by October 2018.

The additional proposed reforms include requiring companies to pay part-time, temporary and seasonal workers at an equal rate to that of full-timers; increase minimum paid vacation time to three weeks for employees with five or more years of service to the company; pay workers three hours’ worth of wages if their shift is cancelled with less than 48 hours’ notice; and offer 10 personal emergency days each year, with at least two paid. The proposals also included steps to easing the process for workers to unionize.

All proposals – apart from the $15 wage increase – come in response to the Changing Workplaces Review, a government-commissioned report on the state of the Canadian workplace released last month that included more than 170 recommendations for reform across Canada.

“Change in the workplace isn’t just on the horizon, it’s here,” Wynne said in a press conference on May 30. “People are working longer, jobs are less secure, benefits are harder to come by and protections are fewer and fewer. In a time of change like this, when the very nature of work is being transformed, we need to make certain that our workers are treated fairly.”

In the weeks leading up to Wynne’s official announcement, the Ontario Chamber of Commerce asked the province’s Legislative Assembly to do an economic impact analysis on the reforms before signing them into law.

“These sweeping changes will tip our economic balance in a profoundly negative way,” said Richard Koroscil, interim president and CEO of the Chamber, in an open letter to Wynne. “The implementation of some of the policy options being considered would have the perverse effect of discouraging investment and eliminating jobs, thereby diminishing economic opportunities in Ontario. Politics cannot drive decision-making, evidence must…We support reform where and when it is needed, but we caution against change for change’s sake.”

Meanwhile, many Ontario-based promotional companies are wary of the effects the changes will have on business operations. “Some may think that perhaps only those at minimum wage will be affected by an increase,” says Janet Trachter, vice president of sales & marketing at Justin Case (asi/63698) in Markham. “But each earner on the org chart above the minimum wage-earner will seek increases to maintain their hierarchy of experience and length of service represented by the wages they earn.”

Trachter adds that equal pay for part-time and full-time employees will in fact result in part-timers being pushed out of the part-time job market. “Business owners will expect the same efficiencies of the full-time worker from the part-time worker, and will retain only the few part-time employees that are worth the higher rate,” she explains. “So those part-timers who worked hours that fit their schedules, and who found the wages for this work to be acceptable, will be forced out of the workforce.”

Ralph Goldfinger, CEO of Canada Sportswear (asi/43684) in Toronto, also anticipates a smaller workforce if these changes are implemented, particularly a minimum wage increase, which he says will be reflected in higher prices on goods sold to their customers. “Clients will not want to pay more money and push back on price increases, causing suppliers to neutralize them,” he says. “This can only happen by reducing employment numbers or by increasing productivity through mechanization. Due to the short lead time, most neutralizing will be due to reducing head count.”

Goldfinger also believes Wynne’s proposals are tied into her re-election bid, taking place in June 2018. “This is a vote-buying proposition at the neglect of the market economy and, more importantly, individual workers,” he says.

The changes could also have an effect on end-buyers’ ability to spend on promotional products, impacting the entire supply chain. “My Canadian suppliers will now have to pay their workers more, so the price of products will inevitably increase,” says Amanda Dudek, owner of A Dudek Promotions (asi/101207) in Maple. “Meanwhile, my clients will have fewer marketing dollars to spend on promotional products since they’ll be using more net dollars to pay their employees.”

Steve Levschuk, president of Talbot Promo (asi/341500) in London, says that funding a minimum wage increase along with Wynne’s other reforms will have an effect on much more than just hourly pay. Companies can expect to see an increase in premiums for employee benefits programs, which often correlate to an individual’s compensation rate. “Everything combined represents significant cost to the employer that can’t be passed on to the consumer,” he explains. “This could cause the real adverse situation for small businesses in Canada.”

Stan Gallen, senior vice president of sales and marketing at Debco (asi/48885) in Concord, has adopted a wait-and-see approach towards the changes. “There are positives and negatives whenever an economic decision of this magnitude is made,” he says. “I don’t think that the changes will affect the promo industry in any major way. We’ve always offered competitive salaries and excellent working conditions. We’ll continue to provide value to our customers irrespective of the new laws.”

The minimum wage debate continues in the U.S. as well, where the Illinois State Senate and House approved legislation that would increase pay to $15 by 2022. The bill currently sits on Gov. Bruce Rauner’s desk awaiting his signature for final passage, though he has recently criticized the plan, saying it would “crush jobs” in the state.