New minimum wage effectively unionizes Ontario
By Sunira Chaudhri
Kathleen Wynne just bid the private sector adieu.
The premier’s approval of an extraordinary 32% hike in the minimum wage — to $15 dollars an hour by 2019 — has created a union-like dystopia that will leave employers looking for the nearest exit.
While many employment activist groups are applauding the announcement, most fail to see the unavoidable fallout this move will bring.
For one, few employers can afford the cost of entry and will close their doors.
That means fewer jobs and more employees collecting Employment Insurance. For those businesses that survive, expect a proliferation of wage freezes, even for those employees in higher positions to recoup the burgeoning labour costs in the lower ranks. Promotions with any real earning potential will become elusive for hard working, loyal employees.
With the wage hike, employees will assuredly be lumped in with their less impressive counterparts because the pie can only be cut so many ways. Welcome to the union of Ontario.
In my experience, there has been an increasing trend over the last several years of American companies setting up shop in Ontario and hiring Canadian employees. That will stop, too. Not only because of the weighty $30,000 a year per full-time minimum wage worker, but more so, it is the unpredictability of ongoing labour costs in Ontario that will keep international business away.
If anything, what the government seeks to curtail — that being precarious, contract employment — will flourish because employers will not be able to cover the payroll. The small and mid-size employers which make up the majority of businesses in Ontario are more likely to hire workers on shorter terms and worse, overburden employees they already have.
Protecting vulnerable workers is a mandate the government seeks to address but a $15-dollar minimum hourly wage does the opposite. The hefty price tag encourages employers who are inclined to make under-the-table cash payments instead of complying with the law.
Not only will businesses have to rebalance the books, the amped-up minimum wage gives Ontario’s labour ministry a new, sharper set of teeth to sink into offending employers who can’t afford to meet their obligations under the Employment Standards Act. This will lead to more employees filing complaints to the ministry, triggering workplace investigations, potential fines and businesses grinding to a halt until investigations are complete.
A top labour ministry mandate is to tackle precarious employment in Ontario but that presupposes those in precarious employment are seeking full-time work. Many minimum wage earners are students or those with family obligations who simply cannot commit to full-time work.
Minimum wage is meant to be a stepping stone in a person’s career or a supplemental income. It is meant to be a starting point for employees — not the point of no return for employers.
In a province that is already a leader in employee rights, this move is ill-timed, a gamble, and will reverberate in our province’s economy for years to come.