Ontario minimum wage hike will result in loss of 50K jobs: provincial watchdog

Click to play video: 'Liberals to increase hourly minimum wage in Ontario'
Liberals to increase hourly minimum wage in Ontario
Tue, May 30: While the decision is seen as good news for low wage workers in the province, others say this could cripple small business and lead to job losses. Lama Nicolas reports – May 30, 2017

Ontario’s government spending watchdog says the province’s proposed minimum wage hike to $15 an hour in 2019 will result in a loss of approximately 50,000 jobs, mostly affecting working teens and young adults.

In a report assessing the economic impact of the wage increase, the Financial Accountability Office of Ontario (FAO) warns job losses should be expected as businesses facing higher payroll costs may respond by laying off workers.

“Ontario’s proposed minimum wage increase is both relatively larger and more rapid compared with most other jurisdictions or historical experience,” the report said.

“This could provide businesses with a greater incentive to reduce costs more aggressively than suggested by existing research – which are generally based on more moderate increases.”

READ MORE: Ontario government tweaks labour reform bill, no changes to $15 minimum wage phase-in

Ontario’s minimum wage would increase by 32 per cent over 18 months compared with increases of 20 per cent over two years in 1990 or 28 per cent over three years in 2008.

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The FAO report further states the wage boost would impact the broader economy by increasing prices and raising household spending.

Meanwhile, just one-quarter of the higher labour income would directly benefit low-income families.

LISTEN: FAO economist David West joins Tasha Kheiriddin on AM640

“Since the income gains would not be concentrated on low-income families, raising the minimum wage would be an inefficient policy tool for reducing overall poverty,” said the government watchdog.

VIDEO: Low-income Ontario workers rejoice, small businesses concerned as $15 minimum wage announced

Click to play video: 'Low-income Ontario workers rejoice, small businesses concerned as $15 minimum wage announced'
Low-income Ontario workers rejoice, small businesses concerned as $15 minimum wage announced

Business groups have been campaigning hard against the phase-in period for the minimum wage, saying the increase – which is currently set to rise to $11.60 in October – is too much to absorb that quickly.

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READ MORE: Ontario labour minister says plans for minimum wage hike aren’t swayed by new report

Premier Kathleen Wynne has promised to unveil a package of offsets this fall to help business owners cope with increased costs due to labour changes.

Debate on the labour reforms, which includes equal pay for part-time workers, increased vacation entitlements and expanded personal emergency leave, is set to begin this week at the Ontario legislature as the bill heads toward a second reading vote.

LISTEN: Progressive Conservative labour critic John Yakabuski on the FAO report

Public hearings were held over the summer, and once it passes the majority Liberal legislature on second reading, it will be sent out for a second round of hearings.

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READ MORE: Business groups warn of job losses if Ontario goes through with proposed labour reforms

If the hike is approved, the number of minimum wage workers will rise from just over 500,000 currently to 1.6 million in 2019.

Minimum wage workers currently represent seven per cent of the total Ontario workforce with that number expected to reach 22 per cent in 2019 once the wage increase is phased in.

Read the full report below: 

With a file from The Canadian Press

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