1 in 3 employers say mandatory pay increases lead to salaries/wages across entire company
About one in three (32 per cent) of Canadian companies say mandatory minimum wage hikes result in increased salaries/wages across the entire company – not just for minimum wage workers.
This is largely because most job seekers (59 per cent) say they would quit if they found out an entry-level employee had the same pay as a more senior-level employee at their company following a minimum wage increase, finds the survey by Express Employment Professionals.
Nearly one in five businesses say that upcoming minimum wage hikes will result in them:
- using more automation/AI (19 per cent)
- decreasing the number of hours that employees work (17 per cent)
- reducing their workforce (14 per cent)
- outsourcing more work (14 per cent)
“While minimum wage is increased to account for inflation, these increases actually further contribute to inflation, making it even more expensive to do business,” says Brent Pollington, Express franchise owner in Vancouver.
Many employers feel that passing the cost of minimum wage increases onto their customers will result in fewer people buying their goods and services, he says, “so they have to find other ways to absorb the cost, which can mean hiring fewer people and cutting hours.
“Ultimately, increased minimum wage prices people out of the market, making it harder for hard-working skilled-entry level employees like teenagers to find employment.”
Several provinces have already announced minimum wage increases this year.
Minimum wages in line with inflation
Still, most employers (85 pe cent) and job seekers (90 per cent) agree that minimum wage should keep up with inflation rates, finds the Express survey of 504 Canadian hiring decision-makers in May and June.
And 85 per cent of job seekers say that minimum wage hikes help the personal finances of minimum wage workers in the long run.
A previous report noted that the City of Winnipeg would have to spend more than $3 million more per year if it offered city workers a wage rate that some advocates consider a living wage.
How to deal with minimum wage increases
There are some things employers can do to help deal with the increases, says Michael Cabral, an Express franchise owner in Winnipeg, Manitoba.
“Companies can use minimum wage increases to regularly review how they can be more efficient and how to better train their staff.
“They also need to review their hiring process, as using probationary periods, making their hiring and firing process quicker and more efficient, or using staffing agencies can all help lower the cost of hiring and running the business.”
Employers bracing for future mandatory wage increases should proactively do the following, according to Express:
- Review current operations and projected labour requirements. Then, review corresponding job descriptions and differentiators, as well as career ladders.
- Consider compression impact on current employee wages.
- Develop a staffing plan that flexes with various levels of business activities with trigger points to onboard new hires or make reductions in workforce and budget accordingly.
- Analyze the total impact the new minimum wage will have on the organization and determine how it will be covered financially.
Increases in public sector wages are keeping wage growth in Canada, according to a previous report.
