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Minimum wage increases in 2017 unwelcome: CFIB

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Economic downturn not the right time

 St. John’s, November 25, 2016 – The Canadian Federation of Independent Business (CFIB) is disappointed the Government has decided to increase the minimum wage rate on April 1, 2017 to $10.75 and again to $11.00 on October 1, 2017, effectively increasing it by five per cent in ten months. 

CFIB has consistently asked the Government to focus on using the tax system to help low-income workers and leave the minimum wage alone. As a result, low-income workers will find more money in their pockets. Unfortunately, the discussion has been focused on the politics rather than the economics of minimum wage. 

“The Government’s reason for taking this action is Newfoundland and Labrador currently has the lowest minimum wage in the country,” said Vaughn Hammond, CFIB’s director of provincial affairs in Newfoundland and Labrador. “Unfortunately, the Government has not released any economic rationale for the minimum wage increases nor has it provided an employment and economic impact analysis of these increases.” 

After making adjustments this year to deal with the considerable increases in taxes and fees, small business owners now have to consider what action they will take to alleviate the burden of the planned minimum wage increases. If the past is any indication, small business owners will adapt by increasing prices of goods and services and absorbing the increases through reduced profits. Many will reduce staff hours, while there will be fewer job opportunities for youth and inexperienced employees. 

“Small business owners do not support minimum wage increases during an economic downturn,” explained Hammond. “The provincial economy is fragile at the moment as unemployment has risen to its highest level in years and a large number of small business owners expect to lay off employees in the next three months. Next year’s increases in minimum wage is unlikely to reverse this.” 

backgrounder is attached for further information. 

To request an interview, contact Vaughn Hammond at [email protected] or 709-753-7764. 

CFIB is Canada’s largest association of small- and medium-sized businesses with 109,000 members across every sector and region.