An increase in Saskatchewan's minimum wage to $9.50 per hour later this year is not being met with a positive reaction by the Canadian Federation of Independent Business (CFIB).
The province has announced the minimum wage is rising from $9.25 to $9.50 per hour on Sept. 1, and the higher wages will also result in a corresponding increase to the minimum call-out pay to $28.50. Saskatchewan will soon join Manitoba and New Brunswick as provinces paying $9.50 per hour, a rate only behind Nunavut ($11 per hour), Newfoundland and the North West Territories ($10 per hour), plus Quebec and Nova Scotia ($9.65 per hour). Neighbouring Alberta's minimum wage is $8.80, second lowest only behind British Columbia at $8.75.
"Since our government took office in 2007, we have raised the minimum wage by more than the rate of inflation," stated Don Morgan, Labour Relations and Workplace Safety Minister. "In fact, minimum wage has increased by $1.55 an hour or 19.5 per cent since 2007."
Morgan said the government will continue to review the minimum wage in the years ahead and make adjustments as appropriate. The Minimum Wage Board is required by legislation to review the minimum wage and report to the government every two years.
"Our government is also helping low income earners by lowering taxes," Morgan said. "We have cut income taxes for minimum wage earners by hundreds of dollars a year and as a result, thousands of minimum wage earners no longer pay any provincial income tax."
Since 2007, a full-time worker earning minimum wage has benefitted from a 46 per cent reduction in provincial income tax while a part-time minimum wage earner working up to 1,600 hours a year no longer pays any Saskatchewan income tax. Disposable income for both full- and part-time minimum wage earners has increased by approximately 22 per cent as a result of minimum wage increases and reductions to provincial income tax.
The CFIB is concerned the increased minimum wage will cool Saskatchewan's hot economy.
“At a time when the Saskatchewan economy is the strongest in Canada, the last thing government should be considering are policies that hinder job creation,” said Marilyn Braun-Pollon, CFIB’s vice-president, Prairie and Agri-business.
Overall, the CFIB highlights that Saskatchewan’s minimum wage has increased 19.5 per cent since 2007, which is double the rate of inflation.
“The fact that Saskatchewan is home to among the highest average weekly earnings in Canada, is further proof the market is working and it is not because of legislation that Saskatchewan small business owners pay competitive wages,” Braun-Pollon said.
“It’s evident the provincial government has decided to make a politically popular decision which leaves Saskatchewan small business owners picking up the tab. While pleased the government didn’t introduce automatic indexation of Saskatchewan’s minimum wage, we had hoped they would have introduced a few measures to mitigate the impact this increase will have on small business owners by introducing a training wage or a gratuity wage.”
The CFIB has taken a position of advocating for government to focus on what they call more practical and effective ways to help low-income earners instead of increasing the minimum wage to address poverty. They would rather see the province provide additional income tax relief and training opportunities.
“Saskatchewan has made good progress on increasing the basic personal exemption from $8,945 to $14,535 and should continue to use the tax system to help workers keep more money in their pockets,” said Braun-Pollon. “Letting low-income earners keep more money in their pockets is a far better approach and doesn’t compromise small business’ ability to grow and create jobs.”
“Given the shortcomings of minimum wage policy, we believe no government should consider increasing the minimum wage until it has exhausted its ability to assist low-income earners through tax relief and training initiatives which upgrade skills for better paying positions,” said Braun-Pollon.
With Saskatchewan small businesses paying among the highest average weekly wages in Canada, the increased minimum wage may have an opposite impact on jobs.
“We worry policies introduced today will dampen many business owners’ level of optimism and hiring plans for the future,” she said.
“Small business owners were hoping the government would have continued providing income tax relief for low-income earners, allowing them to keep more of their income. Instead, businesses will have to prepare for increased wage costs as of September 1, 2011."